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EURO NEWS UPDATE NO.36
European Parliament Backs New TV, Web Legislation
The European Parliament has backed a proposed update to the Television without Frontiers directive, which includes lifting the ban on product placement.
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European Banking Federation's call for reform of EU VAT regime
The European Banking Federation (EBF) welcomes the findings of a study carried out by PwC which mirrors its preoccupations and calls for reform on the VAT exemption regime for financial services.
The study was commissioned by the European Commission with the aim to increase the understanding of the economic effects of the VAT exemption for financial and insurance services, to provide evidence of the inefficiency of the current system and to identify legislative options to eradicate these inadequacies.
PwC's study provides robust support for the case made by the EBF for a reform of the current VAT regime and confirms the validity of the technical solutions proposed by the EBF, as well as the necessity to consider their implementation as the highest priority, in order to safeguard the competitiveness of the European financial services industry in the global marketplace.
Since the adoption of the 6th VAT Directive in 1977, which is the core VAT legislation applicable in the EU, the VAT system applicable to financial services has never been adapted to the new requirements of the financial industry over the last 30 years. The VAT regime is outdated and, accordingly, results in unacceptable legal uncertainty.
Under the current system banks are only granted a highly restricted right to recover the VAT they have incurred on their own expenses. The regime is therefore characterized by its lack of neutrality and penalises intra-group cross-border supplies. VAT has reduced or even eliminated the incentive for banks to integrate and centralize back office functions into specialist centres of excellence. "VAT has effectively become a tax on efficiency" says Guido Ravoet, Secretary General of EBF. This undermines European financial integration and risks having detrimental effects on international competition, as companies in the European financial services sector "will continue to have sub-optimal structures of operations often dictated by VAT".
While banks welcomed the launch in March by the European Commission of a period of open discussion on alternative methods of reform of VAT on financial services, they are concerned that some European governments might have over-estimated concerns about potential budgetary implications of a reform and overlooked the beneficial impact on their economies and tax revenues that would flow from more efficient business structures.
A number of Member States seem to believe that any reform should initially tackle only the issue of legal uncertainty, focusing on the definition of (exempt) financial services.
The EBF supports a wider reform of VAT on financial services in order to tackle both legal and competitive aspects at the same time, which it feels cannot be separated and require equal attention.
The study was commissioned by the European Commission with the aim to increase the understanding of the economic effects of the VAT exemption for financial and insurance services, to provide evidence of the inefficiency of the current system and to identify legislative options to eradicate these inadequacies.
PwC's study provides robust support for the case made by the EBF for a reform of the current VAT regime and confirms the validity of the technical solutions proposed by the EBF, as well as the necessity to consider their implementation as the highest priority, in order to safeguard the competitiveness of the European financial services industry in the global marketplace.
Since the adoption of the 6th VAT Directive in 1977, which is the core VAT legislation applicable in the EU, the VAT system applicable to financial services has never been adapted to the new requirements of the financial industry over the last 30 years. The VAT regime is outdated and, accordingly, results in unacceptable legal uncertainty.
Under the current system banks are only granted a highly restricted right to recover the VAT they have incurred on their own expenses. The regime is therefore characterized by its lack of neutrality and penalises intra-group cross-border supplies. VAT has reduced or even eliminated the incentive for banks to integrate and centralize back office functions into specialist centres of excellence. "VAT has effectively become a tax on efficiency" says Guido Ravoet, Secretary General of EBF. This undermines European financial integration and risks having detrimental effects on international competition, as companies in the European financial services sector "will continue to have sub-optimal structures of operations often dictated by VAT".
While banks welcomed the launch in March by the European Commission of a period of open discussion on alternative methods of reform of VAT on financial services, they are concerned that some European governments might have over-estimated concerns about potential budgetary implications of a reform and overlooked the beneficial impact on their economies and tax revenues that would flow from more efficient business structures.
A number of Member States seem to believe that any reform should initially tackle only the issue of legal uncertainty, focusing on the definition of (exempt) financial services.
The EBF supports a wider reform of VAT on financial services in order to tackle both legal and competitive aspects at the same time, which it feels cannot be separated and require equal attention.
EU chemical law passed amid controversy
EU lawmakers have approved a new chemical law aimed at making producers and importers of chemicals prove that the substances they put on the market are safe for consumers – making it one of the most controversial laws in years.
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EU Emissions Trading Scheme to Include Air Transport
The European Commission today proposed legislation to bring greenhouse gas emissions from civil aviation into the EU Emissions Trading Scheme. The proposed directive will cover emissions from flights within the EU from 2011 and all flights to and from EU airports from 2012. Both EU and foreign aircraft operators would be covered.
Like the industrial companies already covered by the EU Emissions Trading Scheme, EU ETS, airlines will be able to sell surplus allowances if they reduce their emissions and will need to buy additional allowances if their emissions grow.
The Commission says EU emissions from international air transport are increasing faster than from any other sector. This growth threatens to undermine the European Union’s progress in cutting overall greenhouse gas emissions.
