COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC90) 182 final - SYN 274 
Brussels, 19 June 1990 
PROPOSAL FOR AN 
AMENDMENT TO THE 
PROPOSAL FOR A COUNCIL DIRECTIVE 
SUPPLEMENTING THE COMMON SYSTEM OF VALUE ADDED TAX AND 
AMENDING DIRECTIVE 77/388/EEC 
TRANSITIONAL ARRANGEMENTS FOR TAXATION 
WITH A VIEW TO ESTABLISHMENT OF THE INTERNAL MARKET 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
1. THE ATTACHED PROPOSAL HAS BEEN DRAWN UP WITH A VIEW TO THE 
DEFINITIVE ABOLITION OF ALL FISCAL FRONTIERS AND IS DESIGNED TO 
EXPEDITE PROGRESS ON THE FISCAL ASPECTS OF THE INTERNAL MARKET 
Completion of the internal market has as its corollary the 
removal of fiscal frontiers, that is to say, "abolishing the 
imposition of tax on the importation and the remission of tax 
on exportation in trade between Member States".C1) In order to 
give practical shape to the commitments made by the Member 
States in this connection,(2) the Commission presented in 1987 
a proposal(3) supplementing the common system of VAT as laid 
down in the Sixth Directive. That proposal forms part of an 
overall strategy for the approximation of indirect tax rates 
and harmonization of indirect tax structure. 
The 1987 proposal introduces the principle of "taxation in the 
country of origin" since a consequence of abolishing fiscal 
frontiers is that taxable supplies will attract tax in the 
country from which goods are transported to another Member 
State. In this way, intra-Community sales and purchases of 
goods are afforded the same treatment as sales and purchases 
within Member States. 
(£) Directive 77/388/EEC, OJ No L 145, fifth recital. 
(2) Article 99 of the Treaty of Rome as amended by the Single Act, 
etc 
(3) Proposal COM(87)322, OJ No C 252 of 22.9.87 
It should be borne in mind here that one of the conclusions 
reached by the Council on 13 November 1989 was that these 
uniform tax arrangements in the country of origin remained a 
"medium-term objective".(4) 
The ultimate objective has thus been clearly identified and is 
not in doubt. The attached proposal for a Directive by 
amending the Sixth Directive as amended by COM(87) 322, thus 
dovetails with and supplements the 1987 proposal, by 
introducing a number of transitional provisions to help Member 
States achieve that objective under optimum conditions. This 
proposal takes account of all these considerations. 
2. THE TRANSITIONAL TAX ARRANGEMENTS SET OUT BY THE COMMISSION IN 
THE ATTACHED PROPOSAL ARE CONSISTENT WITH THE GUIDELINES 
ADOPTED BY THE COUNCIL AND WILL HAVE A DYNAMIC EFFECT ON THE 
PROCESS OF ABOLISHING FISCAL FRONTIERS 
At the outset, in order to facilitate rapid adoption of the 
proposals for the complete abolition of fiscal frontiers, the 
Commission, in a communication sent to the Council and to 
Parliament on 14 June 1989,(5) suggested the introduction at 
the earliest possible opportunity of a transitional phase 
between now and the end of 1992 during which the necessary 
adjustments enabling Member States to give practical shape to 
their commitments would be made. Furthermore, while 
reaffirming the principle of generalized taxation in the 
country of origin, the Commission developed a new, pragmatic 
approach which, until such time as VAT rates had been brought 
sufficiently into line, would secure differential treatment for 
certain classes of taxable transaction in order to avoid the 
(4) conclusions of the ECOFIN Council of 13 November 1989 
(5) COM(89) 260 final. 
risks of distortion of competition that could arise in the case 
of purchases made by final consumers in sectors deemed to be 
sensitive. Accordingly, the following would be the only 
transactions that would continue to be taxed at the rates and 
under the conditions obtaining in the Member States of 
destination: 
- sales to institutional non-taxable persons and to fully 
exempt taxable persons; 
- mail-order sales to private individuals; 
- sales of new passenger vehicles. 
Ultimately these derogations would have lapsed since a process 
of convergence of rates was introduced at the same time. 
In spite of Commission efforts to introduce elements of 
flexibility into its proposals, the Council made the point that 
a general agreement on the tax arrangements proposed by the 
Commission could not be reached before 1 January 1993. It 
considered that such an agreement presupposed the fulfilment of 
conditions which could not be satisfied by that date.(6) It 
thus adopted the following conclusions: "For a limited period, 
the smooth operation of VAT arrangements in the case of 
transactions between different Member States carried out by 
taxable persons must be ensured by taxing the recipient in the 
country of destination at the rate and under the conditions 
obtaining in that country. Exempt or non-taxable bodies making 
purchases of a certain value in other Member States will be 
treated in the same way. ... The differential treatment of 
certain classes of transaction will enable distortions of 
(&) ECOFIN Council of 9 October 1989. 
competition to be avoided without hampering freedom of 
movement.".(7) The Commission welcomed the fact that the 
Strasbourg European Council asked the Council "to adopt as soon 
as possible the decisions which will make the process of the 
complete abolition of fiscal frontiers irreversible". 
In the attached proposal, which the Commission calls on the 
Council to adopt at the earliest possible opportunity, the 
Commission sets out a balanced transitional solution based on a 
system of taxation in the country of destination which 
corresponds to the Council guidelines and which also provides 
for the link that the Council would like to see established 
between statistics and taxation as regards taxpayers' 
obligations.(8) 
The arrangements are gradualist in design and thus contain 
elements of internal dynamism guaranteeing the irreversibility 
of the process of abolishing fiscal frontiers. 
THE ATTACHED PROPOSAL LAYS DOWN A TRANSITIONAL PERIOD FOR 
TAXATION IN THE COUNTRY OF DESTINATION AND SETS THE DATE FOR 
THE TRANSITION TO THE DEFINITIVE ARRANGEMENTS FOR TAXATION IN 
THE COUNTRY OF ORIGIN 
The transitional tax arrangements proposed by the Commission 
will take effect on 1 January 1993; they will expire not later 
than 31 December 1996 following an overall examination with a 
view to determining on the basis of a Commission proposal, the 
y) Conclusions of the ECOFIN Council of 13 November 1989. 
(8) The actual introduction of the statistical machinery linked to 
the transitional arrangements is the subject of the 
transitional measures inserted in the proposal for a Council 
Regulation (EEC) (COM(90)177) on the statistics relating to the 
trading of goods between Member States. 
procedures under which the definitive unification of the common 
VAT system shall operate. In consequence, the definitive tax 
arrangements will be operative by 1 January 1997. The Council, 
therefore, is called upon to approve simultaneously the 
introduction of the transitional arrangements and the 
introduction of the definitive arrangements as proposed by the 
Commission. 
