TAXATION : EXEMPTION FOR PASSENGERS: NEW SCHEME AS FROM 1 JANUARY.

The Environment Council formally adopted, on 20 December, several tax provisions ratified in recent weeks by the Ecofin Council.

Exemptions for passengersThe Council has finally adopted the revision of Directive 69/169/EEC on exemptions granted to travellers (see Europolitics 3196). To recall, this reform (which is set to come into force on 1 January) is linked to the enlargement of the Union. Its objective is to simplify the regulation and the clearance of exemptions regarding VAT and the excise duties usually levied on the import of goods by travellers coming into the European space. Two hypothetical cases are planned in line with the means of transport used by travellers. If the travellers go by sea or by plane (internal waterways are excluded), the exemption increases from 175 to 430, below which citizens will not have to pay tax. If they enter the EU by land (including waterways), an exemption of 300 will be applied instead of 175. The directive also contains provisions authorising member states to apply different limits for the import of tobacco according to their place of entry (higher limits when these products arrive by air).

Provisional VAT deductibility in the UKThe Council authorised London to continue applying a VAT deductibility scheme (up to 50%) for the hiring of motor vehicles whose use is not only reserved for companies. The authorisation is only temporary. The exemption will expire on 31...