Until the enactment of Law 4334/2015, private coaching schools of all levels of education teaching foreign languages and computer skills were exempt from VAT. This is in line with Directive 2006/112/EC of the Council of the European Union (Article 132). After the enactment of this bill, the exemption ceases and the VAT rate is set at 23% of the taxable value. This measure will obviously result in fee increases, thus putting access to education beyond the reach of many due to social inequalities.
In view of the above, will the Commission say:
1. If account was taken of Directive 2006/112/EC during the negotiations, but the measure in question was nevertheless imposed, does this not constitute a flagrant violation of EC law and the constitutionally guaranteed right of every citizen to education?
2. How can it justify the fact that the directive continues to apply and educational services remain exempt from VAT in the other EU countries (notably Cyprus, France, and Italy)?
3. According to a circular of the Ministry of Finance, all private lessons at all levels of education, regardless of the subject, are exempt from VAT. Are any steps being taken to combat the parallel economy and undeclared work which are likely to increase with the implementation of the above measure, which will thus achieve the opposite of the desired effect for government revenue?
Joint answer given by Mr Moscovici on behalf of the Commission
Written questions: E-013278/15 , E-013281/15
Both parliamentary questions concern the VAT treatment of private education in Greece.
Pursuant to Article 132 (1)(i) of the VAT Directive, Member States shall exempt education carried out by public bodies or other organisations recognised by the Member State concerned as having similar objectives. Member States have a certain discretion to determine which private bodies might be covered by this provision. Furthermore, for bodies other than those governed by public law (e.g. private schools) this tax exemption can be made dependent on one or more of the conditions mentioned in Article 133 of the VAT Directive, which is what Greece has autonomously intended to do (but eventually not done) to restrict the scope of the tax exemption. Private education which does not meet these conditions for exemption may thus be taxed. However, under Article 168 of the VAT Directive, these private bodies will at the same time be entitled to deduct input VAT for the goods and services purchased and used for the purposes of the taxed transactions.
According to the information available to the Commission, other Member States have also introduced conditions based on Article 133, so that education provided by bodies other than those governed by public law would be taxed where these conditions are not fulfilled. Member States do not have reporting obligations to the Commission in this regard.
The Commission can only take proceedings against Member States if the national VAT legislation is not in line with the VAT Directive. In any event it is up to a Member State to take all appropriate steps in order to prevent possible negative impacts, for instance, any increase of the ‘parallel economy’ following the introduction of any new rules on VAT.