The Commission takes the view that such provisions are 
essential: 
- in order to guarantee the irreversibility of the process of 
abolishing fiscal frontiers, in accordance with the wish 
expressed by the Strasbourg European Council on 8 and 
9 December 1989: only the implementing of the definitive 
arrangements will allow the degree of integration desired 
within the internal market to be achieved; 
- in order to give time to businesses and administrations to 
adapt to the new fiscal situation. 
To this end, the Council and the Commission will have to adopt 
the practical procedures for the transition to the definitive 
arrangements not later than 31 December 1995. 
4. THE TRANSITIONAL PROVISIONS PROPOSED BY THE COMMISSION 
ESTABLISH A SYSTEM OF TAXATION IN THE COUNTRY OF DESTINATION 
WITHOUT ANY FRONTIER CONTROLS AND WITHOUT ANY INCREASE IN THE 
BURDEN ON BUSINESSES 
(a) It should be pointed out that a number of provisions 
essential for the establishment and the functioning of the 
internal market will be provided for as of the beginning of 
the transitional period. 
They are: 
- Abolition of any checks or formalities imposed for tax 
purposes when goods cross intra-Community frontiers or 
prior to the movement of goods 
As a result, the transitional measures proposed by the 
Commission are of a kind liable to bring about a 
lightening of the administrative and costs burdens on 
firms engaging in intra-Community trade while at the same 
time providing the means for carrying out the necessary 
checks. From now on, intra-Community transactions will 
be subject to the same checks as domestic transactions 
carried out in Member States. Monitoring of VAT payable 
in connection with intra-Community trade will be carried 
out on the basis of normal trade documents inter alia on 
invoices which must indicate clearly either the amount of 
VAT charged or the exempt status of the transaction as 
well as the means of identifying the taxable status of 
the traders; 
- Equal treatment as between intra-Community and domestic 
transactions as regards the obligations of persons liable 
to pay the tax 
VAT payable on intra-Community transactions will be 
settled and paid on the basis of the regular return 
currently used by traders for.domestic transactions. As 
a result, no new or additional obligation will be imposed 
on traders provided that the amount relating to intra-
Community transactions is broken down by goods sent to 
and goods coming from other Member States; 
- Removal of the current restrictions on tax-paid purchases 
made by travellers in the Member State of purchase 
Tax will be charged directly on such purchases by the 
seller, at the rate and under the conditions obtaining in 
the country of origin of the goods. As a result, there 
will no longer be any restrictions on travellers wishing 
to make tax-paid purchases; 
- The easing of burdens on Small and Medium size 
Enterprises (SME) and the introduction of flexibility 
into the VAT treatment of operations involving SME's 
In this regard the benefit of the exemption arrangements 
applicable to SME's domestic transactions shall be 
extended to such intra-Community supplies as they may 
carry out; 
(b) In view of the Council guidelines which seek to retain as a 
general rule the principle of taxation at the rates and 
under the conditions obtaining in the country of 
destination, the Commission after having examined various 
technical solutions for the taxation of intra-Community 
operations which give rise to transport or dispatch, have 
opted for a legal text which firstly captures the operation 
carried out in the country of departure and secondly 
defines acquisition as a new taxable event in the country 
of arrival. This option means that all reference to 
concepts of importation are avoided and that taxation in 
the country of destination can be assured without any 
checks or formalities when crossing borders. The tax 
mechanisms employed conform to the following rules: 
- Exemption of supply: transactions between taxable persons 
(whether entitled to deduct tax in full or in part) must 
benefit in the country of departure from the exemption 
currently applied to supplies for export. (However, for 
reasons indicated earlier, supplies by SME's will not 
come within the scope of this exemption). 
In the absence of any border formalities or checks, this 
exemption presupposes that the following two conditions 
are met: 
- the person by whom the goods are acquired is a taxable 
person (or a person ranking as such): 
Accordingly, it is up to him to provide evidence of his 
VAT status if necessary by means of a statement to that 
effect issued by the administration in the Member State 
in which he is registered; 
- the goods are dispatched or transported to another 
Member State, with the onus of furnishing proof of 
their departure from the country of departure falling 
on the seller; where appropriate on the basis of 
documents provided by the trader for whose account the 
transport operation is carried out: 
- Taxation of the acquisition 
The corresponding acquisition will give rise to taxation 
in the country of destination and the tax will be payable 
by the person by whom the goods are acquired. The 
acquisition operation is defined as the process of 
acquiring the right to dispose of tangible property as 
10 
owner. It is based, therefore, on a legal and economic 
event which takes place in the country of destination 
that is the counterpart of the supply operation carried 
out in the country of origin. 
In this way, the taxable transaction in the country of 
destination is as such disconnected from the physical and 
material operation of introducing the goods into the tax 
territory, an operation which constitutes the very 
concept of importation. Naturally, this concerns only 
purchases of goods that are being dispatched or 
transported from one Member State to another since the 
transitional arrangements will in no way alter the scope 
of VAT as regards domestic transactions. 
Accordingly, checks on the taxation of acquisitions of 
intra-Community origin are based on the commercial 
documents usually issued or received by traders: order 
forms, transport documents, delivery notes, sales and 
acquisition contracts, invoices, settlements of 
account. Furthermore, in order to facilitate 
administrative cooperation and mutual assistance, 
invoices must explicitly give the VAT numbers of the 
seller and of the person by whom the goods are acquired. 
Special arrangements 
So as to limit during the transitional period the major 
risks of distortion of competition linked to differences 
in rates between Member States, the principle of taxation 
in the country of destination will be applied to certain 
11 
targeted transactions subject to the following 
conditions: 
* The mechanism for taxing intra-Community transactions 
between taxable persons is extended to acquisitions 
made by institutional non-taxable persons and by exempt 
taxable persons where, in the year under consideration, 
they exceed a threshold fixed initially at ECU 35 000. 
This is because, given that such traders act as final 
consumers where VAT is concerned, their purchasing 
decisions are liable to be influenced by the difference 
in rates. It was necessary, therefore, to apply to 
them the special arrangements defined above. 
