Tag Archives: Vat

Decision on the system of own resources

Decision on the system of own resources

Outline of the Community (European Union) legislation about Decision on the system of own resources

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Budget

Decision on the system of own resources

Document or Iniciative

Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own resources.

Summary

The budget of the EU is financed wholly from own resources in order to ensure the orderly development of the Union’s policies. There are three categories of own resources: “traditional own resources”, the own resource based on value added tax (VAT) and the own resource based on gross national income (GNI). Other revenue sources include taxes paid by officials, fines imposed on firms by the Community and interest on late payments.

Own resources ceiling

The own resources ceiling is maintained at 1.24% of the sum of all the EU Member States’ GNIs. The ceiling on annual appropriations for payments is set at 1.31% of that figure. Own resources finance all the expenditure entered in the EU’s general budget. Any surpluses are carried over to the following financial year.

Traditional own resources

Traditional own resources consist of Common Customs Tariff duties and of levies under the common organisation of the market for sugar (“sugar” levies). Member States may retain, by way of collection costs, 25% of the amounts raised.

VAT resource

The own resource based on VAT are levied on Member States’ VAT bases, which have been harmonised for this purpose.

The maximum rate of call of the VAT resource is 0.30%. The maximum VAT base to be taken into account in calculating the rate of call is set at 50% of each Member State’s GNI (“capping of the VAT resource”). For the period 2007-2013 the rate of call of the VAT resource is set at 0.225% for Austria, 0.15% for Germany and 0.10% for the Netherlands and Sweden.

The resource based on GNI

In the light of the revenue generated by the other own resources, the GNI resource is based on the application of a uniform rate to the sum of the GNIs of all the Member States.

For the period 2007-2013, two Member States will benefit from a gross reduction in their annual GNI contribution: an annual reduction of EUR 605 million for the Netherlands and of EUR 150 million for Sweden.

Correction in favour of the United Kingdom

The correction in respect of budgetary imbalances in the United Kingdom is calculated on the basis of the difference between the share of the UK VAT base in the EU’s total VAT base and the share of the United Kingdom in total allocated expenditure.

Germany, Austria, the Netherlands and Sweden are entitled to a reduction in their share of the financing of the correction in favour of the United Kingdom, which is reduced to one quarter of its normal value.

Collection of own resources

The method for collecting own resources will continue to be determined by national provisions. The Commission will carry out a regular examination of those provisions. The Member States will regularly inform the Commission of any anomalies having a financial impact with respect to collection.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Decision 2007/436/EC, Euratom OJ L 163 of 23.6.2007

Related Acts

Council Regulation (EC, Euratom) No 1287/2003 of 15 July 2003 on the harmonisation of gross national income at market prices (GNI Regulation) [Official Journal L 181 of 19.07.2003].

A growing share of the European Communities’ own resources is based on gross national income at market prices. The Regulation further reinforces the comparability, reliability and exhaustiveness of this aggregate.

Commission Decision 97/245/EC, Euratom of 20 March 1997 laying down the arrangements for the transmission of information to the Commission by the Member States under the Communities’ own resources system [Official Journal L 97 of 12.4.1997].
See consolidated version

Council Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax [Official Journal L 155 of 7.6.1989].
The Regulation lays down a single method for determining the VAT bases in a uniform manner.
See consolidated version

Follow-up reports:

Commission report on the follow-up of traditional own resources in cases of fraud and irregularities [COM(2004)850 final – Not yet published in the Official Journal].
Under Regulation (EC) No 1150/2000, Member States are required to inform the Commission of cases of fraud or irregularity with a potential financial impact of over 10 000. The report reviews the situation as regards the system for recovering unpaid customs duties. Such duties form part of the own resources allocated directly to the Community budget. The Member States are responsible for the procedures for recovering customs debt under the control of the Commission. The Commission notes that amounts not recovered are relatively small compared with the total amount involved (160 million).

Commission report to the Council and the European Parliament: Fifth report under Article 12 of Regulation (EEC, Euratom) No 1553/89 on VAT collection and control procedures [COM(2004)855 final – Not published in the Official Journal].
Every three years the Commission draws up a report analysing the procedures applied by Member States for registering taxable persons and for determining and collecting VAT. It also analyses the modalities and results of their VAT control systems and suggests improvements.

Refund of VAT: taxable persons established in another EU country

Refund of VAT: taxable persons established in another EU country

Outline of the Community (European Union) legislation about Refund of VAT: taxable persons established in another EU country

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Refund of VAT: taxable persons established in another EU country

Document or Iniciative

Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State [See amending act(s)].

Summary

This directive lays down the detailed rules for the refund of value added tax (VAT), provided for in Directive 2006/112/EC, to taxable persons not established in the European Union (EU) country of refund * but established in another EU country.

This directive applies to any taxable person not established in the EU country of refund who, during the refund period:

  • has not had in the EU country of refund, the seat of his economic activity, a fixed establishment from which business transactions were effected or, in the absence of such a seat or fixed establishment, his domicile or normal place of residence;
  • has not supplied any goods or services in the EU country of refund, with the exception of the supply of certain transport services and the supply of goods and services to a person who is liable to pay VAT.

Directive 2006/112/EC establishes the transactions which EU countries may exempt from VAT. EU countries must therefore refund to any taxable person not established in the country of refund any VAT charged in respect of goods or services supplied to him by other taxable persons in that EU country or in respect of the importation of goods into that country, when used for the purposes of the transactions listed in Directive 2006/112/EC.

To be eligible for a refund in the EU country of refund, a taxable person not established in this country must carry out transactions giving rise to a right of deduction in the EU country of establishment. When a taxable person not established in the EU country of refund carries out in his EU country of establishment both transactions producing a right of deduction and transactions not producing a right of deduction in that country, the EU country of refund will only pay the proportion of refundable VAT.

Refund application

This directive establishes a fully electronic procedure, whereby the taxable person not established in the EU country of refund addresses an electronic refund application to the EU country of refund and submits it to his EU country of establishment via the electronic portal of that country. The refund application relates to the purchase of goods or services which was invoiced during the refund period, and the importation of goods during the refund period.

The refund application must be submitted to the EU country of establishment by the 30 September of the calendar year following the refund period. The amount of VAT refund applied for must not be less than EUR 400. If the country is late in making the refund payment, the applicant will be entitled to interest on the amount of the refund.

This directive repeals Directive 79/1072/EEC, however its provisions continue to apply to refund applications submitted before 1 January 2010.

Key terms used in the act
  • EU country of refund: the EU country in which the VAT was charged to the taxable person in respect of goods or services supplied to him by other taxable persons in that EU country or in respect of the importation of goods into that EU country.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2008/9/EC

20.2.2008

1.1.2010

OJ L 44, 20.2.2008

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2010/66/EU

21.10.2010

OJ L 275, 20.10.2010

Successive amendments and corrections to Directive 2008/9/EC have been incorporated into the basic text. This consolidated version is for reference only.

Related Acts

Commission Regulation (EC) No 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC [Official Journal 314 of 1.12.2009].

