BETA


2018/0005(CNS) Rates of value added tax

Progress: Awaiting final decision

RoleCommitteeRapporteurShadows
Lead ECON SZANYI Tibor (icon: S&D S&D) LANGEN Werner (icon: PPE PPE), LOONES Sander (icon: ECR ECR), CORNILLET Thierry (icon: ALDE ALDE), VIEGAS Miguel (icon: GUE/NGL GUE/NGL), SCOTT CATO Molly (icon: Verts/ALE Verts/ALE)
Committee Opinion JURI
Lead committee dossier:
Legal Basis:
TFEU 113

Events

2018/11/21
   Commission response to text adopted in plenary
Documents
2018/10/03
   EP - Results of vote in Parliament
2018/10/03
   EP - Decision by Parliament, 1st reading/single reading
Details

The European Parliament adopted a legislative resolution by 536 votes to 87, with 41 abstentions, under a special legislative procedure (consultation) on the proposal for a Council directive amending Directive 2006/112/EC as regards rates of value added tax.

The proposal to amend the VAT Directive provides for greater flexibility for Member States to benefit from reduced or zero rates in force in other Member States. It allows Member States to apply a maximum of two reduced rates of a minimum of 5%. Member States may, in addition to the two reduced rates, apply a rate lower than the minimum of 5% and an exemption with deductibility of the VAT paid at the preceding stage.

Parliament approved the Commission proposal subject to the following amendments:

Towards convergence of VAT rates : Members stressed that under a definitive system where the supply of goods and services would be taxed in the Member State of destination, it should be possible to grant a certain degree of flexibility to Member States in setting rates. However, Member States should not ignore the objective of ensuring greater convergence of VAT rates.

Standard VAT rate : Parliament considered that the standard rate shall permanently remain at least 15 % and shall not exceed 25 %.

General interest : if reduced rates and exemptions benefit the final consumer and be applied to pursue, in a consistent manner, an objective of general interest, priority shall be given to goods or services having a positive impact on the general interest, such as cultural, social or environmental benefits . Members stressed that Member States should avoid using reduced VAT rates for harmful or luxury products .

Parliament also considered allowing Member States to apply reduced rates, including reduced rates without a minimum threshold, to printed publications and electronic publications to ensure the transfer of economic benefits to consumers, thereby promoting reading, and to publishers, thereby encouraging investment in new content and, in the case of newspapers and magazines, should reduce reliance on advertising.

In addition, it shall be possible to apply reduced VAT rates to publications in adapted formats and audio formats intended to facilitate access to books, newspapers and periodicals for people with a visual impairment.

Web information portal : with particular attention to the needs of SMEs engaged in cross-border business activities in the Union and in order to facilitate trade and enhance legal certainty in the single market, the Commission shall, in cooperation with the Member States, establish a comprehensive and publicly accessible Union VAT Web information portal for businesses. That multilingual portal shall provide quick, up-to-date and accurate access to relevant information about the implementation of the VAT system in the different Member States and in particular about the correct VAT rates for different goods and services in the different Member States.

Negative list of products (Annex IIIa) : Members proposed adding pacemakers and hearing aids to the list of supplies of goods and services in the Annex. The Commission shall be empowered to amend the scope of Annex IIIa by means of an implementing act, when necessary and provided there is evidence related to distortion of competition justifying the update of the list of supplies of goods and services.

By 31 December 2021 and every two years thereafter, the Commission shall submit to the European Parliament and the Council a report on the scope of Annex IIIa, accompanied by any proposals to amend that Annex, where necessary.

Documents
2018/10/02
   EP - Debate in Parliament
2018/09/06
   EP - Committee report tabled for plenary, 1st reading/single reading
Details

The Committee on Economic and Monetary Affairs adopted, following the consultation procedure, the report by Tibor SZANYI (S&D, HU) on the proposal for a Council directive amending Directive 2006/112/EC as regards rates of value added tax.

