There are six EU proposals for scrutiny. Three of them can be disposed of by way of the briefing note provided and there are officials to deal with the other three. All the officials may join us to deal with them.
As there is another committee meeting here, we must leave this committee room at 1.40 p.m. If need be, that allows until 12.30 p.m. on EU scrutiny but we might be briefer.
We should deal with the NIB matter.
Agreed. We will move quickly through the EU scrutiny. I am sure everyone will be happy if we deal with it that way.
The first item, according to the schedule on scrutiny of EU proposals, is COM (2004) 273.
Is this on reinsurance?
Yes. Negotiations on this matter are almost concluded. They will be finalised by the Parliament and the Commission. This is the only one that has come into currency in the past couple of weeks because of media publicity. The state of play in this regard is as follows. Negotiations are due to be finalised by the European Parliament and the Commission this summer, after which the measure will be transposed into Irish law. IFSRA has not been dealing with it up to now because it has been dealing with the insurance industry. The authorities took the view that they were aware of this coming down the track when the IFSRA legislation was going through, and rather than have a parallel set of domestic and European legislation, it decided to wait for this. It also took the view that all the players in the re-insurance industry, as in the wholesale industry, are big boys who should be able to look after themselves. Consumers are not directly involved in the reinsurance business. There is controversy about something in Australia. At this point these are just allegations. I will allow a brief discussion on the issue because it is topical at the moment. I suggest that we note it at the end because decisions are concluded on this issue.
The issue of reinsurance should be the subject of a complete briefing to the committee at a future meeting of this committee, particularly in the context of the operation of the IFSC. There are concerns, particularly on the part of the Attorney General of New York, Mr. Spitzer, about issues arising in respect of various companies involved in the reinsurance market. It appears that some of these companies have connections with the IFSC. I note the second paragraph of the report from Mr. Salter in the Department of Finance. It states that the Department of Finance fears the impact on the IFSC captive, namely, the subsidiaries established by companies down there to ensure against the risk of loss on property in general, product liability and alternative risk transfer. There is very sophisticated commentary in this regard.
We should be briefed on what exactly it means and the implications for Ireland. There are suggestions in the United States that there have been significant financial improprieties in regard to some companies and insurance vehicles operating in the reinsurance market. We should be briefed on the issue. As there is not time to discuss it, we need to be briefed on it.
We will get a briefing note on the general reinsurance business which is significant. I propose that we complete a report on the EU scrutiny document. We will finalise a report stating that the committee is satisfied with the proposal, the progress made to date in the negotiations on the proposal and the information provided by the officials, and we will make no recommendation in regard to the proposal.
May we get specific information on the document because there is concern about an issue in the second paragraph? My understanding of reinsurance was simply that it insured the insurers. However, Ireland is concerned about a different issue, which is sharing the risk and getting different risks insured in different places. I did not realise that was described as reinsurance. I would like to have that clarified.
I do not understand the Senator's question.
The second paragraph states that the Department of Finance fears the impact on issues arising such as where a company establishes a subsidiary to insure against the risk of loss to property and general product liability. That is plain and simple insurance as opposed to reinsurance. My understanding is that reinsurance is something insurance companies buy from larger underwriters.
It is like laying off a bet.
Yes, it is. The first line refers to reinsurance being a structured risk transfer. I have never seen an insurance company expose itself to risk. I would be pleased to have clarification of the matter.
We will seek a full briefing note from IFSRA. There are two other proposals in regard to documents 103 and 104 concerning investigations conducted by the European Anti-Fraud Office. We scrutinised these documents on 14 July. I propose we agree a report that we are satisfied with the proposal, the progress made to date in the negotiations and the committee discussions with the officials, and we make no recommendations in regard to the proposal. Is the report agreed? Agreed. I will suspend the meeting until the officials take their seats.
I thought we were to hear from National Irish Bank.
We will, but we will first dispose of three EU scrutiny proposals.