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

Action plan to combat VAT fraud in the European Union

Action plan to combat VAT fraud in the European Union

Outline of the Community (European Union) legislation about Action plan to combat VAT fraud in the European Union

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Action plan to combat VAT fraud in the European Union

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee on a coordinated strategy to improve the fight against VAT fraud in the European Union [COM(2008) 807 final – Not published in the Official Journal].

Summary

The European Commission presents a short-term plan, the aim of which is to achieve a coordinated strategy to combat tax fraud within the internal market. Three types of measure are proposed.

Scope

This Communication deals with the fight against VAT fraud and the recovery of this tax.

Preventing VAT fraud

The Commission proposes a set of measures to enhance tax systems and tax cooperation, with a view to the prevention of VAT fraud.

Firstly, the Commission proposes to introduce minimum Community standards for the registration and deregistration of traders in the VIES system in order to improve the reliability of information contained in the system.

Traders must also be able to have electronic confirmation of the name and address of business partners who are subject to VAT.

The harmonisation and simplification of invoicing rules is also planned in order to reduce the administrative burdens on business and to facilitate controls. These measures include for example common storage periods and harmonised rules concerning invoice dates.

In addition, the notion of the date of chargeability of VAT for intra-Community deliveries of goods and the provision of services should be harmonised to ensure that reporting takes place in both of the Member States concerned at the same time.

Detecting VAT fraud

In order to improve the detection of VAT fraud, the Commission intends to adopt measures to increase the effectiveness of Tax Administrations and in particular to promote better reporting between Member States in intra-Community transactions.

Rules are also proposed concerning VAT exemption on imports to better control these transactions.

The Commission is also seeking to enhance cooperation between Member States in the field of administrative cooperation. It is crucial that certain information be exchanged automatically. Many actions funded by the Fiscalis programme have already been implemented to this effect.

The establishing of a legal framework is proposed, allowing the competent authorities of one Member State to have automated access to specific data contained in the database of another Member State relating to the identification and activities of a trader.

Finally, the creation of a European network Eurofisc for early warning on the risks of VAT fraud and the analysis of these risks is proposed.

Collection and recovery of taxes

The Commission intends to propose measures to enhance the possibilities for Tax Administrations to recover VAT losses in cross border cases.

The principle of joint and several liability for tax losses should be applied to traders who do not provide the required information concerning intra-Community operations when this omission is the cause of tax losses.

The Commission also provides for the harmonisation of instruments laying down enforcement or precautionary measures with the aim of reducing administrative burdens and increasing the effectiveness of recovery.

It is also necessary to guarantee the appropriate protection of all VAT revenue in all Member States by all Member States.

Legislative proposals

The measures described above are in the form of four packages concerning:

  • the reduction of timeframes to speed up the exchange of information between Member States;
  • collection and recovery of taxes in cross border situations;
  • enhancing administrative cooperation between Member States;
  • certain aspects of the fight against fraud and invoicing.

Reflection on a longer term scale

The Commission suggests creating an ad hoc group involving tax authorities and representatives of large as well as small and medium-sized enterprises. The objective of this ad hoc group would be to examine how the use of IT tools could improve, to the mutual benefit of all parties, the relationship between taxpayers and tax authorities in terms of VAT obligations, audit, and communication in general.

Context

This short term action plan is the fruit of a long debate launched in 2006 by the Communication which dealt with the necessity of developing a coordinated strategy with a view to stepping up the fight against tax fraud. Different European institutions have looked into the question, as have Member States and representatives of the business world.

The action plan revises the VAT anti-fraud strategy.

Administrative cooperation in the field of value added tax

Administrative cooperation in the field of value added tax

Outline of the Community (European Union) legislation about Administrative cooperation in the field of value added tax

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Administrative cooperation in the field of value added tax (until 31.12.2011)

Document or Iniciative

Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 [See amending act(s)].

Summary

This regulation determines the conditions of cooperation between national authorities responsible for applying value added tax (VAT) legislation on:

  • supplies of goods and services;
  • intra-Community acquisition of goods;
  • importation of goods.

It also provides a structure for cooperation between these national authorities and the Commission.

More precisely, the regulation lays down rules and procedures to enable the competent authorities of European Union (EU) countries to cooperate and to exchange any information that may help them assess VAT correctly.

Definition of parties concerned and procedures

Each EU country designates a single central office to act as a point of contact for administrative cooperation. The competent authorities of EU countries may designate liaison departments and/or competent officials for direct exchanges of information. The central liaison offices are responsible for maintaining up-to-date lists of these departments or officials and making them available to the other EU countries concerned.

Liaison departments and competent officials are required to inform their central liaison office when they send or receive a request for assistance or a reply to a request for assistance. They must also notify their central liaison office and competent authority of any request for assistance received that requires action outside their territorial or operational area.

The obligation for EU countries to assist each other does not cover the provision of information or documents obtained by the authorities when acting with the authorisation or at the request of a judicial authority, unless provided for in their national law.

Exchange of information on request

This concerns requests for information and for administrative enquiries sent by the competent authority of one EU country (the requesting authority) to the competent authority of another EU country (the requested authority) to obtain information that may help with the correct assessment of VAT. The requested authority has the obligation to provide the information requested. To that end, it may make administrative enquiries and act for the requesting authority as if it were acting on its own behalf.

The requesting authority may make a reasoned request for an administrative enquiry. In such cases, the requested authority must justify any failure to carry out the enquiry.

The requesting authorities must use a standard form for all requests for information and administrative enquiries.

As regards the time limit for providing information, the requested authority must provide the information without delay and no later than three months following the date of receipt of the request. However, if the requested authority is already in possession of the information, the time limit is reduced to a maximum of one month. In certain cases, the requesting and requested authorities may agree on different time limits.

If the requested authority is unable to respond to the request by the deadline, it must immediately inform the requesting authority in writing of the reasons for its failure to do so and indicate a timeframe within which it will be able to respond.

The requesting and requested authorities may agree to allow officials of the first to be present in the administrative offices of the latter. The officials of the requesting authority may also participate in the administrative enquiries with a view to exchanging information, but never to exercise the powers of inspection conferred on the officials of the requested authority. They must at all times be in possession of a written authority, which states their identity and official capacity.

EU countries may also agree to conduct simultaneous controls in their respective territories on the tax situation of taxable persons, if this is more effective than controls carried out by only one EU country.

Exchange of information without prior request

The competent authority of an EU country must forward information by automatic or structured automatic exchange to the competent authority of the EU country concerned when:

  • tax is meant to be charged in the EU country of destination and the effectiveness of the control system depends on information from the EU country of origin;
  • an EU country believes that a breach of VAT legislation has or might have been committed in the other EU country;
  • there is a risk of tax loss in the other EU country.

The exact categories of information to exchange, the frequency of exchanges and the practical procedures for exchanging information are determined by the Commission, assisted by a standing committee on administrative cooperation. In addition, each EU country must determine whether it will take part in the exchange of a particular category of information and whether it will do so in an automatic or structured automatic way.

The competent authorities of EU countries may forward to each other any information of which they are aware by spontaneous exchange.

Storage and exchange of information relating to intra-Community transactions

Each EU country must maintain an electronic database in which it stores and processes information relating to VAT. It is the responsibility of each EU country to ensure that its database is complete, accurate and kept up to date.