The proposal to amend the VAT Directive provides for greater flexibility for Member States to benefit from reduced or zero rates in force in other Member States. It allows Member States to apply a maximum of two reduced rates of a minimum of 5%.

Member States may, in addition to the two reduced rates, apply a rate lower than the minimum of 5% and an exemption with deductibility of the VAT paid at the preceding stage.

The committee responsible recommended that the European Parliament approve the Commission proposal subject to the following amendments :

Standard VAT rate : Members considered that the standard rate shall permanently remain at least 15 % and shall not exceed 25 %.

General interest : Members stressed reduced rates and exemptions applied shall benefit the final consumer and shall be applied to pursue, in a consistent manner, an objective of general interest. Priority shall be given to goods or services having a positive impact on the general interest, such as cultural, social or environmental benefits . They stressed that Member States should avoid using reduced VAT rates for harmful or luxury products .

Members also considered allowing Member States to apply reduced rates, including reduced rates without a minimum threshold, to printed publications and electronic publications to ensure the transfer of economic benefits to consumers, thereby promoting reading, and to publishers, thereby encouraging investment in new content and, in the case of newspapers and magazines, should reduce reliance on advertising.

In addition, it shall be possible to apply reduced VAT rates to publications in adapted formats and audio formats intended to facilitate access to books, newspapers and periodicals for people with a visual impairment.

Web portal : it is proposed that the Commission, in cooperation with the Member States, shall establish a comprehensive, multilingual and publicly accessible Union VAT Web Information Portal on which businesses and consumers can quickly and effectively obtain accurate information on VAT rates.

Negative list of products (Annex IIIa) : Members proposed adding pacemakers and hearing aids to the list of supplies of goods and services in the Annex. The Commission shall be empowered to amend the scope of Annex IIIa by means of an implementing act, when necessary and provided there is evidence related to distortion of competition justifying the update of the list of supplies of goods and services.

By 31 December 2021 and every two years thereafter, the Commission shall submit to the European Parliament and the Council a report on the scope of Annex IIIa, accompanied by any proposals to amend that Annex, where necessary.

Documents
2018/09/03
   EP - Vote in committee, 1st reading/single reading
2018/06/07
   EP - Amendments tabled in committee
Documents
2018/05/02
   EP - Committee draft report
Documents
2018/04/30
   CZ_SENATE - Contribution
Documents
2018/03/28
   RO_SENATE - Contribution
Documents
2018/03/14
   PT_PARLIAMENT - Contribution
Documents
2018/03/06
   DE_BUNDESRAT - Contribution
Documents
2018/03/05
   ES_PARLIAMENT - Contribution
Documents
2018/02/08
   EP - Committee referral announced in Parliament, 1st reading/single reading
2018/01/23
   EP - SZANYI Tibor (S&D) appointed as rapporteur in ECON
2018/01/18
   EC - Document attached to the procedure
2018/01/18
   EC - Document attached to the procedure
2018/01/18
   EC - Legislative proposal published
Details

PURPOSE: to grant Member States greater flexibility in setting value-added tax (VAT) rates.

PROPOSED ACT: Council Directive.

ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow the opinion of the European Parliament.

BACKGROUND: the rules on VAT rates as currently contained in the VAT Directive ( Council Directive 2006/112/EC ) were designed more than two decades ago and based on the original principle.

In its 2016 VAT Action Plan , the Commission proposed to replace the current transitional arrangements for the taxation of trade between Member States by definitive arrangements based on the principle of taxation in the Member State of destination in order to create a robust single European VAT area.

At the same time the Commission announced that taxation at destination would allow to grant Member States more flexibility in setting VAT rates and that all currently existing reduced rates, including derogations, legally applied in Member States should be maintained and could be made available to all Member States, ensuring equal treatment.