The doubling of the threshold from 1 January 1995 will 
provide for the widening of the scope of the 
arrangements for taxation in the country of origin for 
the entire duration of this period. As the Commission 
would like this special arrangement to be relatively 
flexible traders whose purchases remain below the 
threshold may opt for taxation of their acquisitions in 
the country of destination. This option is valid for 
two consecutive years and is irrevocable; 
* On account of their high unit value, which makes them 
particularly susceptible to differences in rates, it is 
proposed that new private vehicles never previously 
registered should be taxed in respect of their 
acquisition in the Member State of use, where the first 
registration on a permanent basis takes place; 
* Mail-order sales are an area of activity in which, 
because of the very structure of this type of 
12 
distribution, demand is particularly sensitive. In an 
open market, significant differences in rates from one 
Member State to another might only underline this 
phenomenon. Such differences in rates could cause 
activities to be shifted elsewhere. The aim during the 
transitional period is to exert control over this risk 
without hampering the free movement of goods. The 
Commission thus proposes that mail-order sales, which 
it has moreover defined in a manner consistent with the 
objectives laid down, should be taxed in the country of 
destination where the seller has an annual turnover of 
intra-Community mail-order sales of more than 
ECU 1 million. The tax mechanism envisaged involves 
shifting the place of taxation of such sales in order 
to make the non-established seller's tax representative 
liable for VAT in the country of destination. 
Treatment of operations involving SME's 
Supplies for export carried out by SME's entitled to the 
exemption laid down in Article 24 of the Sixth Directive 
and in the proposal for a Twenty-Second VAT Directive 
will, as is the case for their domestic transactions, be 
covered by the exemption from tax applicable to SME's 
domestic transactions. In consequence, supplies for 
export by SME's will not give rise to the exemption laid 
13 
down in Article 15 of the Sixth VAT Directive in the 
country of departure. Symmetrically, they will not give 
rise to an acquisition in the country of destination of 
the goods. However, it is worth recalling that SME's can 
in any event opt to benefit from the normal VAT 
arrangements. 
With regard to purchases made by SME's, such transactions 
will be subject to taxation in the country of departure 
of the goods insofar as they do not exceed the threshold 
fixed in the special arrangements applicable to purchases 
by exempt taxable persons - i.e. either ECU 35 000 or 
ECU 70 000 - SME's in this regard are treated as if they 
were taxable persons whose domestic activities are fully 
exempt from VAT. 
14 
EXPLANATORY NOTE ON THE LEGAL TEXT: 
Observations regarding the provisions applicable during the tran­
sitional period solely to intra-Community transactions - Article 2 
of the modified version of COM(87)322 introducing a new wording for 
Article 28 of the Sixth Directive 
Point (a) 
The provisions laid down define the special tax arrangements 
applicable to mail-order sales during the transitional period. 
Scope of the special arrangements for mail-order sales 
Essentially, these arrangements cover mail-order sales to private 
individuals. However, mail-order sales to institutional non­
taxable persons or to fully exempt taxable persons will also be 
covered in cases where such sales do not qualify for the 
arrangements generally applicable during the transitional period 
and provided for at (b) , second indent and (c) . Mail-order sales 
to taxable persons are subject to the general arrangements provided 
for at (b). 
Passenger vehicles are also excluded from the scope of the special 
arrangements for mail-order sales, since they are covered by the 
specific provisions laid down at (b), first indent and (c). 
15 
Definition of mail-order sales 
The concept of mail-order sales is determined by factors to do with 
the way in which the offer is made, e.g. in a catalogue reproduced 
in bulk, using any medium whatsoever, whether or not printed, which 
the consumer can consult in the absence of the trader or his 
representative. Furthermore, the application of three criteria 
will make it possible to ascertain whether the offer does, in fact, 
display the characteristics recognized as being specific to mail­
order sales contracts. Thus, among the transactions excluded from 
the special arrangements for mail-order sales are (i) sales in 
respect of which no prior offer was made and which are in response 
to distance ordering, and (ii) sales consequent upon simple 
advertising comprising an offer to buy (in the press). 
Condition of eligibility for the special arrangements tied to the 
volume of cross-frontier transactions 
Traders with a cross-frontier mail-order turnover exceeding 
ECU 1 million (all Community destinations taken together) must 
apply the special arrangements. Nevertheless, traders not 
satisfying the eligibility condition tied to the volume of their 
cross-frontier transactions may in their own interest apply for 
special arrangements, which will apply for two consecutive 
years. The threshold mechanism is defined as follows: as soon as a 
mail-order firm exceeds, during a calendar year, a volume of mail­
order sales, in the country of departure of the goods, which come 
within the scope of this special arrangement and are destined for 
the other 11 Member States, of 1 million ECU, the firm falls within 
the scope of the special arrangement; Member States must define the 
practical procedures for the implementation of this criterion. 
16 
Taxation mechanism for mail-order sales 
Supplies covered by the special arrangements for mail-order sales 
are deemed to take place in the country to which the goods are 
dispatched or transported. The tax is paid in that country, within 
the conditions laid down in Article 21(1) (a) of the Sixth 
Directive, where appropriate through the intermediary of a tax 
representative. 
Traders will continue to exercise their right to deduct input tax 
in the Member State in which they are established in accordance 
with Article 17(3)(a) of the Sixth Directive as regards 
transactions which they carry out in another Member State provided 
those transactions, if carried out within the territory of the 
country, would have conferred the right to deduct input tax there. 
Point (b) 
This point lists the transactions that fall within the scope of the 
general transitional arrangements. The proposed provisions lay 
down the system of exemptions to be applied in the country of 
departure to supplies of goods and to supplies of services directly 
linked to such goods. 
Nature of the exemption mechanism 
Pursuant to the combined provisions of Articles 5 and 8(1)(a) of 
the Sixth Directive a seller makes a supply which is situated in 
the country of departure and which is therefore taxable there. In 
order to tax the acquisition of the goods dispatched or transported 
17 
to the Member State of destination it is essential that the supply 
made by the seller in the country of departure is exempt. Failing 
this, double taxation would arise. Supplies referred to under (b) 
are for this reason treated as supplies under Article 15 of the 
Sixth Directive which qualify for exemption upon export. It should 
be underlined that this exemption does not preclude the exercise of 
the right of deduction of the seller or of the supplier of services 
under Article 17(3)(b) of the Sixth Directive, given that the right 
to deduction is maintained for transactions exempt under 
Article 15. 
Definition of transactions exempt in the country of departure of 
the goods 
1. Status of the trader carrying out the exempt transaction 
The exemption will apply only if the supply of the goods or the 
related services is effected by a taxable person, whether 
entitled to deduct tax in full or in part. 
Small and medium-sized businesses, all of whose transactions are 
exempt within a Member State pursuant to the exemption from tax 
laid down in Article 24 of the Sixth Directive (as well as by 
the proposal for a Twenty-Second VAT Directive) are excluded 
from the arrangements for taxation in the country of 
destination. Similarly intra-Community supplies made by them 
will benefit from the Article 24 exemption and will not give 
rise to any acquisition transaction in the country of 
destination. Supplies by flat-rate farmers are dealt with under 
the same principles. 