I do not think it is satisfactory to invite guests to discuss matters of public interest while we spend three quarters of our time dealing with European scrutiny documents which have been referred to the committee. We need to focus on matters of public interest. Perhaps there should be a different structure for dealing with deliberative matters which are not of significant public interest. To occupy the whole meeting assessing COM documents and hearing officials talk about them appears contrary to the interests of the public.
Some weeks ago we circulated a document indicating the work programme for the subsequent six meetings. We indicated that we would deal with two issues today, first, EU regulations and then NIB. Arrangements were put in place to deal with these issues. I understand what the Deputy is saying, but some of these EU scrutiny documents may not be controversial and the same officials may be able to deal with all three documents. We felt it would be easy to deal with all three documents together. I was not aware of a problem with the schedule which was circulated to committee members weeks ago.
I did not understand there would be an hour or two hours of briefing from officials of the Department of Finance.
It may not take long. I have no idea how long it will take because it is up to the members. The officials are normally brief. It is a matter for politicians as to how much time it will take. If something requires further consideration, we can postpone a decision on it.
I partly support Deputy Bruton. We have a very crowded programme and more time should be allotted to discuss much of this influential documentation. May we hold an extra meeting to deal with the backlog?
I am happy with that if members are happy. The committee meets each week. We met on the week of St. Patrick's Day, last week and this week when the Dáil is in recess.
We are confined today because of the room.
I have no problem if members want to agree another meeting. We have decided to bring IBOA into our work schedule. If we keep adding people to the list, we will extend our schedule.
In terms of today, we invited two groups of people——
We did. The schedule was circulated to members weeks ago indicating what was on the agenda for the next six or seven meetings. I propose to suspend the meeting while officials take their seats. They will be conscious that members want to deal with the NIB issue as quickly as possible.
The next item on the agenda is scrutiny of EU proposals, COM (2004) 227, COM (2004) 641 and COM (2004) 728 with Department of Finance officials. The committee took a decision on 24 June 2004 to scrutinise document COM (2004) 227 and agreed in February 2005 to scrutinise documents COM (2004) 681 and COM (2004) 728.
I welcome Mr. Ray Kavanagh, Ms Niamh Campbell and Mr. John Burke from the Department of Finance and thank them for their briefing notes which will be circulated to members of the committee. The committee will hear a brief presentation from each of the delegates. Would members prefer to deal with the three proposals together or individually?
We could take them together.
Following the presentations, members may address their questions to the relevant documents. We will first hear a presentation from Mr. John Burke on document COM (2004) 227 followed by a presentation from Ms Niamh Campbell on document COM (2004) 641 concerning implementation measures for a common system of VAT and finally, Mr. Ray Kavanagh will deal with document COM (2004) 728 concerning the simplification of VAT obligations.
Generally speaking, excisable products such as alcohol, tobacco and mineral oil move within the Union under an excise duty suspension regime. This means that no excise duty is payable on these products while they move from a tax warehouse in one member state to another with the appropriate documentation. Excise duty is paid only when the goods are released for consumption.
Council Directive 92/12/EC covers the rules governing the general arrangements of these activities. However, articles 7 to 10 of the directive set down the rules for the movement between member states of excisable products on which duty has been paid in the member state from which they were released for consumption. These articles are the subject of the Commission proposal. Essentially the rules state that products dispatched from one member state to another for commercial purposes are subject to excise duty in the member state in which the products are consumed, that is, the member state of destination. Products acquired by private individuals for their own use and transported by them are taxed in the member state in which they are acquired. Quantitative guide levels can assist in distinguishing between private and commercial movement of excise paid products.
Council Directive 92/12 provides for a review of articles 7 to 10. In this regard, the Commission issued a working paper in 2002 to provide an opportunity to catalogue problems and offer possible solutions for consideration. Based on the findings of that exercise, the Commission drew up a report and concluded that some of the provisions needed to be revised while others required clarification. This is the basis of the proposal to amend Directive 92/12.