The current initiative is part of the Fair Taxation package for the creation of a single EU value added tax area (VAT). The package includes two proposals to modify the VAT Directive, one as regards the definitive VAT system for cross-border trade and one adopted together with this initiative as regards small enterprises , and a proposal for a Council Regulation on combating fraud in the field of VAT.

IMPACT ASSESSMENT: the preferred option would address the issue of derogations by removing the constraints that created the need for such derogations, namely the list of goods and services to which reduced VAT rates can be applied (Annex III) and the 5% minimum for additional reduced rates.

CONTENT: the proposed amendment to the VAT Directive provides for greater flexibility for the Member States to benefit from reduced and zero rates as they existed in other Member States.

The proposal allows Member States, in addition to the two reduced rates of a minimum of five percent and an exemption with deductibility of the VAT paid at the preceding stage currently allowed, to apply another reduced rate between 5% and 0% .

Member States will have to respect that those reduced rates and the exemption must be for the benefit of the final consumer and must be in the general interest.

The list of goods and services eligible for reduced VAT rates (Annex III) would be deleted and replaced by a new negative list of products (Annex IIIa) at which the standard rate of 15% or a higher rate would still be applied.

Moreover, Member States shall ensure that the weighted average VAT rate applied to those transactions for which VAT cannot be deducted always exceeds 12%.

By 31 December 2026 and every five years thereafter, the Commission shall submit to the Council a report on the scope of Annex IIIa, accompanied by any proposals to amend that Annex, where necessary.

Documents

Activities

Votes

A8-0279/2018 - Tibor Szanyi - Am 8/1 03/10/2018 12:59:42.000

2018/10/03 Outcome: +: 586, -: 73, 0: 6
DE ES PL FR RO IT GB SE PT NL BG CZ BE EL HU FI DK SK AT HR LT IE SI MT LU EE LV CY ??
Total
87
50
46
68
30
66
57
19
18
25
16
18
18
18
14
13
12
11
18
9
10
8
8
6
5
4
3
6
2
icon: PPE PPE
195

United Kingdom PPE

2

Belgium PPE

3

Lithuania PPE

2

Luxembourg PPE

3

Estonia PPE

For (1)

1

Latvia PPE

2

Cyprus PPE

1
icon: S&D S&D
170

Netherlands S&D

For (2)

2

Hungary S&D

2
3

Croatia S&D

2

Slovenia S&D

For (1)

1

Malta S&D

3

Estonia S&D

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1

Cyprus S&D

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2
icon: ALDE ALDE
64

Germany ALDE

2

Romania ALDE

3

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1

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3

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1

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40

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2

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A8-0279/2018 - Tibor Szanyi - Am 8/2 03/10/2018 12:59:56.000

2018/10/03 Outcome: +: 543, -: 115, 0: 3
DE PL ES RO FR IT GB SE BG BE HU CZ NL FI PT SK DK AT HR LT SI MT LU EL EE LV IE CY ??
Total
85
45
50
29
66
67
57
19
16
18
14
18
25
13
19
11
12
18
9
10
8
6
5
19
4
3
7
6
2
icon: PPE PPE
193

United Kingdom PPE

2

Belgium PPE

3

Lithuania PPE

2

Luxembourg PPE

3

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1

Latvia PPE

2
3

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1
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171

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2

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2
3

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2

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3

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17

Germany NI

2

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4

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1

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2
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36

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1

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A8-0279/2018 - Tibor Szanyi - Am 17 03/10/2018 13:00:11.000

2018/10/03 Outcome: +: 529, -: 114, 0: 3
DE PL ES RO IT GB FR SE BG BE FI CZ HU NL PT DK SK HR AT LT SI MT LU EE LV IE CY EL ??
Total
84
45
50
28
65
57
62
18
15
17
13
18
12
25
19
12
10
9
17
10
8
6
5
4
2
8
6
19
2
icon: PPE PPE
186