18 
2. Nature of transactions and status of person by whom goods are 
acquired 
(a) The supplies of private vehicles qualifying for exemption 
in the country of departure are those carried out by a 
taxable person whose activity is purchasing and selling 
vehicles other than used vehicles covered by Article 32 of 
the 6th VAT Directive(9) : it should be remembered that used 
cars sold by taxable resellers of used goods have been 
directly excluded from the scope of the transitional 
arrangements since the latter apply without prejudice to the 
provisions of Article 32 which lays down the Community 
arrangements applicable to used goods: 
* Private vehicles supplied under the transitional 
arrangements must, therefore, form part of the seller's 
stock in trade. 
* The scope of the concept of private vehicles used here 
corresponds to that given by Article 2 of Directive 
83/182/EEÇ; it therefore includes motorcycles. Commercial 
vehicles*10) however are excluded from the special 
arrangements for destination taxation. 
(y) This concerns the new proposal for a directive regarding 
special arrangements to apply to used goods, works of art, 
antiques and collectors items (COM(88) 846 final). 
(10)Commercial vehicle within the meaning of Directive 83/182/EEC 
means: 
any road vehicle which by its design or equipment, is suitable 
for and intended transporting, whether for payment or not: 
- more than nine persons, including the driver; 
- goods, 
as well as any road vehicle for special use other than 
transport as such 
19 
* Private vehicles supplied by a taxable user other than the 
taxable person mentioned above will also be exempt if they 
satisfy the conditions laid down under the general 
transitional arrangements: these vehicles are, in fact, 
capital goods the supply of which will be exempt in the 
country of departure and the acquisition of which by a 
taxable person (or a person ranking as such) will be taxed 
in the country of destination (this is necessary in order 
to avoid a situation in which the taxable person by whom 
they are acquired would have to seek a deduction for VAT 
paid in the country of departure). 
(b) Generally speaking, the exemption in the country of 
departure covers supplies, other than those identified 
above, where they are made to an eligible trader, that is to 
say, where the person by whom goods are acquired is: 
* either a fully or partially taxable person, irrespective 
of the amount of acquisitions made by him; 
* or an institutional non-taxable person or a fully exempt 
taxable person whose purchases exceed 35 000 ecus 
(70 000 ecus from 1 January 1995) during the calendar year 
when the supply under consideration was 
made. Nevertheless, since such persons who do not fulfil 
this condition may opt for taxation of their acquisitions 
in the country of destination, the seller may claim 
exemption for his supplies in the country of departure if 
the person by whom the goods are acquired has exercised 
the option available to him. 
(c) In conformity with the general principles of the common VAT 
system, supplies of services directly linked to supplies of 
20 
goods which are exempt under the transitional arrangements 
are themselves exempt in the country in which they are 
territorially located under this proposal. The services 
concerned here are mainly transport of goods services and 
ancillary services as well as services of intermediaries 
acting in the name and on behalf of another. This provision 
aims at applying the same tax arrangements to services as 
that applied to the supplies to which they relate thus 
preserving the neutrality of the tax arrangements for intra-
Community trade. 
For the record, it is recalled that the COM(87) 322 proposal 
defined a new territoriality for transport services by 
providing for the taxation of the totality of intra-
Community transport services in the country of departure of 
the transport only. The transitional arrangements modify 
the application of this new rule to the extent that they 
reintroduce exemption for transport services directly linked 
to a supply of goods for export as defined in point 5(b). 
However, in the case of passenger transport the tax 
treatment of such supplies in relation to journeys 
undertaken within the Community will be the subject of 
specific provisions on the basis of a Commission proposal to 
be made before 31 December 1991. 
By way of conclusion, it should be pointed out that, in all 
the situations covered at (b) , the exemption applies 
irrespective of the place of establishment of the person by 
whom goods are acquired provided the latter are transported 
to a country other than the country of departure by the 
21 
seller or for his account. However, if the transport 
operation is carried out by the person by whom the goods are 
acquired or for his account, the exemption applies only on 
the express condition that the person by whom goods are 
acquired is not established in the country of 
departure. Subject to the provisions at (i), the exemption 
provided for at (b) is restricted to supplies made by the 
last seller in the country of departure. 
Point (c) 
The tax provisions in the country of destination are developed in 
(c) . The proposed provisions define the acquisition transaction 
and the procedures for taxing such transactions. They are, 
therefore, the consequence of the provisions laid down at (b) and 
need to be looked at in conjunction with the latter. 
Definition of "acquisition" transactions taxable in the country of 
destination 
(a) By analogy with supplies exempt in the country of departure 
under the provisions of (b), the matching acquisitions are 
liable to tax in the country to which the goods are transported 
or dispatched. The acquisition transaction is, therefore, 
defined as "the process of acquiring the right to dispose of 
tangible property as owner": it thus exactly mirrors in the 
country of destination the supply transaction carried out in 
the country of departure, this being defined as "the process of 
transferring the right to dispose of tangible property as 
owner". These two transactions, which are located in two 
different countries for VAT purposes, are based on the 
22 
occurrence of one and the same legal event which finds 
practical embodiment in the drawing-up of a supply-acquisition 
contract. 
The point should be made that the acquisition transaction may 
involve only goods that are transported or dispatched to 
another Member State, regardless of the conditions under which 
such transport takes place and, in particular, regardless of 
the conditions governing payment of the transport costs (by the 
seller or for his account, by the person by whom the goods are 
acquired or for his account). 
(b) To the extent that differences in the scope of the right to 
deduct continue to exist, it has appeared necessary to make the 
appropriation of certain property taxable in the country of 
destination by assimilating such transactions with acquisitions 
made for consideration. Similar considerations apply to the 
transfer of property between two Member States by a fully 
exempt taxable person or by a non-taxable person within the 
meaning of Article 4(5). In both cases, the question concerns 
the preservation of the neutrality of VAT whether it be applied 
to domestic transactions or within the framework of intra-
Community relations: in consequence, it is intended to tax in 
the country of destination goods which otherwise would have 
been consumed there without the VAT applicable being 
charged. Naturally, the Member State of destination is obliged 
to take account of VAT which may have been charged on the goods 
in the Member State of departure so as to avoid possible double 
taxation. 
23 
Place at which an acquisition transaction takes place 
In order to ensure that taxation takes place in the country of 
destination, an acquisition transaction from a territorial 
viewpoint, is situated at the place where the goods that have been 
transported or dispatched are situated. 
Chargeable event and chargeability of VAT in respect of acquisition 
transactions 
In this context, chargeable event and chargeability coincide and 
occur at the time the acquisition transaction is carried out. 
Accordingly, a supply transaction exempt under (b) and the matching 
acquisition transaction under (c) are transactions which are each 
characterized by their own chargeable event and chargeability but 
which, nevertheless, are located at the same moment in time since 
the legal conditions necessary for tax to become chargeable are 
identical for both transactions. 
