EUROPE proposed switching which country should collect “value added taxes” on electricity and on natural gas carried in pipelines.

VAT is collected currently by the country in which the electricity or gas is produced.  The European Commission proposed in December to switch the tax to the country where the electricity or gas is consumed.  Transmission and transportation services would also be taxed by the same country.  Taxation Commissioner Frits Bolkestein explained, “It is difficult to determine where the place of supply of gas and electricity is located and this leads to differences in interpretation of the rules by member states and difficulties for traders supplying gas and electricity across borders.”

The proposal must still be approved by the Council of Economic and Finance Ministers.

Keith Martin