The competent authority of an EU country can obtain directly from any other EU country, or have direct access to, data stored on:

  • VAT identification numbers issued by the EU country receiving the information;
  • the total value of all intra-Community supplies of goods and services to persons holding a VAT identification number by all operators identified for the purposes of VAT in the EU country providing the information.

If necessary for the control of intra-Community acquisition of goods and supply of services to prevent a breach of VAT legislation, the competent authority of an EU country must receive directly, or have direct electronic access to, the following information:

  • the VAT identification numbers of the persons who effected the intra-Community supplies of goods and services;
  • the total value of such supplies to persons holding a VAT identification number.

EU countries must provide access to the information without delay and no later than one month from the end of the period to which the information relates.

Conditions governing the exchange of information

The requested authority may refuse a request for assistance. In such cases, it must always inform the requesting authority of its reasons. Requests for assistance may be refused if the provision of information:

  • imposes a disproportionate administrative burden;
  • is contrary to the laws or administrative practices of the requested EU country;
  • leads to the disclosure of commercial, industrial or professional secrets;
  • is against public policy.

Information communicated on the basis of this regulation is covered by the obligation of official secrecy and is protected under the national law of the EU country that received it. Therefore, this information may only be used for clearly specified purposes, such as:

  • establishing the assessment base;
  • collection or administrative control of tax (for the purpose of establishing the assessment base);
  • assessment of other levies, duties and taxes covered by Article 2 of Council Directive 76/308/EEC; and
  • in connection with judicial proceedings that may involve penalties, initiated as a result of infringements of tax law (the documents may be invoked as evidence).

Context

This regulation belongs to a series of tax harmonisation measures taken to complete the internal market.

In the interests of facilitating contacts between local and/or national tax authorities to combat fraud more effectively, this regulation brings together into a single legal instrument and reinforces the provisions of the Directive on mutual assistance by competent authorities in the field of direct and indirect taxation and the Regulation on administrative cooperation in the field of indirect taxation.

On 7 October 2010, the Council adopted Regulation (EU) No 904/2010 which repeals the current Regulation on 1 January 2012. However, chapter V (with the exception of Article 27, paragraph 4) remains applicable until 31 December 2012. Certain provisions from the new Regulation entered into force on 1 November 2010, others will apply from 1 January 2012 and 1 January 2015.

REFERENCES

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1798/2003

1.1.2004

OJ L 264 of 15.10.2003

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 885/2004

1.5.2004

OJ L 168 of 1.5.2004

Regulation (EC) No 1791/2006

1.1.2007

OJ L 363 of 20.12.2006

Regulation (EC) No 143/2008

20.2.2008

OJ L 44 of 20.2.2008

Regulation (EC) No 37/2009

1.1.2010

OJ L 14 of 20.1.2009

Regulation (EU) No 904/2010

1.11.2010

OJ L 268 of 12.10.2010

RELATED ACTS

Commission Regulation (EC) No 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC [Official Journal L 314 of 1.12.2009].

Report from the Commission to the Council and the European Parliament of 18 August 2009 on the application of Council Regulation (EC) No 1798/2003 concerning administrative cooperation in the field of value added tax [COM(2009) 428 final – Not published in the Official Journal].

Commission Regulation (EC) No 1925/2004 of 29 October 2004 laying down detailed rules for implementing certain provisions of Council Regulation (EC) No 1798/2003 concerning administrative cooperation in the field of value-added tax [Official Journal L 331 of 5.11.2004].
This regulation establishes the categories of information to be exchanged without prior request, the frequency with which such exchanges must take place and other rules for implementing certain provisions of Regulation (EC) No 1798/2003.

Anti-tax fraud measures

Anti-tax fraud measures

Outline of the Community (European Union) legislation about Anti-tax fraud measures

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Anti-tax fraud measures

Document or Iniciative

Commission Communication, dated 31 May 2006, to the Council, the European Parliament and the European Economic and Social Committee concerning the need to develop a coordinated strategy to improve the fight against fiscal fraud [COM(2006) 254 – Not published in the Official Journal].

Summary

This communication seeks to trigger a debate based on lines of reflection regarding the factors to be taken into account in the context of developing a coordinated strategy at European level to improve the fight against fiscal fraud.

Administrative cooperation between Member States

With a view to improving administrative cooperation between Member States, the Commission proposes to:

  • strengthen not merely the legislation but also the practical measures employed regarding cooperation in the field of direct and indirect taxation and assistance in the recovery of taxes;
  • improve risk management so as to enable Member States to focus their inspection efforts on the sectors and companies considered to represent a major fraud risk;
  • create a permanent Forum for administrative cooperation at Community level for all direct and indirect taxes.

Cooperation with third countries

Given that tax fraud does not stop at the external borders of the European Union (EU), the Commission is proposing the adoption of a Community approach to cooperation with third countries.

Modifications to existing VAT and excise systems

With a view to reducing the cases of fraud, the Commission is launching a debate on possible modifications that could be made to the existing common VAT and excise systems.

Among the potential avenues to be explored in the VAT sector are the possibility not only of strengthening the principle of joint and several liability for the payment of VAT but also of extending the use of the reverse charge mechanism. In all the cases cited, the Communication lays down the conditions to be met by the new VAT system.

In the excise sector, thought is being given to the current tobacco taxation structure.

Other avenues to be explored

The Commission is also proposing that the discussions should include a range of more specific measures such as:

  • increasing tax declaration obligations for companies considered to represent a risk;
  • reducing these obligations for companies which obtain an authorisation by entering into a partnership with the tax authorities;
  • using standardised, high-performance IT tools for the rapid exchange of information.

BACKGROUND

In 2004, tax revenues (total tax take plus compulsory social security contributions) represented 39.3% of GDP (gross domestic product) in the EU. Tax fraud accounts for approximately 2 to 2.5% of GDP, i.e. between 200 billion and 250 billion. Tax fraud constitutes an obstacle to the smooth operation of the internal market inasmuch as it leads to significant distortion of competition among taxpayers.

Related Acts

Commission Communication, dated 25 October 2005, to the Council and the European Parliament – The Contribution of Taxation and Customs Policies to the Lisbon Strategy [COM(2005) 532 final – Not published in the Official Journal].

This Communication launches a plan for EU-wide taxation and customs measures that would help the EU to achieve its Lisbon objectives. The Commission is in favour of a more concerted and coordinated approach at Community level so as to enable the Member States to combat tax fraud more efficiently.

Commission Communication, dated 27 September 2004, to the Council and the European Parliament on preventing and combating corporate and financial malpractice [COM (2004) 611 final – Not published in the Official Journal].

This Communication seeks to provide a global method for reducing the risk of corporate and financial malpractice, combining in equal measure the fiscal, judicial and law enforcement dimensions.

Proposal for a Regulation of the European Parliament and of the Council of 20 July 2004 on mutual administrative assistance for the protection of the financial interests of the Community against fraud and any other illegal activities [COM(2004) 509 final – Not published in the Official Journal] [COD/2004/0172 procedure].