Environment Commissioner Stavros Dimas said, “Aviation too should make a fair contribution to our efforts to cut greenhouse gas emissions. The Commission will continue to work with our international partners to promote the objectives of a global agreement on aviation.
He said, "Any increase in ticket costs resulting from the scheme is expected to be limited, and significantly lower than rises due to oil price changes in recent years."
"Bringing aviation emissions into the EU Emissions Trading Scheme is a cost-effective solution that is good for the environment and treats all airlines equally," Dimas said.
Someone flying from London to New York and back, said Dimas, generates roughly the same level of greenhouse gas emissions as the average person in the European Union does by heating his or her home for a whole year.
"Air France supports the principle of emissions trading schemes," Jean-Cyril Spinetta, chairman & CEO of the Air France-KLM group, said today.
"This solution appears to be the most environmentally sound way of reducing the impact of air transport on climatic change, without compromising the economic growth of this sector and the vital role it plays in the global economy."
British Airways chairman Martin Broughton called on the European Commission to "rethink its latest plans for aviation carbon trading."
In a speech at the Aviation Club December 12, Broughton said the Commission was considering a package that was “overly ambitious and self-defeating.”
It would delay meaningful action to combat climate change and weaken Europe’s airlines against competitors based elsewhere, he said, urging commissioners to drop the current plan to apply the scheme to all flights into and out of the European Union.
Broughton advocated confining the scheme to flights within the EU. He suggested allocating initial carbon allowances to airlines free of charge – as has occurred for industries already within the scheme.
From its Washington, DC office, the Air Transport Association of America, ATA, the industry trade organization of U.S. airlines, called the proposed legislation illegal under international law.
“ATA is disappointed that the European Commission remains intent on unilaterally covering the flights of non-European Union carriers in its emissions trading scheme," the organization said in a statement. "This misguided decision clearly violates international laws and bilateral air service agreements, and deferring its implementation by one year does not change that outcome."
“The International Civil Aviation Organization is working on appropriate multi-lateral solutions to address greenhouse gas emissions of international aviation, including emissions trading guidance," ATA said. "The EU is alone in its efforts to bypass that ongoing work. We urge the EU to join with the rest of the world in working through ICAO to find constructive solutions to this issue."
But Dimas says including civil aviation in the EU trading scheme implements an approach endorsed by the International Civil Aviation Organization, ICAO.
ICAO President Roberto Kobeh Gonzalez, says the impact of aircraft gas emissions "could generate enough public pressure to halt the growth of air transport."
Reach: EU Chemicals legislation takes final hurdle
The proposed new chemicals legislation known as Reach has surmounted its final hurdle and is now scheduled to take effect from June 2007. On 13 December 2006, the European Parliament (EP) passed the compromise agreement worked out earlier. The substances in question are to be tested over the next 11 years and registered with the future European Chemicals Agency located in Helsinki / Finland. The new rules
are more industry-friendly rules on certain core issues compared with the EP's initial proposal.
are more industry-friendly rules on certain core issues compared with the EP's initial proposal.
Don't blame the euro, OECD says
EU governments should stop blaming the euro for economic difficulties and should make their own labour markets more flexible and curb budget deficits instead, economic think-tank the OECD has said.
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Compromise vital if EU nutrition labelling to survive
Food industry and consumer groups are poles apart over the question of mandatory nutrition labelling with government opinion somewhere between the two.
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EU to propose new CO2 rules for cars on Jan 24
The European Commission will lay out on Jan. 24 its new strategy for cutting emissions from cars, which is likely to include the option of binding legislation to force carmakers to clean up their vehicles.
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EU threatening parliamentary democracy, says ex-German president
Germany's state of parliamentary democracy is under threat from the European Union which is slowly taking away all the national parliament's powers, the country's ex-president has said.
In an article for newspaper Welt am Sonntag, Roman Herzog pointed out that between 1999 and 2004, 84 percent of the legal acts in Germany stemmed from Brussels.
In an article for newspaper Welt am Sonntag, Roman Herzog pointed out that between 1999 and 2004, 84 percent of the legal acts in Germany stemmed from Brussels.
For more information please visit: http://euobserver.com/9/23250
EU sets 2020 targets for emissions reduction and sustainable energy
At least a 20% reduction in greenhouse gas emissions in 2020 compared to 1990 and an effort to push towards a 30% emissions reduction in 2020 in negotiations with other developed countries, largely to be achieved by a 20% share of renewable energy and 20% extra energy efficiency. These elements were presented by the European Commission as the key driving factors in a coherent EU energy policy for the next decades. President Barroso: “Until now, this is by far the most ambitious climate policy presented by countries or regions in the world. Europe must lead the world into a post-industrial revolution towards a low-carbon economy.”
Latest trends and perspectives
On 30 January 2007, the most recent developments in the ten sectors studied in 2006 by the Commission's e-Business W@tch, identified through a survey across more than 14,000 European enterprises, will be presented in an open conference in Brussels.
Presentations and the discussion will focus on implications of the observed trends and developments for firms, industries and policy. The conference is addressed, in particular, to industry representatives, policy officials, business support organisations, consultants, and researchers from economic and ICT-related fields.
2nd February