(December 18, 2008) Mail and messaging technology specialist Pitney Bowes is at the vanguard of the wider industry’s calls to ensure fairness and clarity in new EU-wide postal VAT principles that are likely to emerge from the European Court of Justice (ECJ) in 2009.

Speaking at the 11th Königswinter Seminar – the annual Postal Economics forum – Dr Tim Walsh, VP, Corporate and Regulatory Affairs, Pitney Bowes, outlined the industry’s concerns over the likely changes to EU postal VAT-exemption that the ECJ are reviewing.

Among these concerns is that the basis for future VAT exemption be consistent with the EU tax principle of fiscal neutrality, not least in respect of alternative payment options available to mailers.

Tim Walsh stated: “Mailers pay for postal services based on the convenience and efficiency of the different payment channels (stamps, meters and PPI). Any EU-wide basis for on-going exemption of some postal services must be channel neutral. It would not be good for mailers or for posts if there was a discriminatory imposition of VAT on the same or functionally substitutable postal products.

“Any decision by the ECJ on postal VAT in 2009 is likely to raise significant pricing and implementation issues for posts and mailers alike. Now is precisely the wrong time for VAT-exempt mailers such as charities and financial services companies to have further uncertainty over possible VAT-induced price increases for direct and transactional mail.

“Clearly, there are benefits from an harmonisation of EU postal VAT, not least in the stimulus it will give posts to outsource services that can be more efficiently provided by third-parties. Equally, the competitive distortion arising from current VAT rules particularly affecting end-to-end new entrants also needs to be addressed.  But the solution to the VAT issue must not be worse than the problem itself.

“Clearly, this a critical time for the industry to come together to work through the VAT issues that are likely to impact all players within the postal industry over the course of 2009.”