United Kingdom PPE

2

Belgium PPE

2

Lithuania PPE

2

Luxembourg PPE

3

Estonia PPE

For (1)

1

Latvia PPE

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1

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1
icon: S&D S&D
167

Hungary S&D

For (1)

1

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2

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2

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2

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3

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1

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2
icon: ALDE ALDE
63

Germany ALDE

2

Romania ALDE

3

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1

Portugal ALDE

1

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2

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1

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2

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1
icon: NI NI
17

Germany NI

2

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4

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1

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2
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35

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icon: ENF ENF
30

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1

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1

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4
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2

A8-0279/2018 - Tibor Szanyi - Am 23 03/10/2018 13:00:26.000

2018/10/03 Outcome: -: 551, +: 87, 0: 26
HU ?? CY LU LV DK IE EE MT HR LT SI SK NL AT FI BG CZ SE BE EL PT GB RO PL IT ES FR DE
Total
14
2
6
5
3
12
8
4
6
9
10
8
11
24
18
13
16
18
19
18
19
19
56
28
46
68
49
68
87
icon: EFDD EFDD
36

Lithuania EFDD

For (1)

1

Czechia EFDD

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1

Poland EFDD

1

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1
icon: ENF ENF
32

Belgium ENF

For (1)

1

Poland ENF

For (1)

1

Germany ENF

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1
icon: NI NI
18

Hungary NI

For (1)

1

NI

For (1)

Abstain (1)

2

Denmark NI

Against (1)

1

United Kingdom NI

Against (2)

4

Germany NI

For (1)

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2
icon: GUE/NGL GUE/NGL
40

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2

Denmark GUE/NGL

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1

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3

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3

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1

Czechia GUE/NGL

Against (1)

1

Sweden GUE/NGL

Abstain (1)

1

Portugal GUE/NGL

Against (1)

4

United Kingdom GUE/NGL

1

Italy GUE/NGL

2

Germany GUE/NGL

Abstain (1)

5
icon: ECR ECR
60

Cyprus ECR

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1

Croatia ECR

Against (1)

1

Lithuania ECR

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1

Slovakia ECR

2

Netherlands ECR

2

Finland ECR

Against (1)

2

Bulgaria ECR

2

Czechia ECR

2

Sweden ECR

2

Belgium ECR

2

Greece ECR

Against (1)

1

Romania ECR

2

Italy ECR

2
icon: Verts/ALE Verts/ALE
50

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2

Luxembourg Verts/ALE

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1

Denmark Verts/ALE

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1

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1

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1

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1

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1

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1

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4

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2

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5

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1
icon: ALDE ALDE
64

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1

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1

Denmark ALDE

3

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1

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1

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2

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1

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1

Portugal ALDE

1

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Against (1)

1

Romania ALDE

3

Germany ALDE

2
icon: PPE PPE
193

Cyprus PPE

1

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3

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2

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1

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3

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icon: S&D S&D
171

Hungary S&D

2

Cyprus S&D

2
3

Estonia S&D

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1

Malta S&D

3

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2

Lithuania S&D

2

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1

Slovakia S&D

3

Netherlands S&D

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2

Finland S&D

2
3

Czechia S&D

4

A8-0279/2018 - Tibor Szanyi - Am 24S 03/10/2018 13:00:48.000

2018/10/03 Outcome: -: 311, +: 179, 0: 175
EL IE IT GB SE PT ?? CY EE BE LU AT LV MT LT SI NL DK HR ES HU FI SK CZ FR BG RO DE PL
Total
18
8
68
57
19
19
2
6
4
18
5
18
3
6
10
7
25
12
9
50
14
13
11
18
66
16
30
87
46
icon: Verts/ALE Verts/ALE
51

Italy Verts/ALE

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1

Estonia Verts/ALE

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1

Belgium Verts/ALE

2

Luxembourg Verts/ALE

For (1)

1

Austria Verts/ALE

3

Lithuania Verts/ALE

For (1)

