Adding to the leaders’ summit workload, the finance council of the 25 has passed along the matter of VAT rates. France wants to lower VAT on restaurant meals but, Germany’s head of finance, new in the job, withheld his support. Austria and Denmark also rejected Britain’s proposed VAT exception list. Changes in taxation policy in the EU must have everyone’s agreement.
Till there is a new deal, each country’s special exemption rates will stay the same. Paris said it would keep VAT low on building renovation. The European Commission said it would not pursue countries for infringements of the rules. The British compromise restricted the list of demands from states for lower VAT rates to local services that it said would not distort the functioning of the EU’s single market.
It retained a proposal that would allow French President Jacques Chirac to fulfil a 2002 election pledge to cut VAT on restaurant meals to well below the EU’s 15 percent minimum “standard” rate. French restaurateurs want a reduction from 19.6 percent to 5.5. percent.