Amended by:

Amended Proposal for a Regulation of the European Parliament and the Council on mutual administrative assistance for the protection of the financial interests of the European Community against fraud and any other illegal activities [COM(2006) 473 final – Not published in the Official Journal] [COD/2004/0172].

Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 [Official Journal L 264, 15.10.2003].

This Regulation establishes a common system of administrative cooperation and exchange of information between the competent authorities of the Member States to ensure proper application of VAT and to combat fraud.

Decision No 1152/2003/EC of the European Parliament and of the Council of 16 June 2003 on computerising the movement and surveillance of excisable products [Official Journal L 162, 1.7.2003, p. 5].

Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments [Official Journal L 157, 26.6.2003].

The ultimate aim of this Directive is to enable savings interest received in one Member State by natural persons who are resident for tax purposes in another Member State to be made subject to effective taxation in accordance with the laws of the latter Member State.

Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums [Official Journal L 336, 27.12.1977].

With a view to combating international tax evasion and avoidance, this Directive strengthens collaboration between the Member States’ tax administrations, while at the same time facilitating the exchange of information that appears relevant for the correct assessment of taxes on income and on capital.

 

VAT: special arrangements applicable to services supplied electronically

VAT: special arrangements applicable to services supplied electronically

Outline of the Community (European Union) legislation about VAT: special arrangements applicable to services supplied electronically

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Information society > Interaction of the information society with certain policies

VAT: special arrangements applicable to services supplied electronically

The objective of this Directive is to create a level playing field for European Union (EU) businesses with regard to the indirect taxation of electronic commerce. The Directive also aims to make compliance for non-EU businesses as easy and straightforward as possible. The changes modernise the existing VAT place-of-supply rules for services by including the electronic commerce sector.

Document or Iniciative

Council Directive 2002/38/EC of 7 May 2002 amending and amending temporarily Directive 77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services [See amending acts].

Summary

Until now, the uniform basis of assessment provided for by the common system of value-added tax (VAT) has not adequately addressed the supply of services delivered electronically because the supply of services in this way was simply not envisaged when the existing tax system was set up. As a result, the application of the prior VAT rules to these transactions produced perverse and discriminatory results. Previously, electronically delivered services originating within the EU were generally subject to VAT irrespective of the place of consumption, while those from outside the EU were not subject to VAT even when delivered within the EU.

The objective of this Directive is to introduce new harmonised rules and thus eliminate distortions in competition for radio and television broadcasting services and electronically supplied services within the EU. The absence of a clear and fair tax regime was a disincentive to investment and put EU business at a competitive disadvantage.

The principal changes in the uniform basis of assessment provided for by the common system of VAT concern the place of taxation for services supplied in electronic form over electronic networks.

Electronically supplied services include services such as cultural, artistic, sporting, scientific, educational, entertainment, information and similar services as well as software, video games and computer services generally. The result is that:

  • for specified electronically delivered services, when supplied by a non-EU operator to an EU customer, the place of taxation is within the EU and accordingly they are subject to VAT;
  • when these services are provided by an EU operator to a non-EU customer, the place of taxation is where the customer is located and they are not subject to EU VAT;
  • when an EU operator provides these services to a business in another Member State, the place of supply is the place where the business customer is established;
  • where the EU operator provides these services to a private individual in the EU or to a taxable person in the same Member State, the place of supply continues to be where the supplier is located;

Non-EU operators are required to register for VAT purposes only when their business involves sales to final consumers. If they supply to EU businesses (and this covers the vast bulk of such transactions), they face no obligations at all as the business customers account for the VAT themselves on a self-assessment basis under the “reverse charge mechanism”.

The simplest and most attractive option for non-EU businesses is to make use of the Directive’s simplified scheme for such businesses. This allows them to identify themselves for EU tax purposes in a single European Member State, taking advantage of streamlined compliance and on-line reporting procedures.

Non-EU businesses are able to register with a tax authority in a Member State of their choosing. They are required to charge VAT to non-business customers in the EU according to the standard tax rate in the Member State where the customer lives.

Every three months, they pay the tax they have collected to the administration where they have registered, together with a return in electronic form detailing total sales for each EU Member State. On the basis of this information, the Member State of registration re-allocates tax revenue to the country of the consumer.

This simplified scheme for non-EU businesses is to be applied for three years, with the option of moving towards a more technically advanced scheme.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Directive 2002/38/EC 15.5.2002 1.7.2003 OJ L 128, 15.5.2002
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 2006/58/EC 28.6.2006 1.7.2006 28.6.2006

Related Acts

Council Directive 2006/138/EC of 19 December 2006 amending Directive 2006/112/EC on the common system of value added tax as regards the period of application of the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services [Official Journal L 384 of 29.12.2006].

Report from the Commission to the Council on Council Directive 2002/38/EC of 7 May 2002 amending and amending temporarily Directive 77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services [COM(2006) 210 final – not published in the Official Journal].

This report looks at the services covered by the Directive and the practical questions relating to the administration of the tax as well as its longer term operational framework.

Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 [Official Journal L 264, 15.10.2003].

This Regulation sets out to enhance cooperation between Member States’ tax administrations to help combat VAT fraud by removing remaining obstacles to the exchange of information. It has three main objectives:

  • to establish clear and binding rules on the exchange of information (in particular by electronic means),
  • to provide for direct contacts between national departments for combating fraud, and
  • to increase the exchange of information.

VAT: mutual assistance for the recovery of claims

VAT: mutual assistance for the recovery of claims

Outline of the Community (European Union) legislation about VAT: mutual assistance for the recovery of claims

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

VAT: mutual assistance for the recovery of claims

This Directive lays down rules to be incorporated into the laws, regulations and administrative provisions of the Member States in order to ensure that claims arising out of the financing of the European Agricultural Guidance and Guarantee Fund or relating to agricultural levies, customs duties or value-added tax can be recovered in any Member State.

Document or Iniciative

Council Directive 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties, and in respect of value-added tax [See amending acts]

Summary

This Directive concerns mutual assistance for the recovery of claims.

The authority in a Member State seeking assistance with a claim covered by the Directive is known as the “applicant authority”; in order to recover the claim, it addresses a request for assistance to a competent authority in another Member State, known as the “requested authority”.

At the request of the applicant authority, the requested authority is to provide any information which would be useful in the recovery of the claim.

At the request of the applicant authority, the requested authority is to notify to the addressee all instruments and decisions which emanate from the Member State of the applicant authority and relate to a claim and/or to its recovery.

At the request of the applicant authority, the requested authority is to recover claims which are the subject of an instrument permitting their enforcement.

The request for recovery sent by the applicant authority must be accompanied by an instrument permitting enforcement of the claim, which must not be contested in the applicant authority’s own Member State. In addition, the measures taken in the applicant authority’s Member State must not have resulted in the payment in full of the claim.

Claims are recovered in the currency of the Member State of the requested authority, which may, after consulting the applicant authority, allow the debtor time to pay; any interest charged here is remitted to the applicant authority’s Member State.

An interested party wishing to contest the claim and/or the instrument permitting its enforcement issued in the Member State of the applicant authority may bring an action before the competent body of that Member State. Where it is the enforcement measures taken in the requested authority’s Member State that are being contested, the action is to be brought before the competent body of that Member State. As soon as the requested authority is informed that an action has been brought, it must suspend the enforcement procedure.