The Commission proposal of 2 April 2004 retains the basic principle that excise duty in respect of goods moved for commercial purposes is payable in the member state of destination. However, the proposal provides for some harmonisation and simplification of procedures covering commercial movements between member states and to reform certain arrangements in this area — for example, a simplified procedure for payment in the member state of destination of the excise duty due on distance sales by vendors in one member state to private individuals in another.
In the case of goods acquired in another member state by private individuals, the proposal removes the existing stipulation that the private individual who acquires the products must also accompany them en route to the destination member state. The principle of taxation in the member state of acquisition would still apply provided that individual either transported them or arranged for their transportation — these might be termed distance purchases. The changes would not apply to tobacco products transported on behalf of a private individual. They would continue to be taxed in the member state of destination on public health grounds. The principle of taxation in the member state of acquisition for products for personal use would also apply to gifts of excisable products, including tobacco products sent from one individual to another, provided no payment was involved.
The proposal also states that quantitative guidelines, better known as the indicative limits, which apply as criteria for determining whether products are acquired for personal use or for commercial purposes, be abolished. It is argued by the Commission that any such guide levels should be a matter for the administrations of the various member states.
The following reservations were expressed when the proposal came forward for discussion at Council level. Any liberalisation of the regime for importation of duty paid products could have significant implications for domestic revenue receipts for Ireland. There would be increased opportunities for private individuals to engage in fraudulent commercial activity and, regarding public health, the proposal could lead to an increase in alcohol consumption.
On the receipts argument, excise on alcohol is an important source of tax revenue used to fund public services. This is not a view necessarily shared by other member states with different traditions and approaches to taxing alcohol. However, such countries may source more of their tax revenue from earned income than is the case in Ireland. With regard to the potential for fraudulent commercial activity, Ireland has always taken the view that a private individual must accompany excise-paid products when returning to his or her member state. Extending this provision to allow private individuals merely to arrange for such transportation could open the door to a significant increase in private importation of alcohol products by individuals whose primary motive may be to sell on such products at a profit. In addition, there are health considerations attached to any proposal likely to lead to an increase in alcohol consumption, but this is not an excise concern as such.
We expressed our reservations on the abolition of indicative limits which are used as guidelines for customs staff in determining whether private shoppers returning home bring home quantities for personal use only. The alcohol limits are ten litres of spirits, 90 litres of wine and 110 litres of beer.
The vast majority of member states shared Ireland's reservations on the Commission proposal. The main problem for member states was the removal of the obligation for private citizens to accompany alcohol and the abolition of the indicative limits. The Nordic countries raised the possibility of reducing the limits and making them mandatory to limit cross-border shopping for alcohol, while some member states wanted the limits on tobacco products, in particular cigarettes, to be halved. However, the Commission was opposed to member states' suggestions in this area, noting that indicative limits should only be used as mere guidelines.
The indicative limits issue is a major one for some countries. For example, the UK has been reprimanded for what the Commission has seen as tough action on shoppers returning from continental Europe, primarily on short ferry trips. The UK suspects that a number of shoppers are taking multiple trips and reselling quantities.
In light of the negative response from member states, the Commission has withdrawn the key elements associated with the proposal, namely, that alcohol need not be accompanied when imported by a private citizen and the abolition of the indicative limits. The proposal primarily centres on simplification and harmonisation of procedures relating to commercial operations. These would include the introduction of central offices in each member state that would allow registration and guarantee lodgement and payment facilities for traders engaged in these commercial activities. However, these in themselves have proved to be problematic in discussions. Some member states are not convinced of the need for change in this area. Doubts were expressed that the solutions being put forward would reduce the administrative burden on traders. However, there is scope for some progress in this area.
