No C 272/12 Official Journal of the European Communities 28.10.86 
Article 7 
1. Member States shall take the measures necessary to 
comply with this Directive by 1 July 1987 at the latest. 
They shall immediately inform the Commission thereof. 2. Member States shall forward to the Commission 
the text of all provisions of national law which they 
adopt in the field covered by this Directive. 
Article 8 
This Directive is addressed to the Member States. 
Proposal for a Council Directive amending Directive 77/388/EEC on the harmonization of the 
laws of the Member States relating to turnover taxes in respect of the common value added tax 
scheme applicable to small and medium-sized businesses 
COM(86) 444 final 
(Submitted by the Commission to the Council on 9 October 1986) 
(86/C 272/11) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, Article 24 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 99 
thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Par­
liament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas, in accordance with Article 24 of the Sixth 
Council Directive 77/388/EEC of 17 May 1977 on the 
harmonization of the laws of the Member States relating 
to turnover taxes — common system of value added tax: 
uniform basis of assessment ('), as last amended by the 
Act of Accession of Spain and Portugal, Member States 
apply exemptions and special schemes for charging and 
collecting VAT in the case of small businesses other than 
those covered by the common flat-rate scheme for 
farmers; Special scheme for small and medium-sized under­
takings 
1. (a) Member States shall apply a tax exemption to 
taxable persons whose annual turnover is less 
than the equivalent in national currency of 
10 000 ECU. 
(b) Member States may apply a tax exemption to 
taxable persons whose annual turnover is less 
than the equivalent in national currency of 
35 000 ECU. 
2. The exemption shall apply to the supply of 
goods and services by small and medium-sized under­
takings. 
Whereas, the Commission has reported to the Council 
on the application of these various schemes and has 
suggested improvements which would ensure greater 
convergence in the application of VAT in this area and 
achieve greater simplification in handling VAT in small 
and medium-sized business, 
HAS ADOPTED THIS DIRECTIVE: 
Article 1 
Article 24 of Directive 77/388/EEC is hereby replaced 
by the following: 
0) OJNoL 145, 13.6. 1977, p. 1. 3. Turnover for the purposes of paragraph 1 shall 
consist of the amount, exclusive of value added tax, 
of goods and services supplied as defined in Articles 
5 and 6, to the extent that they are taxed, including 
transactions exempted with refund of tax previously 
paid in accordance with Article 28 (2), and the 
amount of the transactions exempted pursuant to 
Article 15, the amount of real property transactions, 
the financial transactions referred to in Article 13 
B (d), and insurance services, unless these 
transactions are ancillary transactions. 
However, disposals of tangible or intangible capital 
assets of a business shall not be taken into account 
for the purposes of calculating turnover. 
28.10.86 Official Journal of the European Communities No C 272/13 
4. Taxable persons exempt from tax shall not be 
entitled to deduct tax in accordance with the 
provisions of Article 17, nor to show the tax on their 
invoices or on any other documents serving as 
invoices. 
5. Taxable persons coming under the exemption 
scheme may opt either for the normal value added 
tax scheme or, where appropriate, for a simplified 
scheme. 
6. Member States shall introduce a simplified 
scheme for charging and collecting the tax in 
accordance with the following provisions: 
(a) the scope of the simplified scheme for charging 
and collecting the tax shall be limited to 
businesses with an annual turnover of less than 
the equivalent in national currency of 150 000 
ECU. 
(b) Notwithstanding the first subparagraph of Article 
10 (2), the chargeable event shall be the payment 
for the goods or services supplied. 
(c) As a corollary, and notwithstanding Article 
17 (1), the right to deduct shall arise at the time 
of payment for the goods or services by the 
taxable person. 
(d) The transitional provisions of Article 28 (3) (d) 
derogating from the principle of immediate 
deduction laid down in the first subparagraph of 
Article 18 (2) shall not de applicable. 
(e) The taxable person shall make an annual return, 
each Member State endeavouring to ensure that 
the date of the return is the same as that of the 
return required from the taxpayer in respect of 
direct taxation. 
(f) The taxable person shall make monthly or 
quarterly advance payments equal to one-twelfth 
or one-quarter, respectively, of the net amount 
on value added tax paid the previous year, unless 
he declares on his own responsibility that such 
advance payments are greater than the tax 
actually due for the current year. He shall make 
adjustments depending on the real net amount of 
value added tax indicated in his annual returns 
and pay any balance due when the return is filed. 
If the balance is in his favour, the Member State 
shall repay the amount thereof in the month 
following the adjustment. (g) Member States may introduce, for certain groups 
of taxable persons whose purchases are 
sufficiently homogeneous in relation to their 
turnover, flat-rate percentages for calculating 
deductible VAT as a proportion of their 
turnover, provided this does not lead to a 
reduction of tax. Member States wishing to 
introduce flat-rate percentages shall inform the 
Commission in accordance with the procedure 
set out in paragraph 8. 
7. A Member State may be authorized to retain: 
(a) its existing exemption scheme on condition that 
such regime is more favourable to small and 
medium-sized businesses than that set out in 
paragraphs 1 to 5; 
(b) its existing simplified regime, on condition that 
this regime is calculated to simplify the 
obligations of taxable persons, in particular as 
regards the charging and collection of the tax, in 
a manner wich is no less favourable to small and 
medium-sized businesses than that set out in 
paragraph 6. 
8. A Member State which wishes to introduce the 
measures referred to in paragraph 6 (g) or to retain 
its existing special scheme as provided for in 
paragraph 7 shall inform the Commission and shall 
provide it with all relevant information. For the 
measures referred to in paragraph 6 (g), the Member 
State shall provide details of the information used to 
calculate the flat-rate percentages and of the size of 
purchases made at different rates in the economic 
sector concerned. 
9. The Commission shall inform the other 
Member States of the measures envisaged by the 
Member State, pursuant to paragraph 7, within two 
months and shall submit, if it considers it appro­
priate, a proposal to the Council with a view to auth­
orizing such measures. The Council shall decide by 
qualified majority after the European Parliament has 
given its opinion. 
10. The level of the Community exemption 
provided for in paragraph 1 (a) and (b) and the 
amount of turnover set out in paragraph 6 (a) shall 
be revised each year, by a decision of the 
Commission, in order to maintain their values in real 
terms. The Commission's decision shall be taken by 
1 October each year and shall take effect from 
1 January the following year. 
11. The equivalent in national currency of the 
ECU which shall apply for the implementation of this 
Directive shall be fixed once a year by the 
Commission. The rates applicable shall be those 
obtained on the first working day of October, with 
effect from 1 January the following year.' 
No C 272/14 Official Journal of the European Communities 28.10.86 
Article 2 
1. Member States which wish to make use of the 
option set out in Article 24 (7) shall introduce their 
request to the Commission within six months from the 
date of adoption of this Directive. 
2. Member States shall provide the Commission with 
the whole of the information necessary to determine the 
own resources due, and in particular with regard to the 
number of taxable persons and their corresponding 
turnover where such turnover exceeds the equivalent in 
national currency of 10 000 ECU and who are subject to 
the special scheme for small and medium-sized 
businesses. 3. Member States shall bring into force the measures 
necessary to comply with this Directive not later than 
1 April 1987. 
4. Member States shall inform the Commission of the 
measures which they adopt to give effect to this 
Directive. The Commission shall inform the other 
Member States thereof. 
Article 3 
This Directive is addressed to the Member States.