Questions concerning periods of limitation are governed by the laws of the Member State of the applicant authority.

Member States renounce all claims upon each other for the reimbursement of costs resulting from mutual assistance under the Directive. The applicant authority’s Member State is liable for costs incurred as a result of actions held to be unfounded, as far as either the substance of the claim or the validity of the instrument issued by the applicant authority is concerned.

A Committee on Recovery is set up and may examine any matter concerning the application of the Directive.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 76/308/EEC 19.03.1976 01.01.1978 OJ L 73 of 19.03.1976
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 2001/44/EC 18.07.2001 30.06.2002 OJ L 175 of 28.06.2001
Directive 79/1071/EEC 07.12.1979 01.01.1981 OJ L 331 of 27.12.1979

Related Acts

Commission Directive 77/794/EEC of 4 November 1977 laying down detailed rules for implementing certain provisions of Council Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties, and in respect of value-added tax [Official Journal L 333 of 24.12.1977]

Council Directive 2001/44/EC of 15 June 2001 amending Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties and in respect of value added tax and certain excise duties [Official Journal L 175 of 28.06.2001]

This Directive aims to extend the scope of mutual assistance as laid down by Directive 76/308/EEC on claims relating to certain revenue and wealth taxes, in order to better protect the financial interests of Member States and the neutrality of the internal market. It also aims to enable more efficient recovery of claims covered by a recovery request and finally, to encourage Member States to make use of mutual assistance for recovery.

Commission Directive 2002/94/EC of 9 December 2002 laying down detailed rules for implementing certain provisions of Council Directive 76/308/EEC on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures [Official Journal L 337 of 13.12.2002]

Report from the Commission to the Council and the European Parliament of 8 February 2006 on the use of the provisions on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures [COM(2006) 43 final – Not published in the Official Journal]

 

Refund of VAT: taxable persons not established in the country

Refund of VAT: taxable persons not established in the country

Outline of the Community (European Union) legislation about Refund of VAT: taxable persons not established in the country

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

Refund of VAT: taxable persons not established in the country

The Directive lays down Community arrangements for refunding value-added tax to taxable persons not established in the country concerned.

Document or Iniciative

Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value-added tax to taxable persons not established in the territory of the country [See amending acts].

Summary

The Directive concerns taxable persons established not in the territory of the country but in another Member State. ‘Taxable person’ is defined in Council Directive 77/388/EEC.

Taxable persons fall within the scope of the Directive if, during a period of not less than three months and not more than one calendar year or during a period of less than three months where that period represents the remainder of a calendar year, they:

  • have had in that country:

– neither the seat of their economic activity nor a fixed establishment from which business transactions are effected;

– nor, if no such seat or fixed establishment exists, their domicile or normal place of residence;

  • have supplied no goods or services in that country, with the exception of:

– transport services and services ancillary to transport services;
– services in cases where tax is payable by the person to whom they are provided.

Member States are to refund to the taxable persons concerned:

  • the VAT charged on services or movable property supplied to them by other taxable persons in the territory of the country;
  • the VAT charged on goods imported into the country in so far as they are necessary for their business activities or on services they have provided.

This Directive establishes the conditions governing refund applications.

The right to a refund is determined in accordance with Directive 77/388/EEC.

Supplies of exempt goods or goods which may be exempted under the above-mentioned Directive do not qualify for a refund.

The supply of goods dispatched or transported by or on behalf of a purchaser not established within the territory of the country, with the exception of goods transported by the purchaser for the equipping, fuelling and provisioning of any means of transport for private use, is exempt.

The treatment of taxable persons not established in the territory of the Community is governed by the 13th Council VAT Directive 86/560/EEC.

Those concerned must apply to the relevant national authorities and submit reimbursement claims to them.
The document contains the addresses of the authorities concerned and the minimum amounts that may be reimbursed.

BACKGROUND

Within the framework of their commercial activities, persons liable to VAT in a Member State other than the one in which they are established can qualify for reimbursement of VAT in the Member State in which the tax was paid.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 79/1072/EEC 7.12.1979 1.1.1981 OJ L 331 of 27.12.1979
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 2006/98/EC 1.1.2007 1.1.2007 OJ L 363 of 20.12.2006

Sixth VAT Directive: uniform basis of assessment

Sixth VAT Directive: uniform basis of assessment

Outline of the Community (European Union) legislation about Sixth VAT Directive: uniform basis of assessment

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

Sixth VAT Directive: uniform basis of assessment

The EU authorities are abolishing tax controls at internal frontiers for all transactions carried out between Member States, approximating the value-added tax (VAT) rates applicable to those transactions and making provision for a transitional phase of limited duration that will ease the transition to the definitive arrangements for the taxation of trade between Member States.

Document or Iniciative

Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value-added tax: uniform basis of assessment. [See amending acts]

Summary

The following text summarises a consolidation of existing Directives in this field.

Scope

VAT is applicable to the supply of goods or services affected for a consideration within the territory of the country by a taxable person acting as such and to the importation of goods.

Territoriality

The following territories of individual Member States are excluded from the scope of the Directive:

  • the island of Helgoland and the territory of Büsingen (Germany);
  • Greenland (Denmark);
  • Livigno, Campione d’Italia, the Italian waters of Lake Lugano (Italy).

Taxable persons

The taxable person is the person who independently carries out in any place one of the following economic activities, whatever the purpose or results: the activities of producers, traders and persons supplying services, including mining and agricultural activities and activities of the professions. Member States may also treat as a taxable person anyone who carries out one of these activities on an occasional basis, and in particular one of the following: the supply before first occupation of buildings or parts of buildings and the land on which they stand; the supply of building land.

The word “independently” excludes employed and other persons from the tax in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee.

States, regional and local government authorities and other bodies governed by public law are not considered taxable persons in respect of the activities or transactions in which they engage as public authorities, except where their not being taxable would lead to distortions of competition of a certain magnitude.

Place of taxable transactions

The place of supply of goods is deemed to be:

  • the place where the goods are at the time when dispatch or transport to the person to whom they are supplied begins (in the case of goods that are dispatched or transported);
  • the place where the goods are when the supply takes place (in the case of goods not dispatched or transported).

The place where a service is supplied is deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides. However,

  • the place of the supply of services connected with immovable property, including the services of estate agents and experts such as architects, is the place where the property is situated;
  • the place where transport services are supplied is the place where transport takes place, having regard to the distances covered;
  • the place of supply of services relating to ancillary transport activities, cultural, sport, scientific or educational activities, as well as valuations of or work on movable tangible property, is the place where the services are physically carried out;
  • the place of supply of services in the case of hiring out of movable tangible property, with the exception of all forms of transport, is the place of utilisation;
  • the place of supply of the following services is the place where the customer has established his business or has a fixed establishment or, in the absence of such a place, the place where he has his permanent address or usually resides: transfers and assignments of copyrights, advertising services, the services of consultants, engineers, lawyers or accountants; banking, financial and insurance transactions.