1

Slovenia Verts/ALE

For (1)

1

Netherlands Verts/ALE

2

Denmark Verts/ALE

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1

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For (1)

1

Hungary Verts/ALE

2

Finland Verts/ALE

For (1)

1
icon: GUE/NGL GUE/NGL
40

Ireland GUE/NGL

3

Italy GUE/NGL

2

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1

Sweden GUE/NGL

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1

Cyprus GUE/NGL

2

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3

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1

Finland GUE/NGL

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1

Czechia GUE/NGL

1
icon: EFDD EFDD
36

Lithuania EFDD

For (1)

1

Czechia EFDD

For (1)

1

Germany EFDD

Abstain (1)

1

Poland EFDD

1
icon: S&D S&D
171

Cyprus S&D

2

Estonia S&D

Abstain (1)

1

Belgium S&D

Abstain (1)

4

Malta S&D

3

Lithuania S&D

2

Slovenia S&D

Abstain (1)

1

Netherlands S&D

Abstain (2)

2
3

Croatia S&D

2

Hungary S&D

2

Finland S&D

2

Slovakia S&D

3

Czechia S&D

For (1)

4

Bulgaria S&D

Against (1)

3
icon: ENF ENF
32

Belgium ENF

For (1)

1

Germany ENF

Against (1)

1

Poland ENF

For (1)

1
icon: NI NI
17

United Kingdom NI

Against (2)

4

NI

For (1)

Abstain (1)

2

Denmark NI

Against (1)

1

Germany NI

Against (1)

2
icon: ALDE ALDE
63

Ireland ALDE

For (1)

1

United Kingdom ALDE

Against (1)

1

Portugal ALDE

1

Estonia ALDE

Against (1)

1

Luxembourg ALDE

Against (1)

1

Austria ALDE

Against (1)

1

Latvia ALDE

1

Denmark ALDE

3

Croatia ALDE

2

Romania ALDE

For (1)

3

Germany ALDE

2
icon: ECR ECR
60

Greece ECR

For (1)

1

Italy ECR

2

Sweden ECR

2

Cyprus ECR

Against (1)

1

Belgium ECR

2

Lithuania ECR

Against (1)

1

Netherlands ECR

2

Croatia ECR

Against (1)

1

Finland ECR

2

Slovakia ECR

2

Czechia ECR

2

Bulgaria ECR

2

Romania ECR

2
icon: PPE PPE
195

United Kingdom PPE

2

Cyprus PPE

Against (1)

1

Estonia PPE

Against (1)

1

Belgium PPE

For (1)

3

Luxembourg PPE

3

Latvia PPE

2

Lithuania PPE

2

Croatia PPE

3

A8-0279/2018 - Tibor Szanyi - Proposition de la Commission 03/10/2018 13:01:03.000

2018/10/03 Outcome: +: 536, -: 87, 0: 41
DE ES PL FR RO IT GB SE BG BE PT AT NL CZ FI SK HR LT SI IE EL LU EE HU LV DK CY MT ??
Total
86
49
46
68
30
67
57
19
16
18
18
18
25
18
13
11
9
10
8
8
19
5
4
14
3
11
6
6
2
icon: PPE PPE
194

United Kingdom PPE

2

Belgium PPE

3

Lithuania PPE

2

Luxembourg PPE

3

Estonia PPE

For (1)

1

Latvia PPE

2

Cyprus PPE

Against (1)

1
icon: S&D S&D
172

Netherlands S&D

For (2)

2
3

Croatia S&D

2

Slovenia S&D

For (1)

1

Estonia S&D

For (1)

1

Hungary S&D

2

Cyprus S&D

2

Malta S&D

3
icon: ALDE ALDE
63

Germany ALDE

2

Romania ALDE

3

United Kingdom ALDE

1

Portugal ALDE

1

Austria ALDE

For (1)

1

Croatia ALDE