# CE2004078EN.01037601.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/376 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/376

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(2004/C 78 E/0399)

WRITTEN QUESTION E-1636/03

by Bartho Pronk (PPE-DE) to the Commission

(15 May 2003)

Subject:   Sixth VAT Directive

Subject:

The Sixth VAT Directive (Directive 77/388/EEC (1) on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment) covers immovable property among other things. In Ireland stamp duty is frequently levied on newly built properties in addition to VAT. It is doubtful whether the uniform basis of assessment within the meaning of the Sixth VAT directive is applied when stamp duty is levied.

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| 1. | Does the Commission consider that the simultaneous imposition of stamp duty and VAT is in breach of the VAT Directive? Is there any case law relating to this matter? |
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1.

Does the Commission consider that the simultaneous imposition of stamp duty and VAT is in breach of the VAT Directive? Is there any case law relating to this matter?

| 2. | Are such taxes compatible with other European legislation on freedom of movement? |
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2.

Are such taxes compatible with other European legislation on freedom of movement?

Answer given by M. Bolkestein on behalf of the Commission

(19 June 2003)

(19 June 2003)

The ‘stamp duty’ to which the Honorable Member refers is a tax on documents. For the most part, these are legal documents used in the transfer of property or are documents which create rights for the parties concerned. Where documents are not properly stamped, they cannot be used in court proceedings. If a document records the transfer of ownership of a newly-built property, then that property cannot be registered unless the correct stamp duty is paid.

Whether or not stamp duty is payable on a document recording the transfer of a new property depends on the value of the property and whether or not the purchaser is a first time buyer, where the property is residential.

| 1. | According to article 33 of the sixth VAT 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 (2), Member States are allowed to maintain or introduce, among other taxes, stamp duties, provided that they are not characterised as turnover taxes.
  In practice, a charge can be characterised as a turnover tax if it exhibits the same essential features as VAT which, according to the case law of the Court of Justice, can be outlined as follows:






  — | VAT is generally applied to transactions relating to goods or services; |
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1.

According to article 33 of the sixth VAT 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 (2), Member States are allowed to maintain or introduce, among other taxes, stamp duties, provided that they are not characterised as turnover taxes.

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In practice, a charge can be characterised as a turnover tax if it exhibits the same essential features as VAT which, according to the case law of the Court of Justice, can be outlined as follows:

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VAT is generally applied to transactions relating to goods or services;

| — | it is proportional to the price of those goods or services; |
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it is proportional to the price of those goods or services;

| — | it is charged at each stage of the production and distribution process; |
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it is charged at each stage of the production and distribution process;

| — | it is imposed on the added value of goods and services. |
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it is imposed on the added value of goods and services.

In the judgement of 16 December 1992 (case C-208/91 Beaulande (3)), the Court of Justice analysed the specific case of stamp duty imposed by France in addition to VAT on the acquisition of building land. The judgement held that a charge of this kind did not have the essential characteristics of VAT as described above. In this regard, the Court established that the levy of both this tax and of VAT was not contrary to the Sixth VAT Directive.

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In particular, the Court stated that ‘stamp duty is not a general tax, as it is not intended to apply to all economic transactions. Secondly, no production and distribution process is involved, as the stamp duty is charged only when the real estate passes into the ownership of the final consumer. Furthermore, it is not deductible from duty of the same kind paid on subsequent conveyances. Finally, the levying of such duty does not take account of the added value but is based on the full value of the property’ (points 16 to 18).

| 2. | In the field of taxation, a general principle establishes that the taxation of immovable property falls within the competence of the State where the property stands. Therefore, it is not clear how the stamp duty imposed in Ireland would be contrary to the freedom of movement. |
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2.

In the field of taxation, a general principle establishes that the taxation of immovable property falls within the competence of the State where the property stands. Therefore, it is not clear how the stamp duty imposed in Ireland would be contrary to the freedom of movement.

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(1)  OJ L 145, 13.6.1977, p. 1.

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(2)  OJ L 145, 13.6.1977. Directive as last amended by Council Directive 2002/92/EC. OJ L 331, 7.12.2002.

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(3)  Case C-208/91 Raymond Beaulande v. Directeur des services fiscaux de Nantes [1992] ECR I-6709.

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