The proposal was last discussed in January, when the Council meeting concluded with the Luxembourg Presidency stating that it would return to the Council with a revised text which would attempt to take on board the views of member states. The issue of reducing the indicative limits put forward by some member states obviously does not sit comfortably with the Commission which regards such a move as a retrograde step. In light of this, it is possible the Commission may withdraw the proposal completely. I will be happy to answer members' questions.
I thank Mr. Burke for his full and comprehensive report. We will now deal with document COM (2004) 641 concerning the implementation measures for a common system of VAT.
The first VAT proposal is fairly technical, dealing with a regulation which prescribes how certain provisions of the sixth VAT directive are to be implemented across member states. The stated objective of the proposal is to achieve uniformity and consistency in application, thereby preventing problems of double taxation or non-taxation arising where there is divergent application across the EU. It will give greater legal certainty to traders and tax authorities. The legal basis for the proposal is Article 29a of the sixth VAT directive, a new article which was inserted into the sixth directive last year. This is the first proposal to be presented under this measure. As it is the first instance of the use of the provision, we consulted the Attorney General who has advised that the legal basis is in order. Article 29a allows the Council to adopt by unanimity implementing measures for implementation of the sixth directive.
Prior to this regulation, questions of interpretation of the sixth VAT directive, the basic legal framework for the EU VAT system, were dealt with by the VAT committee established under Article 29. The VAT committee is chaired by the Commission with member state representatives and deals with issues of interpretation. Over the years it has produced by unanimity non-binding guidelines on many questions of interpretation of the sixth directive, for example, the definitions of "taxable person", "taxable amount" and "supply of goods or services". These guidelines do not have legal certainty and cannot be used in evidence in national or European courts.
The current proposal consists of a number of articles implementing various provisions of the sixth directive for which guidelines have been agreed. A number of these non-binding guidelines will be put into a regulation and become legally binding. The proposal covers a wide range of questions of interpretation. We are happy to discuss any individual article with the committee. To give an example of the kinds of issues covered, Article 6 deals with the VAT treatment of translation services. The regulation confirms that these services are taxed in the member state where the recipient of the services is located. The current sixth directive does not specifically mention translation services, but this proposal confirms they are included in the services listed. Another example is the scope of the exemption from VAT in respect of vocational training or retraining. The regulation before us confirms that this includes instruction relating to a trade or profession and that the duration of the training course does not have an impact on the exemption from VAT.
Discussions on the proposal commenced in November and there have been four meetings to date. Most of the discussion has ranged around the questions raised by the different articles. Ireland had expressed concern on two articles which we felt went beyond questions of interpretation. These articles have been dropped from the latest version of the proposal which was circulated in the past few days.
In general we welcome this proposal as a mechanism for achieving a common interpretation of the technical aspects of the sixth directive which brings greater consistency and legal certainty and benefits both taxpayers and tax authorities. The last paragraph of my note reiterates that our concern in assessing and negotiating the proposal has been to ensure that the regulation does not go beyond matters of technical interpretation and application and does not make any changes to existing VAT rules.
Thank you for that detailed presentation. We now move on to document COM (2004) 728 which concerns the simplification of VAT obligations, detailed rules for the administration of VAT and the administrative co-operation arrangements in the context of a one-stop-shop scheme and the refund procedures for VAT. As this appears to be technical, I ask Mr. Kavanagh to try to keep his presentation simple and in layman's English.
I will do my best. Before I begin I draw the attention of the committee to the information note provided on this matter, dated 4 January, which was sent to the clerk of the committee. I refer to section 10 which deals with the legal basis for the three separate legislative proposals involved in the overall package. Section 10.2 gives Article 93 of the treaty as the legal basis for the proposal which concerns the refund of VAT. That should read Article 29a of the sixth VAT directive. In section 10.3 the legal basis given for the administrative co-operation arrangements, the third element of the package, gives Article 29a of the sixth VAT directive, but should read Article 93. I apologise for that interchange.