Point (d) 
Given the nature of the acquisition transaction, its taxable amount 
can only be the taxable amount for the matching supply transaction 
in the country of departure and, as such, it is based on the 
concept of consideration defined in Article 11(A)(1) and (2). For 
the record, point 4 of this proposal defines the rate of exchange 
applicable to those elements of the taxable amount drawn up in a 
currency other than that of the country of taxation. In particular 
this provision applies to the taxable amount for acquisition 
transactions. An additional provision has been introduced to cover 
24 
those cases in which acquisition has given rise to a transport 
operation carried out by the person by whom the goods are acquired 
or for his account and to ancillary services the costs of which are 
borne by the person by whom the goods are acquired and not by the 
seller. In such cases, the value of the services incidental to the 
acquisition of goods must be included in the taxable amount for 
that acquisition and hence taxed at the rate and under the 
conditions obtaining in the country to which the goods are 
transported. It is to be noted that this provision has to be taken 
together with the exemption in the country of departure for the 
supply of services directly linked to supplies exempt under (b). 
If the costs of those same supplies are borne by the seller, their 
value will form an integral part of the consideration sought by the 
seller from the person by whom the goods are acquired and will, as 
a result, be automatically included in the taxable amount for the 
acquisition transaction. In conformity with the objective of 
applying taxation in the country of destination, the rate of VAT 
applicable to the acquisition transaction will be the same as that 
applied within the territory of the country of destination to a 
supply of the same goods. 
Point (e) 
The person liable for the tax payable under the special 
arrangements for mail-order sales is, in accordance with the 
present provisions of Article 21(1)(a), the taxable person not 
established in the Member State of taxation or possibly his tax 
representative or some other person. 
Where tax is payable in respect of an acquisition transaction, the 
person by whom the goods are acquired is the person liable to pay 
the tax and he must comply with the obligations relating to 
declaration. 
25 
If the person by whom the goods are acquired is not established in 
the country where the acquisition transaction is taxable, it is 
specifically laid down that a fiscal representative of the person 
by whom the goods are acquired may be designated as the person 
liable to pay the tax. 
The person liable to pay tax is required to comply with the 
obligations relating to declaration and payment in respect of 
acquisition transactions on the regular return normally used by him 
to account for and pay the tax for which he is liable on domestic 
transactions as a taxable person. As a result, tax payable on an 
acquisition transaction is treated in exactly the same way as tax 
payable on a domestic supply transaction. If the person liable is 
not a taxable person or if he has been released from the 
obligations relating to declaration which were incumbent upon him 
as a taxable person under the arrangements applicable to domestic 
transactions, it will be for the Member States to define what 
obligations relating to declaration, settlement and payment are 
incumbent on him (inter alia a requirement to declare and pay the 
tax at the time a vehicle acquired by a private individual is 
registered). 
Point (f) 
Since Article 17(2)(a) of the Sixth Directive as amended by 
document COM(87) 322 will take effect only on expiry of the 
transitional period (cf. point (j)), this provision reintroduces 
for the duration of that period the rules on territoriality laid 
down in the Sixth Directive for a range of intangible services. 
It will not be possible during the transitional period to provide 
for a right to deduct input tax payable or paid in another Member 
State. 
26 
Point(g) 
Provisions which at present allow the right to opt for taxation in 
respect of banking and financial activities exempt under 
Article l3(B)(d) of the Sixth Directive, have been reintroduced 
under this point for the duration of the transitional arrangements. 
Point (h) 
This provision exempts the acquisition of goods the supply or 
importation of which would have been exempted in the country of 
destination. 
It thus covers acquisitions of goods the supply of which for 
domestic transactions would in any event be exempt, in particular 
by the provisions of Article 13 of the Sixth Directive on 
exemptions on domestic transactions. 
This also covers acquisitions of goods which if imported (from 
third countries) would have been exempt under the provisions of 
Article 14(1)(d) and (g) of the Sixth Directive. 
Moreover the provisions of Article 15(4) to (9) of the Sixth 
Directive will be examined later particulalrly in the context of 
possible changes to the proposal for a directive on ships stores 
presented by the Commission on 21 January 1980C11). 
Point (i) 
In view of the creation of the acquisition transaction, this point 
takes over the provisions of Article 16(2) of the Sixth Directive 
(ii)proposal COM(79)794 final, O.J. E.C. No C 31 of 8.2.1980, 
page 10 
27 
so as to give traders who make export supplies the possibility of 
benefitting from an exemption from tax in cases where they are the 
consignee for import transactions, acquisitions, supplies and 
services linked to their export supplies to other Member States or 
to third countries. 
Point (j) 
Under this provision, the person by whom goods are acquired may 
deduct VAT payable or paid on goods that have been the subject of 
an acquisition transaction. This right to deduct input tax is 
subject to the same conditions as the right to deduct VAT payable 
or paid on goods that have been supplied. It should, therefore, be 
noted that this right to deduct input tax may in principle be 
exercised as soon as the person by whom goods are acquired becomes 
liable for the tax payable on the acquisition transaction. 
Naturally, acquisition transactions will not be taken into 
consideration in determining the deductible proportion for 
partially taxable persons since they are not as such a component of 
turnover. 
It has also been necessary to include a special measure to ensure 
that, in a given Member State during the transitional period, a 
right to deduct VAT payable or paid in another Member State is not 
granted. 
Point (k) 
In the interests of setting out all the obligations to be complied 
with during the transitional period by persons liable to pay the 
tax, the text of Article 22 of the Sixth Directive has been 
reproduced in its entirety. However, only some of its provisions 
28 
have been amended; these are commented on below: 
First paragraph of Article 22(3)(a): The obligation to issue an 
invoice, which already covers any supply made to another taxable 
person, is extended to supplies made to a non-taxable person within 
the meaning of Article 4(5). This obligation applies irrespective 
of the country in which the person by whom the goods are acquired 
is established and thus supplements the text of Article 22(2) of 
the Sixth Directive as regards the supporting documents to be 
provided in respect of intra-Community transactions where both the 
supply and acquisition of goods are concerned; 
Second paragraph of Article 22(3)(b): In the case of supplies of 
goods covered by the transitional tax arrangements for intra-
Community trade in the country of destination, the invoice must 
give the VAT numbers of the two traders concerned. This provision 
makes it possible to enter on the invoice one of the factors 
essential in determining the tax treatment to be applied and, as 
such, is a necessary item of information for implementing 
administrative cooperation and mutual assistance procedures; 
Second and third paragraphs of Article 22(4): The proposed 
provisions define the obligation to declare the amount of intra-
Community supplies of goods by indicating separately from the total 
amount of transactions the amount of goods sent to other Member 
States and the amount of acquisitions received from other Member 
States. This obligation applies only to transactions involving 
tangible movable goods and, as a result, excludes transactions 
involving services not linked to a supply of goods; 
29 
Article 22(9): The obligation to issue an invoice in respect of 
goods supplied to persons in other Member States is not covered by 
the possibilities for easing the burden of obligations on persons 
liable to pay the tax since the invoice is important for 
identification purposes and for checking that the transactions in 
question have been afforded the proper tax treatment; 
Article 22(10): The exemption in the country of departure for 
supplies of goods referred to in the second indent at (b) is 
conditional on the VAT status of the person by whom the goods are 
acquired. In order to ensure that the seller possesses the 
necessary information to apply that exemption, the person to whom 
the goods are supplied must be able to produce a statement from the 
competent tax administration certifying his VAT status. As such a 
statement can be issued only at the request of the person by whom 
the goods are acquired, the latter must necessarily submit a new 
request in the event of any change in his VAT status. 