In order to avoid double taxation, non-taxation or the distortion of competition the Member States may consider:

  • the place of supply of services situated within the territory of the country as being situated outside the Community in cases in which the effective use and enjoyment of the services take place outside the Community;
  • the place of supply of services situated outside the Community as being within the territory of the country in cases in which the effective use and enjoyment of the services take place within the territory of the country.

Chargeable event and chargeability of tax

The chargeable event is the occurrence by virtue of which the legal conditions necessary for the tax to become chargeable are fulfilled.

The chargeability of tax is the tax authority’s entitlement under the law at a given moment to claim the tax from the person liable to pay, even if the time of payment may be deferred.

The chargeable event occurs and the tax becomes chargeable when the goods are delivered or the services are performed, with the sole exception of certain specified cases.

For imported goods, the chargeable event occurs and the tax becomes chargeable at the time when goods enter the territory of the country.

Taxable amount

Within the territory of a country, the taxable amount is, according to the type of supply of goods or services:

  • everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies, or
  • the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined as the time of supply, or
  • the full cost to the taxable person of providing the services, or
  • the open market value of the services (‘open market value’ of services means the amount which a customer, at the marketing stage at which the supply takes place, would have to pay to a supplier at arm’s length within the territory of the country at the time of the supply under conditions of fair competition to obtain the services in question).

For the importation of goods, the taxable amount is:

  • the price paid or to be paid by the importer, where this price is the sole consideration, or
  • the open market value of the goods where the price paid or to be paid is not the sole consideration for the imported goods (‘open market value’ of imported goods means the amount which an importer at the marketing stage at which the importation takes place would have to pay to a supplier at arm’s length in the country from which the goods are exported at the time when the tax becomes chargeable under conditions of fair competition to obtain the goods in question).

Rate

These transactions are subject to tax at the rates and under the conditions prevailing in the Member State of destination of the goods or services supplied within the limits of the approximation of rates provided for in the above-mentioned Directives:

  • the standard rate of VAT must be at least 15% in each Member State until 31 December 2000;
  • one or two reduced rates of at least 5% are authorised for supplies of goods or of services having a social or cultural purpose (Annex H, the scope of which the Council examines every two years);
  • rates of 12% or more are authorised for goods and services other than those referred to in Annex H which qualified for a reduced rate on 1 January 1991;
  • zero rates and extra-low rates (below 5%) existing on 1 January 1991 may be maintained, in principle, until 1997;
  • all increased rates are abolished.

Exemptions

Exemptions are possible within the territory of a country for certain activities of public interest, insurance and reinsurance transactions, the leasing or letting of immovable property (with the exception of the provision of accommodation, the letting of premises and sites for parking vehicles, lettings of permanently installed equipment and machinery, hire of safes), supplies of goods used wholly for an exempted activity, and many other activities such as the granting and negotiation of credit, transactions and negotiations concerning deposit funds, payments, transfers, transactions and negotiations concerning currency, and transactions and negotiations concerning shares, or interests in companies or associations.

Exemptions for imports are also possible, in particular for the final importation of goods of which the supply by a taxable person would in all circumstances be exempted within the country; for importation of goods under a declaration for transit arrangements; for importation of goods declared to be under temporary importation arrangements, which thereby qualify for exemption from customs duties, or which would so qualify if they were imported from a third country; for final importation of goods qualifying for exemption from customs duties other than as provided for in the Common Customs Tariff or which would qualify for exemption if they were imported from a third country. However, Member States have the right not to grant exemption where, for example, it would be liable to have a serious effect on conditions of competition on the home market.

There is also provision for exemptions for export and like transactions and international transport, as well as special exemptions linked to international goods traffic.

Deductions

Origin and scope of the right to deduct: the right to deduct arises at the time when the deductible tax becomes chargeable. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person is entitled to deduct from the tax which he is liable to pay: value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person; value added tax due or paid in respect of imported goods; value added tax due in respect of;

  • goods produced, constructed, extracted, processed, purchased or imported in the course of his business for the purpose of his business, where the value added tax on such goods, had they been acquired from another taxable person, would not be wholly deductible;
  • services supplied by his business for the purposes of his business where the value added tax on such a service, had it been supplied by another taxable person, would not be wholly deductible.

Member States must also grant every taxable person the right to the deduction or refund of value added tax in so far as the goods and services are used for the purposes of:

  • transactions relating to economic activities carried out in another country which would be eligible for deduction of tax if they had occurred in the territory of the country;
  • its exempted transactions;
  • any of its exempted transactions where the customer is established outside the Community or when these transactions are directly linked with goods intended to be exported to a country outside the Community.

Rules governing the exercise of the right to deduct: to have the right to exercise the right to deduct, the taxable person must, depending on the case, hold an invoice, hold an import document, specifying him as consignee or importer, and stating or permitting calculation of the amount of tax due, or comply with the formalities established by each Member State.

Persons liable to pay the tax

Under the internal system, VAT may be payable, depending on the case, by:

  • taxable persons established abroad who carry out taxable transactions. Where the taxable transaction is effected by a taxable person established abroad, Member States may adopt arrangements whereby tax is payable by someone other than the taxable person residing abroad. Inter alia a tax representative or other person for whom the taxable transaction is carried out may be designated as that other person. The Member States may also provide that someone other than the taxable person is to be held jointly and severally liable for payment of the tax;
  • persons to whom services are supplied and carried out by a taxable person resident abroad. However, Member States may require that the supplier of services be held jointly and severally liable for payment of the tax;
  • any person who mentions the VAT on an invoice or other document serving as invoice.

On importation, VAT may be payable by the person or persons designated or accepted as being liable by the Member States into which the goods are imported.

The Directive also imposes obligations on these persons liable to pay VAT, both under the internal system and on importation. For instance, all taxable persons must state when their activities as taxable persons commence, change or cease. Every taxable person must keep accounts in sufficient detail to permit application of the value added tax and inspection by the tax authority. These obligations allow VAT to be properly applied.

Special schemes

There are special schemes for:

  • small businesses;
  • farmers (common flat-rate scheme);
  • second-hand goods, works of art, collectors’ items and antiques;
  • gold;
  • labour-intensive services;
  • travel agents.

Under certain conditions Member States may introduce derogations in order to simplify the collection of VAT or prevent certain forms of tax evasion and avoidance.

On 25 June 1997 the Commission proposed setting-up of an Advisory Committee on VAT.

Directive 77/388/EEC has been amended many times. The most recent amendments are.