This package of proposals is a complex dossier which contains three separate legislative proposals designed to ease the administrative burden imposed by existing VAT procedures on cross-border traders. Simplification of these procedures represents a key element of the European Commission's VAT strategy, launched in June 2000 and updated in October 2003, which recognised the need to modernise the operation of the VAT system in the interests of the smoother running of the internal market and the promotion of cross-border trade.
Under the dossier, the European Commission sets out six specific measures which it considers necessary to achieve these objectives. The measures include the introduction of a one-stop shop, enabling non-established cross-border traders to use a single VAT number for all supplies made throughout the EU and to make VAT declarations on-line through a single electronic portal or gateway operated by their national tax authority; the introduction of a second one-stop shop scheme facility providing for the on-line submission of requests for VAT refunds from traders in other member states; the harmonisation of the scope of goods and services for which member states may apply restrictions on the right to deduct or reclaim VAT on business expenses; an extension of the use of the reverse charge mechanism for certain business-to-business transactions to reduce further compliance obligations for cross-border traders; the introduction of an optional maximum VAT registration of €100,000 for small traders; and the introduction of a single global VAT threshold of €150,000 governing the distance selling of goods to private consumers. Typically this would involve goods ordered by phone or via the Internet.
The three legislative proposals brought forward by the Commission to underpin these measures involve a Council directive modifying the sixth VAT directive, a Council directive replacing the existing eighth VAT directive governing VAT refund procedures and a Council regulation modifying Council Regulation EC1798/2003 setting out a basis for information exchanges between national tax authorities in support of the proposed one-stop-shop schemes. The Commission wishes to see these proposals agreed as a single package and proposes that they enter into force on 1 July 2006.
In general, Ireland welcomes this package of proposals from the Commission, particularly in the context of achieving a reduction in the administrative burden for businesses supplying goods and services to other member states. Streamlining VAT procedures for these businesses should enhance efficiency and encourage increased activity within the Internal Market.
In addition, the one-stop shop scheme at the heart of the package should ultimately enable new rules for cross-border business-to-consumer services to be introduced. This will have particular benefits for Irish companies delivering services electronically over the Internet to consumers in other member states.
While generally welcoming the overall package from the Commission, a number of aspects, including the harmonisation of VAT deductibility rules in respect of business expenses and the revision of the VAT registration threshold scheme, will be carefully monitored during the negotiations process in the context of any potential Exchequer impact. The cost of administering the new arrangements for the one-stop shop facilities will also need to be assessed given that the proposals from the Commission effectively represent a shift in the administrative burden from cross-border traders to national tax authorities. For example, the Revenue Commissioners will be required to operate the IT systems necessary to support the on-line services under the one-stop-shop schemes. Given that the finer details of these requirements will only emerge over time, it is difficult at this early stage to determine the level of costs involved.
Regarding developments to date, there were three meetings on the dossier during November and December 2004. Discussions were preliminary in nature and are not expected to resume until the latter half of 2005.
The remainder of my statement briefly discusses each of the six measures proposed, to which I referred in my introductory remarks. Details of these measures have been set out in the standard information note dated 4 January 2005 and supplied to the committee under the Oireachtas scrutiny process. If the committee wishes, I will discuss each of these measures at this stage or alternatively concentrate on specific aspects of the proposal.
If I may make a brief comment, I will refer to the last document first. This is certainly the most welcome of the initiatives. I would be interested to hear the Department's view on the move by Ireland to go to the maximum VAT registration limit for small traders. The committee had a discussion during the course of the Finance Bill in which the Minister pointed out that he was restricted to applying indexation to the existing limits of €25,000. In the event, he was unable to agree any concession this year on cost grounds. It seems this directive seeks to change the regime. If other countries are moving to those higher levels, I think Ireland should prepare a process to move to those higher levels of VAT threshold registration. It would reduce the burden for smaller businesses and the levels outlined in the directive are realistic. Most committee members were surprised at the high costs associated with moving to these levels indicated by the Minister but the process should be initiated. This is a welcome document and I urge Government support for it, in particular for that element which involves an issue of our provisions.