30 
Proposal for an 
Amendment to the proposal for a 
COUNCIL DIRECTIVE _ 
SUPPLEMENTING THE COMMON SYSTEM OF VAT 
AND AMENDING DIRECTIVE 77/388/EEC 
THE COMMISSION AMENDS ITS PROPOSAL0) AS"FOLLOWS: 
1. The following shall be inserted between the second and third 
recitals: " " 
"Whereas nevertheless the full and definitive abolition of fiscal 
frontiers presupposes the fulfilment of conditions which cannot 
be satisfied before 31 December 1992; 
Whereas accordingly, a clearly defined transitional period must 
be provided for during which transitional provisions designed to 
facilitate passage to the definitive taxation arrangements and to 
ensure the irreversibility of the process leading to the complete 
abolition of fiscal frontiers, must be implemented;" 
2. Article 2 is replaced by the following provisions: 
. _ . . . ".Article 2 
Article 28 of Directive 77/388/EEC is hereby replaced by the 
following: 
Article 28 
Notwithstanding the other provisions of this Directive and 
without prejudice to Article 32, the following provisions, shall 
apply until 31 December 1996 at the latest: 
(1)0J No C 252, 22.9.1987, p.2. 
31 
(a) Where goods supplied to a non-taxable person or to a taxable 
person whose activity is fully exempt, who does not qualify 
for the arrangements provided for in the second indent of point 
(b), are dispatched or transported they shall be deemed to be 
supplied at the place where they are at the time they reach 
the person by whom the goods are acquired, provided that the 
following conditions are simultaneously met: 
- the supplies comprise goods other than private vehicles 
that have been dispatched or transported to another Member 
State ; 
- the supplies are effected within the context of mail-order 
selling. "Mail-order selling" means a specialized economic 
activity involving goods selected from a catalogue and sold 
on a retail basis. "Catalogue" means any offer to the 
public made using any medium whatsoever which is reproduced 
in bulk and which lists the articles for sale in such a way 
that the following three criteria are met: 
-the contract ', is concluded on the basis of a trader's 
catalogue which the consumer has a proper opportunity of 
reading in the absence of the trader, 
32 
r there is intended to be continuity of contact between the 
trader and the consumer in relation to that or any 
subsequent transaction, 
- both the catalogue and the contract clearly inform the 
consumer of his right to return goods to the trader within 
a period of not less than seven days of receipt or 
otherwise to cancel the contract within that period without 
obligation of any kind other than to take reasonable care 
of the goods : 
- the annual turnover exclusive of value-added tax generated 
by the seller in connection with mail-order selling to 
Member States other than that from which the goods are 
dispatched or transported exceeds the equivalent in 
national currency of ECU 1 million at the conversion rate 
ruling on the day on which this Directive is 
adopted. Member States shall grant to taxable persons not 
satisfying this condition the right to opt for the present 
arrangements governing mail-order sales. The option shall 
apply for two calendar years; 
(b) Under conditions which they shall lay down for the purpose of 
ensuring the correct and straightforward application of the 
exemptions provided for below and of preventing any evasion, 
avoidance or abuse, Member States shall, by analogy with the 
transactions referred to in Article 15, exempt the following 
where they are effected by taxable persons other than those 
qualifying for the exemption from tax referred to in 
Article 24 or for the flat-rate arrangements referred to in 
Article 25: 
- supplies of private vehicles forming part of the seller's 
stock in trade and dispatched or transported to another 
Member State by the seller or for his account or by a 
person not established within the territory of the country 
by whom the goods are acquired or for his account; 
33 
supplies other than those referred to in (a) to a taxable 
person or to a non-taxable person within the meaning of 
Article 4(5) of goods other than private vehicles as 
referred to in the first indent which are dispatched or 
transported to a taxable person or a non-taxable person 
within the meaning of Article 4 (5) in another Member State 
by the seller or for his account or by a person not 
established within the territory of the country by whom the 
goods are acquired or for his account. 
However, where the person by whom the goods are acquired is 
a taxable person whose activity is fully exempt or a non­
taxable person within the meaning of Article 4(5), this 
provision shall apply only from the moment during the 
calendar year when the total amount of corresponding 
purchases exclusive of value-added tax exceeds the 
equivalent value in national currency of ECU 35 000 at the 
conversion rate ruling on the day this Directive is 
adopted. This amount shall be increased to ECU 70 000 with 
effect from 1 January 1995, at the conversion rate applicable 
on that date. The threshold for purchases which applies 
for the purposes of these provisions consists of the amount 
of purchases exclusive of value-added tax which have been 
dispatched or transported from a Member State other than 
the Member State of arrival of the goods, with the 
exception of: 
- purchases of private vehicles the supply of which is 
covered by the provisions of the first indent 
- purchases of goods the supply of which is covered by the 
provisions of point (a) 
- purchases of goods the supply of which is effected by a 
taxable person who benefits from the exemption regime of 
Article 24. 
34 
This provision shall also apply where the respective 
ceilings of ECU 35 000 and ECU 70 000 have not been 
exceeded, provided that the person to whom the goods are 
supplied has exercised this option. The option shall be 
valid for two calendar years; 
- supplies of services, including transport and incidental 
transactions but excluding supplies of services exempt 
under Article 13, where they are directly linked to 
transactions referred to in this point (b); 
- supplies of services made by intermediaries acting for and 
on behalf of others where they intervene in transactions 
referred to in the first, second and third indents of this point (b); 
(c) VAT shall be charged on acquisitions for consideration of 
goods the supply of which by taxable persons is governed by 
the provisions set out in the first and second indents of point 
(b). "Acquisition of goods" means the process of 
acquiring the right to dispose of tangible property as 
owner. The place where an acquisition is made shall be 
deemed to be the place where the goods dispatched or 
transported are at the time they reach the person by whom 
they are acquired. The chargeable event shall occur and the 
tax shall become chargeable when the acquisition is made. 
