Brussels Brief - January 20, 2006
January 20, 2006
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KEY DEVELOPMENTS
Intellectual Property: Public Consultation on Patent Policy
Alana Tervo
The European Commission has begun a public consultation with industry and other stakeholders on patent policy within the EU. The consultation aims to create an EU-wide system of protection which best takes into account stakeholders’ needs. The consultation focuses on three major issues: the Community patent; ideas for how the current patent system in Europe can be improved; and potential areas for harmonisation. The consultation also seeks views on action that can be taken within the framework of the existing European patent system whilst work on the Community patent continues. The idea for a Community patent was introduced in 1960, but agreement on how it will work has never been reached. This consultation follows the failed efforts to agree on a Community Patent Regulation in 2004. It thus marks another attempt to make the single market for patents a reality.
Financial services: Unicredito/HVB Merger Problems in Poland
Michal Cieplinski
Unicredito, the Italian banking group, is encountering problems in Poland over its acquisition of HVB of Germany. The competition aspects of the transaction have already been assessed by the European Commission, who cleared the deal last October. Both HVB and Unicredito have extensive Central and Eastern European operations. It is expected that the combined entity will replace the State-controlled PKO Bank Polski as the largest bank in Poland. The Polish Government, in light of the expected significant job cuts, has announced that it will block the deal, apparently under national banking supervision regulations. The European Commission, fearing over-protectionism of the Polish Government, has demanded explanation of why it is opposing the merger.
Transport: Parliament Rejects Liberalisation of Port Services
Philip Torbøl
The European Parliament has rejected a Commission proposal on market access to port services. An earlier proposal had already been rejected in November 2003. Together with this latest vote, the Parliament expressed concern that the draft Commission text still did not meet the need for a clear legal and legislative framework for Community ports. Key issues such as transparent State aid and other support to ports as well as fair competition between ports should be reconsidered. Transport Commissioner Barrot stated that he would consult his fellow Commissioners before deciding whether or not to formally withdraw the proposal.
Taxation: Commission Refers Spain and Greece to ECJ
Andrea Hamilton
The European Commission has referred Spain and Greece to the European Court of Justice (ECJ), challenging certain Spanish and Greek tax provisions. Spain applied a flat-rate tax to non-residents’ employment income and capital gains, which in most instances exceeded the tax imposed on residents. The Commission found these rules failed to conform to EU law, particularly the non-discrimination principle and rules on freedom of movement. The two Greek tax provisions at issue primarily affect motorists. First, Greece assessed VAT on the entire fee for a roadside assistance contract, a portion of which is attributable to insurance services. The Commission found this rule inconsistent with the Sixth VAT Directive, which specifically exempts VAT on insurance services. The Commission also found that Greek taxation rules on car registration discriminate against imported used cars from other Member States and are thus inconsistent with EU law. Both Spain and Greece failed to amend these tax provisions as the Commission previously requested, prompting their referral to the ECJ.
Internal Market: Commission Issues Report on Motor Insurance
Yannis Virvilis
The European Commission has addressed a report to the European Parliament and the Council, dealing with compensation bodies and third-party liability cover for trailers in the framework of motor insurance. This follows a consultation procedure on these issues carried out with stakeholders. Compensation bodies are entities set up by Member States, which are responsible for providing compensation to injured parties from loss resulting from accidents occurring in a Member State other than their State of residence. The report concludes that the compensation body mechanism needs no revision. However, it states that the efficiency of cooperation between compensation bodies as well as public awareness on this issue should be increased. Concerning liability cover for trailers, the report concludes that there are cases where victims have difficulties in obtaining compensation for an accident with a trailer. The Commission thus proposes that different solutions could be envisaged to remedy this situation in the future, when the motor insurance directives will be revised.
Taxation: Companies Unwittingly Party to Carousel Fraud are Entitled to Reimbursement of Input VAT Paid
Javier Berasategi
The European Court of Justice has ruled that the right of a taxable person to deduct VAT cannot be affected by the fact that, without that person knowing or having any means of knowing that another transaction in the chain is vitiated by fraud. In this type of fraud, a trader registered for VAT in a Member State sells goods to a trader registered for VAT in another Member State. The second trader disappears without accounting to the tax authorities for the VAT due, or uses a “hijacked” VAT number. The goods are sold at a loss to a company in the same Member State, which in turn sells the goods on to another company established in that State, paying the output VAT invoiced to the tax authorities, after deduction of the input VAT paid. Following this, possibly after further transactions, the goods are exported to another Member State exempt from VAT. The exporting company nonetheless is entitled to claim reimbursement of the input VAT paid on the purchase of those goods. Where the purchaser is the first company, this constitutes carousel fraud.
Taxation: Portugal Challenged on Discriminatory Taxation of Foreign Banks
Frank Schoneveld
The European Commission has sent Portugal a formal demand requesting changes to its tax legislation on outbound interest payments. A withholding tax of 20 per cent is levied on the gross interest paid by Portuguese resident borrowers to non-resident lenders. Interest paid to resident lenders (principally Portuguese banks) on the other hand, is not subject to withholding tax, although it is subject to Portuguese corporate income tax. The result is that interest payments to foreign banks are often taxed more heavily than interest payments to Portuguese banks. This can be a big disadvantage for foreign banks, particularly those offering mortgages and other loans in Portugal. The Commission considers that the higher taxation of foreign banks restricts the freedom to provide services and the free movement of capital in the EU. If Portugal does not reply satisfactorily to this reasoned opinion within two months, the Commission may refer the matter to the European Court of Justice.
Transport: Commission’s Action Programme to Foster Inland Waterway Transport
Elena Kostadinova
The European Commission has presented an action programme to promote inland waterway transport as part of its objective to improve Europe’s transport system. The action programme, called NAIADES (Navigation And Inland Waterway Action and Development in Europe), will run from 2006 to 2013. NAIADES covers all activities related to inland waterway transport, including infrastructure, services and labour. Apart from a number of legislative and policy instruments the Commission encourages the participation of economic operators in the sector in different European research, technology and development (RTD) and support programmes, such as Marco Polo II, Competitiveness and Innovation Programme (CIP), Trans-European Transport Networks (TEN-T) and River Information Services (RIS). Member States are also invited to provide funding under the programme.
NEXT WEEK’S EVENTS
Monday 23 January – Friday 27 January 2006
COUNCIL MEETINGS
Agriculture and Fisheries Council (23 January 2006)
Economic and Financial Affairs Council (24 January 2006)
COURT OF JUSTICE
Judgments
Freedom to provide services
C-514/03 Commission v Spain
Procedure
C-279/03 OP Implants
Social security for migrant workers
C-2/05 Herbosch Kiere
Taxation
C-533/03 Commission v Council
Opinions
Community own resources
C-377/03 Commission v Belgium
C-378/03 Commission v Belgium
Competition
Joined Cases C-295/04, C-296/04, C-297/04, C-298/04 Manfredi
Customs union
C-306/04 Compaq Computer International Corporation
Law governing the institutions
C-119/04 Commission v Italy
New accessions
C-161/04 Austria v Parliament and Council
COURT OF FIRST INSTANCE
Judgments
Agriculture
T-276/03 Le Canne v Commission
Commercial policy
T-364/03 Medici Grimm v Council
State aid
T-92/02 Stadtwerke Schwäbisch Hall and Others v Commission