I support the Government's position of holding the line on the VAT directive that it should only be for technical issues. In terms of Ireland's overall tax negotiation position, it is important to maintain the veto obligation in respect of substantive change in tax law.
This is a mandate for the Revenue Commissioners to seem mean in respect of the interpretation of rules for those importing goods. There have been some bizarre cases where Revenue sought charges on gifts and where gifts were unwrapped, and there were queries whether the gift was worth more than €45. I support the view that tax arbitrage should not be supported on a grand scale by individuals seeking, for personal or general gain, to ride between the tax regimes to avoid paying tax. However, some balance is necessary. It seems that the Revenue Commissioners sometimes take an excessively harsh view when holding back packages for tax assessment which are plainly personal gifts for family members from people living abroad. I suggest more realistic standards. This directive would probably facilitate more liberal standards. If Ireland takes the hardline pro-Revenue view of the need to protect the tax base, there will need to be some realistic changes in the existing levels. People should be allowed post gifts of a reasonable value to family members without a rigmarole at the borders. I do not dispute that this hardline approach is necessary but I suggest more realistic thresholds for the application of the obligations.
On the issue raised by Deputy Bruton, Ireland's position on the proposal is that any liberalisation of the regimes for the importation of duty products would have significant implications for domestic revenue and receipts. Will the Department provide a broader statement on the implications of the proposal? I acknowledge there may be opportunities for fraudulent commercial activity but I ask the Department to elaborate on the first measure. I do not understand the second measure because it is a domestic matter, relating to an increase in alcohol consumption. I do not understand what it has to do with VAT and excise duty being paid at a particular point and I think it is irrelevant.
I thank the officials from the Department of Finance and the Revenue Commissioners for the outline which was very helpful to the committee. It is time to go back to first principles in this matter and I refer to the Treaty of Rome. Officials in Brussels and in the European Union should be forced to reread the Treaty of Rome. They have forgotten what was agreed, what it was trying to achieve and how it is mucked up very often.
I agree with Deputy Bruton. The second VAT measure is certainly a step in the right direction. I agree Ireland should retain its position on the big issue of VAT. However, I am horrified at the level of proposals in the first measure. I thank Mr. Burke for his outline statement to the committee. When one discusses Europe with the ordinary person, this is the issue which interests them. The first principles of the Treaty of Rome refer to the free movement of commodities within the European market area. The common market idea is lost time and again and this proposal, if accepted, would be another nail in its coffin. I am heartened by the possibility that the measure will not be adopted. I have no difficulty with the tax arbitrage because that creates competitiveness among people who provide goods and services and puts pressure on the Government to take a realistic view of the national taxation limits and parameters.
I was not aware previously — perhaps I should have been — of the "indicative limits" regulation but I have observed it in operation. I have observed a very sensible, law-abiding citizen, who with a friend hires a white transit truck once a year and on behalf of a number of neighbours drives it across to Cherbourg and buys four pallets of wine in the supermarket. He insists on declaring his purchase to customs on his return, causing great trouble to the officials who do not quite know how to deal with the situation. I once observed the customs officials admonishing him. Based on the indicative limits of 90 litres, 120 bottles, ten cases per person, he would have exceeded that because there were only two people travelling. However, he was genuine because this wine was not for commercial sale.
The customs officials were in an impossible position. They are the ones put in the breach to stop the Treaty of Rome finding its true level among European society. They are expected to be tolerant but it is an impossible situation. I am completely opposed to the simplified procedure for payment in the member states of destination of the excise duty due on distant sales by vendors. Ordinary people should be allowed to log on to the Internet and buy something in Paris and have it delivered or travel there and bring it back. If they pay the tax in the country of purchase, that should be the end of the matter and all we should require is a receipt when crossing the border. It is bad enough that people are required to show their passports when leaving this country to travel to mainland Europe — which is necessary for reasons that we all understand and now is not the time to discuss it — but it is unacceptable to have other limits applied when they return after legitimately buying goods in an ordinary supermarket or shop in Europe.