35 
The following shall be treated as an acquisition of goods for 
consideration: 
- the acquisition by a taxable person whose activity is fully 
exempt or by a non-taxable person within the meaning of 
Article 4(5), for the purposes of his activity in the 
Member State of destination, of goods transferred from the 
Member State of departure of the goods. The Member State of 
arrival of the goods shall take the measures necessary to 
avoid any double taxation; 
- the acquisition by a taxable person, for the purposes of 
his activity in the Member State of destination, of goods 
not eligible for a deduction of input tax in full or in 
part where those goods have been transferred from the 
Member State of departure of the goods. The Member State of 
arrival of the goods shall take the measures necessary to 
avoid any double taxation; 
By derogation from Article 8(1)(a) where the place of 
departure of the consignment or transport of goods is in a 
Member State other than the country of acquisition of those 
goods, the place of the supply by the person by whom the 
goods are acquired and the place of any subsequent supplies 
shall be deemed to be in the country of acquisition of the goods; 
(d) The taxable amount of the acquisition shall be the same as 
that which would be applicable within the territory of the 
country to the supply of the same goods in accordance with 
Article 11(A)(1) and (2) and (C) . To the extent that they 
have not already been included, the taxable amount of the 
acquisition shall include expenses incidental to the 
36 
acquisition such as commission, packaging, transport and 
insurance costs charged up to the point within the territory 
of the country at which the goods dispatched or transported 
arrive. 
As regards the transfer of goods referred to in the second 
indent of point (c), the taxable amount shall be determined in 
accordance with Article 11(A)(1)(b). 
The rate of tax applicable to the acquisition of a good shall 
be that applied to the supply of the same good within the 
territory of the country; 
(e) In the case referred to in point (a), the tax shall be payable in 
accordance with Article 21(1)(a). 
In the cases referred in point (c), the. person by whom the goods 
are acquired shall declare the acquisition and shall pay the 
tax. Where the taxable transaction is carried out by a 
person by whom the goods are acquired who is established 
abroad, Member States may take measures providing for the tax 
to be payable by another person - in particular a fiscal 
representative may be designated for these purposes. 
Where the person liable to pay the tax is a non-taxable 
person or a taxable person released from the obligation to 
make a tax return, Member States shall take the measures 
necessary to ensure that he complies with the obligations set 
out in point (k). To that end, provision may be made for the 
simplification of those obligations and for an annual return; 
(f) The place where services specified in Article 9(2)(e) are 
supplied when performed for customers established outside the 
37 
Community or for taxable persons established in the Community 
but not in the same country as the supplier shall be the 
place where the customer has established his business or has 
a fixed establishment to which the service is supplied or, in 
the absence of such a place, the place where he has his 
permanent address or usually resides; 
(g) Member States may grant taxable persons the right to opt for 
taxation of the transactions referred to in Article 13(B)(d); 
(h) Member States shall exempt the acquisition of goods the 
supply of which would in all circumstances be exempted within 
the country. They shall also exempt the acquisition of goods 
the importation of which would in all circumstances be 
exempted pursuant to Article 14(1)(d) and (g); 
(i) Subject to the consultation provided for in Article 29, 
Member States may opt to exempt acquisition by, imports for, 
and supplies of goods to a taxable person intending to export 
them to another Member State or to a third country as they 
are or after processing, as well as supplies of, services 
linked with his exporting business, up to a maximum equal to 
the value of his exports during the preceding twelve months; 
(j) The provisions governing deductions shall also apply to VAT 
payable or paid on the acquisitions referred to in point (c). 
38 
However, the tax payable or paid in a Member State by a 
taxable person: 
- in respect of goods supplied or to be supplied to him by a 
taxable person; 
- in respect of goods which have been imported or have been 
subject to an acquisition; 
- and in respect of services supplied or to be supplied to 
him by a taxable person; 
shall not qualify for deduction in another Member 
State. With regard to taxable persons who are established in 
the territory of the Community, the right to refund shall be 
determined pursuant to Directive 79/1072/EEC during the 
transitional period; 
(k) By way of derogation from the provisions of Article 22 the following shall apply: 
1. Every taxable person shall state when his activity as a 
taxable person commences, changes or ceases. 
2. Every taxable person shall keep accounts in sufficient 
detail to permit application of value added tax and 
inspection by the tax authority. 
3. (a) Every taxable person shall issue an invoice, or 
other document serving as an invoice, in respect of 
all goods and services supplied by him to another 
taxable person or to a non-taxable person within the 
meaning of Article 4(5) and shall keep a copy 
thereof. This obligation shall apply, irrespective 
of whether the persons referred to in this paragraph 
are taxable persons or non-taxable persons as 
39 
defined in Article 4(5) within the territory of the 
country or in another Member State. 
Every taxable person shall likewise issue an invoice 
in respect of payments on account made to him by 
another taxable person before the supply of goods or 
services is effected or completed. 
(b) The invoice shall state clearly the price exclusive 
of tax and the corresponding tax at each rate as 
well as any exemptions. 
The invoice shall also state in respect of 
transactions referred to in point (b) of this Article 28 the VAT 
registration number of the taxable person supplying 
the goods and that of the person by whom they are 
acquired. 
(c) The Member States shall determine the criteria for 
considering whether a document serves as an invoice. 
Every taxable person shall submit a return within an 
interval to be determined by each Member State. This 
interval may not exceed two months following the end of 
each tax period. The tax period may be fixed by Member 
States as a month, two months or a quarter. However, 
Member States may fix different periods provided that 
these do not exceed a year. 
40 
The return must set out all the information needed to 
calculate the tax that has become chargeable and the 
deductions to be made, as well as, where appropriate, 
the total amount of supplies referred to:in point (b) of, this Article 
28, the total amount of acquisitions referred to in point (c) ot^chis Article 28 and, in 
so far as it seems necessary for the establishment of 
the basis of assessment, the total amount of the 
transactions relative to such tax and deductions, and 
the total amount of the exempted supplies. 
5. Every taxable person shall pay the net amount of value 
added tax when submitting the return. The Member States 
may, however, fix a different date for the payment of 
the amount or may demand an interim payment. 
6. Member States may require a taxable person to submit a 
statement including the information specified in 
paragraph 4 and concerning all transactions carried out 
the preceding year. This statement shall also provide all 
the information necessary for any adjustments. 
7. Member States shall take the necessary measures to 
ensure that those persons who, in accordance with 
Article 21(1)(a) and (b), are considered to be liable to 
pay tax instead of a taxable person established in 
another country and who are jointly and severally liable 
for the payment comply with the obligations relating 
to the submission of a return and payment. 
41 
8. Without prejudice to the provisions to be adopted 
pursuant to Article 17(4), Member States may, subject to 
respecting equality of treatment between domestic and 
intra-Community transactions, impose other obligations 
which they deem necessary for the correct levying and 
collection of the tax and for the prevention of fraud. 