  • Council Directive 2000/17/CE amends Directive 77/388/EEC on the common system of VAT (transitional provisions) authorising the Republic of Austria to apply a reduced rate of VAT to the letting of immovable property for residential use, provided that the rate is not lower than 10%, and the Portuguese Republic to apply a reduced rate to restaurant services, provided that the rate is not lower than 12%.
  • Directive 2000/65/EC amends Directive 77/388/EEC as regards the determination of the person liable for payment of VAT. The rules for determining the person liable were a problem for small operators active in several Member States, who might be forced to appoint a tax representative in Community countries other than their home country in which they were supplying goods or services. Given the new legislation on administrative cooperation, which provides for mutual assistance between the Member States, and the need to simplify the common VAT system, the amended Article 21 now makes it optional for taxable persons not established in a country to appoint a tax representative there.
  • Council Directive 2001/115/EC amends Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of value added tax. It aims to harmonise the conditions laid down for invoicing, in particular by drawing up a list of compulsory entries and by establishing a common legal and technical framework for electronic invoicing. It is also intended to make it possible to benefit from the development of new technologies.
  • Directive 2002/38/EC amends the Sixth VAT Directive. It concerns subjecting to VAT certain services supplied by electronic means to non-taxable persons established within the EU by operators outside the EU. A special scheme will be put in place and the country of consumption must ensure that the operators fulfil their obligations. The services concerned include the supply of music, films and games, images, texts, information, software and website hosting.
  • Directive 2003/92/EC amends the rules for applying VAT to supplies of gas and electricity in order to facilitate the operation of the internal market. In particular, it is intended to eliminate current problems of double-taxation, non-taxation and distortion of competition between traders. Although the previous rules worked well in a national context, they are no longer suited to the market liberalisation and increasing cross-border supplies of gas and electricity. The new rules therefore provide for: the levying of VAT in the State of supply or consumption of gas and electricity; a compulsory reverse charge mechanism which no longer requires VAT registration when purchasers and suppliers are not established in the same Member State; taxation of the costs of access to and use of distribution networks in the State of establishment of the purchaser.
  • Directive 2004/7/EC amends the procedures whereby Member States can introduce measures derogating from the Sixth VAT Directive. It aims to simplify and modernise the procedure by which a Member State may be authorised by the Council, under Articles 27 and 30 of the Sixth VAT Directive, to introduce into its legislation special measures derogating from the provisions of the Directive, either in order to simplify the procedure for charging the tax or to prevent certain types of tax evasion or avoidance, or in the context of an agreement with a non-member country or an international organisation. For reasons of transparency and legal certainty, the Directive removes the possibility of tacit approval of derogation. Every derogation authorised must now be the subject of an explicit decision adopted by the Council on a proposal from the Commission. It also provides that when a Member State has submitted a request for derogation the Commission informs the requesting State that once it has all the necessary information to evaluate the request it will present to the Council within three months of the Member State’s submission of that information either a proposal for authorisation or a communication setting out its objections. To ensure more uniform application of the common VAT rules, the Directive aims to grant the Council powers of execution enabling it to adopt, on the basis of a Commission proposal, measures guaranteeing the application of those rules.
  • Directive 2004/15/EC amends Article 289(6) of the Sixth VAT Directive to extend for two years the authorisation to apply a reduced rate of VAT to labour-intensive services.
  • Directive 2004/66/EC amends Directive 77/388/EEC to take account of the accession of 10 new Member States on 1 May 2004.
  • Directive 2005/92/EC aims to extend the period of application of the minimum standard rate of VAT (i.e. 15%) for the five years from 1 January 2006 to 31 December 2010.
  • Directive 2006/69/EC amends the Sixth VAT Directive to provide Member States with the option of quickly adopting legally sound measures in order to counter avoidance and evasion in certain specific and targeted areas.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 77/388/EEC 01.01.1978 01.01.1978 OJ L 145 of 13.06.1977
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 80/368/EEC 22.03.1988 22.03.1988 OJ L 90 of 03.04.1980
Regulation (EEC/Euratom) 3308/80 OJ L 345 of 20.12.1980
Directive 84/386/EEC 01.07.1985 01.07.1985 OJ L 208 of 03.08.1984
Directive 89/465/EEC 24.07.1989 01.01.1990
01.01.1991
01.01.1992
01.01.1993
01.01.1994
OJ L 226 of 03.08.1989
Directive 91/680/EEC 01.01.1993 01.01.1993 OJ L 376 of 31.12.1991
Directive 92/77/EEC 01.01.1993 01.01.1993 OJ L 316 of 31.10.1992
Directive 92/111/EEC 01.01.1993 01.01.1993 OJ L 390 of 31.12.1992
Directive 94/4/EC 1.4.1994, except for derogations OJ L 365 of 31.12.1994
Directive 94/5/EC 01.01.1995 01.01.1995 OJ L 60 of 03.03.1994
Directive 94/76/EC 01.01.1995 01.01.1995 OJ L 365 of 31.12.1994
Directive 95/7/EC 01.01.1996, except for derogations OJ L 102 of 05.05.1995
Directive 96/42/EC 29.07.1996 OJ L 170 of 09.07.1996
Directive 98/80/EC 17.10.1998 01.01.2000 OJ L 281 of 17.10.1998.
Directive 1999/49/EC 02.06.1999 31.12.1998 OJ L 139 of 02.06.1999.
Directive 1999/59/EC 26.06.1999 01.01.2000 OJ L 162 of 26.06.1999.
Directive 1999/85/EC 28.10.1999 31.12.2002 OJ L 277 of 28.10.1999.
Directive 2000/17/EC 05.04.2000 OJ L 10 of 05.04.2000.
Directive 2000/65/EC 21.10.2000 31.12.2001 OJ L 269 of 21.10.2000.
Directive 2001/4/EC 27.01.2001 OJ L 22 of 24.01.2001.
Directive 2001/115/EC 07.02.2002 01.01.2004 OJ L 15 of 17.01.2002.
Directive 2002/38/EC 15.05.2002 OJ L 128 of 15.05.2002.
Directive 2002/93/EC 07.12.2002 OJ L 260 of 11.10.2003.
Directive 2003/92/EC 11.10.2003 01.01.2005 OJ L 260 of 11.10.2003.
Directive 2004/7/EC 19.02.2004 OJ L 27 of 30.01.2004.
Directive 2004/15/EC 10.02.2004 01.01.2004 OJ L 10 of 21.02.2004.
Directive 2004/66/EC 01.05.2004 01.05.2004 OJ L 168 of 01.05.2004.
Directive 2005/92/EC 28.12.2005 01.01.2006 OJ L 345 of 28.12.2005
Directive 2006/18EC 22.02.2006 OJ L 51 of 22.02.2006
Directive 2006/69/EC 12.08.2006 OJ L 221 of 12.08.2006
Directive 2006/98/EC 1.1.2007 OJ L 363 of 20.12.2006

Related Acts

SIMPLIFICATION OF OBLIGATIONS AND REFUNDS

Proposal of 29 October 2004 for a Council Directive amending Directive 77/388/EEC with a view to simplifying value added tax obligations; proposal of 29 October 2004 for a Council Directive laying down detailed rules for the refund of value added tax, provided for in Directive 77/388/EEC, to taxable persons not established in the territory of the country but established in another Member State [COM(2004) 728/1 and /2 – OJ C 24, 29 January 2005]

With a view to simplifying the measures aimed at easing the burden of VAT compliance on taxable persons who have no establishment in the Member State where they are carrying out activities, the Commission proposes six concrete measures via three separate legislative amendments: introduction of the one-stop scheme for non-established taxable persons; introduction of a one-stop scheme to modernise the refund procedure; harmonisation of the scope of the goods and services for which Member States may apply restrictions to the right to deduct; extension of the use of the reverse charge mechanism for certain business-to-business (B2B) transactions carried out by non-established taxable persons; review of the special scheme for small traders; and simplification of the distance selling arrangements.
Consultation procedure (CNS/2004/0261)

PLACE OF APPLICATION OF VAT FOR SUPPLIES OF SERVICES:

Council Regulation No 1777/2005 of 17 October 2005 laying down implementing measures for Directive 77/388/EEC on the common system of value added tax [Official Journal L 288 of 29.10.2005].