While the document outlines the matter clearly, it should be kept simple. The only further change I would like to see is the requirement for people to prove where they bought an item and that they had paid the normal cost, including VAT. In many European countries, a shop or hotel receipt will show the amount of tax paid. While it is irrelevant, it is an issue of information. Perhaps what we need is that it can be clearly seen on the receipt that the tax or VAT has been paid. We do not need any further restraints in this area and while I thoroughly agree with the line we are taking on the subsequent two amendments, I am not sure how strong our position is on the first. While Mr. Burke has outlined it clearly for us, I ask him to give me some comfort on the matter and tell me that we are not supporting the anti-European people in Brussels who are trying to restrict trade and the movement of products between member states in the Single Market area.
I take Deputy Bruton's point about the gifts. It is in our interest to have a pragmatic approach in this area and we will discuss it with Revenue. Newspaper reports have indicated that revenue receipts could suffer from the liberalisation of the regime. It is no secret that Ireland has high excise rates on alcohol. The rates on spirits are probably the highest, with the exception of Sweden. Opportunities for potential benefit exist if people want to source alcohol outside the State. We bring in approximately €1 billion on excise duties, which is not an insignificant amount. We believe some leakage would occur if a very liberal regime were in place. I calculated this morning that if we were to reduce our excise rates on alcohol to the EU average, excise receipts would fall by €700 million, which is an interesting figure and would represent two percentage points on the standard rate of income tax.
Consumption would probably increase.
Reducing the rate might increase transactions. Where stands the proposal now? I know Mr. Burke has said it might be withdrawn entirely. Are we supportive of its withdrawal?
We would be. However, I believe more discussions will take place over time. It is obvious that many member states have serious problems with this proposal. I would like to return to some of the other issues raised by Senator O'Toole.
What are we saying at the meetings in Europe? Are we for or against this proposal?
The contentious parts of the proposal have been withdrawn. Discussions will take place on commercial movements, which have proved problematic. The discussions will continue on that matter in so far as the proposal will still exist.
We have some sympathy with the unfortunate customs officers who are being asked to apply the impossible.
I ask that we be kept informed of any further developments on the matter. The briefing has been very helpful. Do any of our other guests wish to respond to any other points?
Deputy Bruton asked about the VAT registration threshold. What is proposed is an optional threshold of €100,000. At present, member states can only increase their thresholds in line with inflation. France, for example, has a threshold of €5,000 and could never get very far. The maximum possible threshold is €100,000. As Ireland, at €25,500 for services and €51,000 for goods, has the third highest threshold in the EU, it is unlikely that we would have any great difficulty with an optional threshold of €100,000, although we do not have a final position on that aspect of the proposal as yet. Within that framework, there is obviously a significant budgetary issue in increasing these thresholds as mentioned by the Minister during the debate on the Finance Bill.
As he is enthusiastic to reduce business burden, it should be on the agenda for next year.
I think that is what the Minister intends. In a sense this will not force an increase; it is simply an option.
We will conclude our discussion of these matters for today. On behalf of the committee, I thank the witnesses, Mr. Burke, Ms Campbell and Mr. Kavanagh, for assisting us in our scrutiny of the proposals. We will consider the views on the matters and report in due course. Is it agreed that the three reports, which we cleared earlier having discussed them at previous meetings, be adopted as reports of the committee and that the clerk should lay them before the Houses? Does the committee agree that copies be forwarded to the Sub-Committee on European Scrutiny and the Department of Finance and the Office of the Revenue Commissioners? Agreed.