9. With the exception of the obligation to issue invoices 
in respect of supplies specified in point (b), Member 
States may release taxable persons: 
- from certain other obligations; 
- from all other obligations where those taxable persons 
carry out only exempt transactions; 
- from the payment of the tax due where the amount is 
insignificant. 
10. Where a taxable person or a non-taxable person within 
the meaning of Article 4(5) or a taxable person 
qualifying for the arrangements laid down in 
Articles 24 and 25 so requests, the competent 
authorities in the Member State in which he is 
established shall issue to him a statement certifying 
his VAT status provided the person making the request 
fulfils the conditions defined in the second indent of point 
(b). However, where the seller already possesses such a 
statement, the person by whom the goods are acquired 
shall not be obliged to provide a new statement during 
the calendar year for which the statement was 
42 
issued. That statement shall be in conformity with the 
specimen certificate set out in the Annex hereto. 
If a statement certifying his VAT status has already 
been issued to him, the taxable person or the non­
taxable person within the meaning of Article 4(5) shall 
submit a new request in the event of any change in his 
VAT status." 
3. Article 3 is replaced by the following provisions : 
"Article 3 
1. The following Council Directives shall cease to have effect 
on 31 December 1992: 
Directive 83/183/EEC 
Directive 74/651/EEC 
2. The following Council Directives shall cease to have effect 
on 31 December 1992 in so far as intra-Community relations 
are concerned: 
Directive 69/169/EEC 
Directive 83/181/EEC 
Directive 85/362/EEC 
3. The following Council Directives shall cease to have effect 
on 31 December 1996: 
Directive 79/1072/EEC 
Directive 83/182/EEC." 
4. A new Article 4b shall be inserted : 
"Article 4b 
Article 11(C)(2) of Directive 77/388/EEC shall be replaced by 
43 
the following provisions : 
(2) Where elements determining the taxable amount are expressed in a 
currency other than that of the Member State where evaluation is 
carried out, the rate of exchange applicable shall be the last 
rate of sale registered on the most representative exchange 
market or markets of the Member State concerned at the time the 
tax becomes payable according to procedures fixed by Member 
States." 
Done at Brussels, " For the Council 
44 
ANNEX 
CERTIFICATE OF VAT STATUS 
(Name and address of competent authority) 
certifies that 
(Surnames and forenames or name of firm) 
(nature of activity) 
(Address of the establishment) 
is recognised for VAT purposes under the registration number 
as an operator entitled to receive supplies of goods 
exempted from value-added tax by virtue of the application of 
Article 2 of Directive COM(87) 322 as amended by Directive COM (90) 
182. 
Date 
Official 
Stamp 
(Signature, name and grade) 
(1) If the applicant does not have a VAT registration number, the 
competent authority shall state the reason for this. 

45 
COMPLIANCE BURDENS ON FIRMS AND AFTER 1992 
DUE TO VAT AND STATISTICAL RETURNS 
IMPACT ASSESSMENT 
Present situation: 
VAT 
Current customs based import/export procedures require that 
goods consignments must stop at customs posts when crossing 
borders. In addition the goods have to be declared to the 
authorities and cleared through Customs either at the border or 
elsewhere. Goods consignments are declared to the customs 
authorities using the Single Administrative Document (SAD). 
At present up to 50 boxes approximately on the (SAD) may have to 
be completed in respect of each individual consignment, in trade 
between Member States I1). Additionally a further five boxes 
must be completed by the administrative authorities. 
No precise figures are available for the number of SAD's issued 
in any one year. However a reasonable estimate is that between 
50 to +/- 60 millions SAD's are used in purely intra-Community 
trade each year. This figure would not include other 
consignments, such as third-country goods transiting the 
Community. 
Taxable traders who use the SAD for import and export 
transactions also have to complete periodic VAT returns in the 
usual manner. 
Statistics 
The SAD is also used as the basis for the collection of 
statistics on trade between Member States. 
Situation from 1993 onwards 
Under the Commission's proposal, the obligations imposed on 
Community firms will be considerably reduced: 
^ All these boxes may not necessarily be completed by the same 
firm. 
46 
VAT 
No SAD will be required in most intra-Community trade. 
There will be no stops or controls at borders by customs. 
Custfom clearance formalities will also be dispensed with. 
For traders subject to VAT, the only obligations relating to 
intra-Community trade will be: 
- an inclusion in their normal periodic VAT-returns of two 
global (import and export) figures for their trade with other 
Member States. 
- the inclusion of the VAT-number of seller and purchaser on the 
invoice documenting the transaction. 
- obtaining a declaration from the domestic VAT-authorities, 
that they are subject to VAT. This documentation shall be 
given to the seller in the other country as a precondition for 
the zero-rating of exports. 
Once completed, however, these requirements would involve no 
further compliance burden transaction-by-transaction. The only 
other documentary requirement will be to keep the normal common 
records and documents which firms are required to keep in any 
case. 
Small enterprises(2) VAT exempt can chose between two options: 
- they simply buy in other Member States at the rate of VAT 
applicable in those other Member States (rate of VAT in 
country of origin), implying absolutely no subsequent 
relations with VAT-authorities in any countries, subject to an 
annual purchases threshold of 35.000 ecus*3', above which they 
must use the following option; 
- they can choose to buy VAT-free, but pay subsequently the 
domestic rate of VAT on the purchase. This presupposes a 
registration with the VAT-authorities, so that they can prove 
their status to the seller. 
The same regime applies to traders which are exempt from VAT by 
reason of the type of activity they carry on (banks, insurance, 
some public institutions etc.). 
(*) The Commission has a proposal before the Council which will 
harmonise the VAT exempt thresholds, which at present vary 
between Member States, to an obligatory level of 10.000 ecus 
per annum and an optional level of 35.000 ecus throughout 
the Community. 
*3' This threshold will be raised to 70.000 ecus with effect 
from 1 January 1995 
47 
Statistics 
As the SAD document disappears a new system is introduced for 
the collection of trade statistics between Member States 
implying the following burdens: 
Small enterprises which are VAT exempt are completely exempted 
from the supply of any statistics on trade between Member 
States. 
- The great majority of other firms will only be required to 
complete two extra boxes (value of intra-Community imports and 
exports) on their periodic VAT returns, which would serve both 
VAT and statistical purposes. 
- Only the largest firms (about 20% of VAT registered firms) 
will in addition be required to complete an INTRASTAT monthly 
declaration for statistical purposes on which seven compulsory 
and three optional data items are to be indicated. 
The situation after 1992 
When the regime change towards the taxation in the country of 
origin as the general principle, requirements relating to the 
documentation of the status of the buyer will in general 
disappear. 


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COM(90) 182 final 
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