# C_2008204EN.01011901.xml

| 9.8.2008 | EN | Official Journal of the European Union | C 204/119 |
| --- | --- | --- | --- |

9.8.2008

EN

Official Journal of the European Union

C 204/119

---

Opinion of the European Economic and Social Committee on the Proposal for a Council Directive amending VAT Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

COM(2007) 677 final

(2008/C 204/24)

On 22 November 2007 the Council decided to consult the European Economic and Social Committee, under Article 93 of the Treaty establishing the European Community, on the

Proposal for a Council Directive amending VAT Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

Proposal for a Council Directive amending VAT Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 20 February 2008. The rapporteur working alone was Mr Burani.

At its 443rd plenary session, held on 12 and 13 March 2008 (meeting of 12 March), the European Economic and Social Committee adopted the following opinion by 123 votes to one with six abstentions.

1.   Introduction

| 1.1 | The VAT Directive (1) that came into force in 2007 brought together VAT provisions introduced and amended over the years into a single text. Implementation has thrown up a number of practical difficulties or aspects on which businesses and some Member States have commented or made proposals. The Commission has examined these and has decided to present some suggestions for amendment in the present proposal. |
| --- | --- |

1.1

The VAT Directive (1) that came into force in 2007 brought together VAT provisions introduced and amended over the years into a single text. Implementation has thrown up a number of practical difficulties or aspects on which businesses and some Member States have commented or made proposals. The Commission has examined these and has decided to present some suggestions for amendment in the present proposal.

1

| 1.2 | Since the amendments vary in kind and concern different issues, and in order to reduce red tape and accelerate procedures, the Commission has chosen — rightly, in the Committee's view — to group them under a single proposal. |
| --- | --- |

1.2

Since the amendments vary in kind and concern different issues, and in order to reduce red tape and accelerate procedures, the Commission has chosen — rightly, in the Committee's view — to group them under a single proposal.

2.   Contents of the proposal

| 2.1 | Certain amendments concern the energy sector, whose tax scheme was originally based on a 2003 directive (2) and subsequently transposed into the VAT Directive. As a result of the technical terms used, its scope proved to be too narrow, and failed to reflect economic realities. More specifically, among the ‘energy products’ subject to excise duty it included natural gas supplied by pipeline and vessels for transporting gas, electricity and heat or refrigeration supplied by heat and refrigeration networks (‘remote supply’). The Commission proposes that these products be exempted from the scope of the duty. |
| --- | --- |

2.1

Certain amendments concern the energy sector, whose tax scheme was originally based on a 2003 directive (2) and subsequently transposed into the VAT Directive. As a result of the technical terms used, its scope proved to be too narrow, and failed to reflect economic realities. More specifically, among the ‘energy products’ subject to excise duty it included natural gas supplied by pipeline and vessels for transporting gas, electricity and heat or refrigeration supplied by heat and refrigeration networks (‘remote supply’). The Commission proposes that these products be exempted from the scope of the duty.

2

| 2.2 | Under the proposal, these sources of energy would be taxed in the Member States where the service is provided in terms of supply or access. It also simplifies the procedure whereby the Member States may apply a reduced VAT rate. |
| --- | --- |

2.2

Under the proposal, these sources of energy would be taxed in the Member States where the service is provided in terms of supply or access. It also simplifies the procedure whereby the Member States may apply a reduced VAT rate.

| 2.3 | In the area of derogations, at the time of accession Bulgaria and Romania were authorised to grant tax exemptions to small businesses, and to continue exempting international passenger transport from VAT. Nothing has changed in this respect: it has simply been considered helpful to incorporate these derogations into the text of the VAT Directive, as was done previously for other Member States. |
| --- | --- |

2.3

In the area of derogations, at the time of accession Bulgaria and Romania were authorised to grant tax exemptions to small businesses, and to continue exempting international passenger transport from VAT. Nothing has changed in this respect: it has simply been considered helpful to incorporate these derogations into the text of the VAT Directive, as was done previously for other Member States.

| 2.4 | Regarding the right of deduction, the proposal introduces — or rather clarifies — a prominent principle, inherent to the original thinking behind VAT: to restrict the initial exercise of the deduction to the proportion of effective business use when mixed-use immovable property is included in a company's assets and liabilities. Provision is also made for an adjustment system to reflect the varying proportions over time of business and non-business use. |
| --- | --- |

2.4

Regarding the right of deduction, the proposal introduces — or rather clarifies — a prominent principle, inherent to the original thinking behind VAT: to restrict the initial exercise of the deduction to the proportion of effective business use when mixed-use immovable property is included in a company's assets and liabilities. Provision is also made for an adjustment system to reflect the varying proportions over time of business and non-business use.

3.   Comments and conclusions

| 3.1 | The proposals mentioned in points 2.3 and 2.4 above require no particular comment: regarding the former, the aim is to correct a previous omission, and in the latter, to spell out — necessarily, albeit obviously — a basic principle which is widely known and implemented. |
| --- | --- |

3.1

The proposals mentioned in points 2.3 and 2.4 above require no particular comment: regarding the former, the aim is to correct a previous omission, and in the latter, to spell out — necessarily, albeit obviously — a basic principle which is widely known and implemented.

| 3.2 | The EESC approves the proposal as described in points 2.1 and 2.2, aiming to bring legislation into line with economic realities, and ensuring equal treatment for different energy sources. |
| --- | --- |

3.2

The EESC approves the proposal as described in points 2.1 and 2.2, aiming to bring legislation into line with economic realities, and ensuring equal treatment for different energy sources.

| 3.3 | The EESC therefore supports the Commission's proposal. |
| --- | --- |

3.3

The EESC therefore supports the Commission's proposal.

Brussels, 12 March 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

---

(1)  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.

1

(2)  Council Directive 2003/92/EC of 7 October 2003.

2

---