This Regulation aims to clarify interpretation and application of common VAT rules. It clarifies key aspects of the Sixth VAT Directive, to wit taxable persons, the place of supply of certain services and rules applicable to electronically supplied services. The objective is to ensure more uniform application of the rules and improve the functioning of the internal market.

Proposal of 23 December 2003 for a Council Directive amending Directive 77/388/EEC as regards the place of supply of services [COM(2003) 822 – Official Journal C 96 of 21.04.2004].

For supplies of services between VAT taxable persons (“business to business”), the Commission proposes applying VAT in the country where the purchaser is established (i.e. the place of consumption) rather than in the supplying country. The modified proposal particularly targets the VAT rules applicable to the supply of certain services to private individuals. The proposed changes are intended to eliminate distortions of competition, both between EU businesses and between EU and third country businesses, which remotely supply services to private individuals. The modified proposal also reduces the administrative burden on businesses as regards VAT by harmonising the rules that are currently applicable to services supplied to businesses and those that are supplied to private individuals.
Consultation procedure ()

ADMINISTRATIVE COOPERATION AND MUTUAL ASSISTANCE IN THE FIELD OF INDIRECT TAXATION:

Proposal of 29 October 2004 for a Council Regulation amending Regulation (EC) No 1798/2003 as regards the introduction of administrative cooperation arrangements in the context of the one-stop scheme and the refund procedure for value added tax [COM(2004) 728/3 – OJ C 24 of 29.1.2005]

The European Commission is proposing a Regulation to simplify current Value Added Tax (VAT) compliance obligations to help cross-border traders who supply goods and services to other EU Member States. In particular the proposal would provide for a “one-stop-shop” system whereby a trader could fulfil all his VAT obligations for EU-wide activities in the Member State in which he is established. This system would allow traders to use a single VAT number for all supplies made throughout the EU and to make VAT declarations to a single electronic portal that would then be submitted automatically to the different Member States to which the trader supplies goods or services. The proposal also contains five other simplification measures.
Consultation procedure (CNS/2004/0262)

Council Directive 2003/93/EC of 7 October 2003 amending Directive 77/799/EEC concerning mutual assistance by the authorities of the Member States in the field of direct and indirect taxation [Official Journal L 264 of 15.10.2003]

This amendment allows Member States to exchange information on certain taxes on insurance premiums and to combat VAT fraud.

Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax [Official Journal L 264 of 15.10.2003]

Regulation (EC) No 1798/2003 enhances cooperation between Member States’ tax administrations for the purpose of combating VAT fraud by removing remaining obstacles to the exchange of information. It has three main objectives:

  • to establish clear and binding rules on the exchange of information,
  • to provide for direct contacts between national departments combating fraud, and
  • to increase the exchange of information.

SPECIAL SCHEMES

Proposal of 5 May 2003 for a Council Directive amending Directive 77/388/EEC as regards value added tax on services provided in the postal sector [COM(2003) 234 – Official Journal C 76 of 25.03.2004]

The Commission, aiming to eliminate distortions of competition in public postal services, which are increasingly performed by private businesses, proposes to amend the rules on value-added tax (VAT) applicable to such services by subjecting them to taxation at a standard rate. To minimise the impact of this change on the prices paid by end consumers, the Commission provides for the possibility of a reduced rate of VAT on letters and other addressed items weighing 2 kg or less.
The proposal has three key elements:

  • removal of the exemption for public postal services and postage stamps;
  • amended place-of-supply-rules to ensure only one VAT rate for most private post;
  • an option for a reduced rate.

Consultation procedure ()

Proposal of 8 February 2002 for a Council Directive amending Directive 77/388/EEC as regards value added tax on services provided in the postal sector [COM(2002) 64 final – Official Journal C 126 E of 28.5.2002]

This Directive proposal is aimed at extending the scope of the special scheme for travel agents to all supplies of travel packages.
Consultation procedure (CNS/2002/0041)

 

Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

Outline of the Community (European Union) legislation about Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

To combat international tax evasion and avoidance the European Union is strengthening collaboration between the Member States’ tax administrations and facilitate the exchange of information which appears relevant for the correct assessment of taxes on income and on capital.

Document or Iniciative

Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums.

Summary

Under this Directive, Member States’ competent authorities are required to exchange any information which appears relevant for the correct assessment of taxes on income and on capital and the assessment of indirect taxes:

  • value added tax;
  • excise duty on alcohol and alcoholic beverages:
  • excise duty on manufactured tobacco.

Taxes on income and on capital are deemed to include all taxes, irrespective of the manner in which they are levied, imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the disposal of movable or immovable property, taxes on the amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

The competent authority of a Member State may request the competent authority of another Member State to forward the information referred to at point 1.

All information made known to a Member State under the directives must be kept secret in that state in the same manner as information received under its domestic legislation.

These directives impose no obligation to have enquiries carried out or to provide information if the Member State which should furnish the information would be prevented by its laws or administrative practices from carrying out these enquiries or from collecting or using this information for its own purposes.

Directive 79/1070/EEC makes some changes to the wording of Directive 77/799/EEC.

Directive 92/12/EEC amends Directive 77/799/EEC to extend its scope to cover excise duties.

Directive 2003/93/EC extends the scope of mutual assistance provided for in Directive 77/799/EEC to cover the taxes on insurance premiums referred to in Directive 76/308/EEC so as to better protect the financial interests of the Member States and the neutrality of the internal market.

Directive 2004/56/EC is designed to speed up the flow of information between Member States’ tax authorities. On direct taxation (income tax, company tax and capital gains tax), in conjunction with taxes on insurance premiums, it permits the Member States to coordinate their investigative action against cross-border tax fraud and to carry out more procedures on behalf of each other. It thus updates Directive 77/799/EEC on mutual assistance and rectifies its weaknesses.

Council Directive 2004/106/EC amends the original title and the content of Directive 77/799/EEC. As provisions covering administrative cooperation in the field of excise duties are included in Council Regulation 2073/2004, Directive 77/799/EEC will henceforth focus only on mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 77/799/EEC [adoption by consultation] 23.12.1977 01.01.1979 OJ L 336 of 27.12.1977
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 79/1070/EEC 07.12.1979 01.01.1981 OJ L 331 of 27.12.1979
Directive 92/12/EEC 06.03.1992 01.01.1993 OJ L 76 of 23.03.1992
Directive 2003/93/EC 15.10.2003 31.12.2003 OJ L 264 of 15.10.2003
Directive 2004/56/EC 29.04.2004 01.01.2005 OJ L 127 of 29.04.2004
Directive 2004/106/EC 24.12.2004 30.06.2005 OJ L 359 of 04.12.2004
Directive 2006/98/EC 1.1.2007 1.1.2007 OJ L 363 of 20.12.2006