ARCHIVESHISTORIQUES
DELACOMMISSION
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DOCUMENTS "COM"
COM(82)412
Vol.1982/0137

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)412 final
Brussels,9July1982
Proposalfora
COUNCILREGULATION (ECSC,EEC,EURATOM)
amendingandextendingthetermofvalidityofRegulation (EEC,EURATOM,
ECSC)No2892/77implementing inrespectofownresourcesaccruingfrom
ValueAddedTaxtheDecisionof21April1970onthereplacement of
financialcontributions fromMemberStatesbytheCommunities *ownresources
(submittedtotheCouncilbytheCommission )
COM(82)412final

i'4 /. '?
' t-<-
EXPLAKATORY_MEMOR ANTUM
Article 14ofRegulation No2892/77states that theRegulation should
apply from 1January 1978 foratransitional period expiring on
31December 1982 andthat theCouncil ,acting unanimously onaproposal
from theCommission ,should adopt ,before 30June 1982 ,theprovisions
relating tothedefinitive uniform system for levying VAT resources and
thedetailed rules for implementing this system .
I-THE TRANSITIONAL PERIOD MP THE CHOICE OFASINGLE METHOD OF
DETERMINING THE VAT OWN RESOURCES BASE
1.Although theCouncil ,when itadopted Regulation No2892/77t
considered itnecessary toarrive at'auniform system for thelevying of
VAT ownresources ,theMember States were given the choice oftwo
methods ofdetermining the ownresources base for atransitional period
offive years :
(i)method Aorreturns method (Section AofTitle IIIof
Regulation No2892/77)where thebase isdetermined byreference
totheinformation contained inthereturns made bytaxable persons
for agiven year ;
(ii)method Borrevenue method (Section Bofthesame Title ),where the
base isdetermined byapplying aweighted average rate calculated
essentially from statistical data tototal revenue collected ina
given year .
Thefive year transitional period was tobeused forpreparing the
1
introduction ofadefinitive system ;itscontent and therules for its
application attheend ofthis period should have been laid down onthe
basis ofaCommission proposal totheCouncil (fourth recital of
Regulation No2892/77)*
However ,most oftheMember States haddifficulty introducing the
Sixth VATDirective *with effect from 1January 1978 ,andonly twoMember
States didinfact manage todoso.ANinth VATDirective **deferred by
oneyear ,i.e. to 1January 1979 »"thedeadline bywhich theother seven
should implement it.
♦Council Directive 78/388/EECof17May1977 ,0JL145,13.6.1977 .
**Council Directive 78/583/EECof26June 1978 ,0JL194,19.7.1978 .

w2-
For1979 only four more Member States were able tocomply .Thelast
three Member States were unable toimplement the Sixth Directive until
some time in1979 or1January 1980 ,
Thederogation provided forinArticle 4(2)oftheDecision of
21April 1970*cculd beeffective only iftheuniform basis ofassessment
wasapplied inatleast three Member States ;this wasnotthecase until
1January 1979 .Effective application ofRegulation No2892/77thus had
tobedeferred to 1January 1979 in "thecase ofsixMember States and to
1January 1980 inthecase ofthethree others e
/
2.Oneoftheconsequences oftheentry inforce ofthe Sixth Directive
being staggered over three years hasbeen toshorten –bytwoyears in
thecase ofsome Member States –thefive years considered necessary by
theCouncil andprovided forbyRegulation No2892/77 "toprepare forthe
introduction ofadefinitive system forVAT ownresources .
Inaddition tothis delay inactually applying Regulation No2892/77
(twoyears inthecase ofthree Member States andoneyear inthecase of
sixMember States )9itshould also beborne inmind that theMember
States arethen allowed sixmonths forpreparing thestatement ofthe
definitive base forafinancial year (application ofArticle 10of
Regulation No2892/77)andtheCommission needs time toperform its
inspections (application ofArticle 12)®
For thepurposes ofassessing theoperation ofthenewVAT ownresources
system ,theCommission did nottherefore have full information concerning
all the Member States until itwas able tocheck the first statements
from thethree Member States which didnotputthe Sixth Directive in
effect until 1January I98O0 TheCommission received these statements
by1July 1981 andchecked them inthethird quarter ofthat year ,but
not all theproblems could besettled o
3«Subject totheobservations inpoint 2,theCommission canalready
draw some conclusions from itsinspection activities . *
Therevenue method hasproved extremely complicated inpractice ;to
implement it,theCommission hasalready hadtogive itsinterpretation
ofmany oftherelevant Community rules ,andthe Mrs."! 1•■-<have had
todevote considerable effort tointerpreting statistics ,.
L94,28.4.1970

The Commission still maintains that the revenue metnod does not present
the same guarantees ofconsistency andaccuracy asthereturns method .
However ,itmust beadded that theCommission 'sexperience ofthe
returns method islimited toDenmark andIreland ,and some problems of
application have arisen .
Inthis connection ,theCommission isaware that ,because ofthe
complexity oftherevenue method ,some Member States areconsidering
abandoning itinfavour ofthe returns method .Should they doso,the
Commission would then acquire wider experience ofthereturns method
and could give amore authoritative opinion onits operation .
However ,theCommission atpresent has noinformation which would make it
goback ontheposition ittook initially when ,initsproposal tothe
Council ,itdeclared itspreference forthereturns method .However ,
before alltheMember States could adopt this method ,some ofthem would
have totake internal measures ,which would require some time toprepare .
4*The Commission maintains that ithas not been able tomake uee of
thefull five years envisaged bytheCouncil forestablishing the content
ofthedefinitive system and therules foritsapplication .However ,it
canbeseen that this amount oftime isinfact necessary since neither
theCommission northeMember States have yet come toanyconclusion on
the matter . The Commission therefore feels that the choioe ofa
definitive system should bedeferred andthat thetransitional period
should beextended byatleast thetwoyears which were lost from the
original five years specified bytheCouncil .
Three years areinfact requested toallow sufficient time todraft the
necessary provisions .

II-AIM OPTHE PROPOSAL
5»Since Regulation No2892 /77expires on31December 1982 ,the
Commission must send the Council aproposal for anewregulation .
Thepresent proposal extends theexisting provisions while improving
orsupplementing certain points «
Although ,forthereasons setoutinsection Iabove ,theCommission has
been unable topropose adefinitive uniform system ,ithas considered it
necessary ,inrequesting extension ofthetransitional period ,topropose
important amendments tospecific points ofthe existing provisions ,
mainly asregards application ofthe revenue method and theadministration
ofthe system bytheCommission .
Todate there have been noproposals under Article 28(4 )foramending the
transitional provisions ofthe Sixth VAT Directive .The corresponding
provisions ofArticle 9ofRegulation No2892/77»which deal with the
determination ofthe VAT own resources base where these transitional
provisions areapplied ,have therefore notbeen amended either ,except
for thedeletion ofthereference toparagraph 2ofAnnex Gtothe
Sixth VAT Directive o
6c Asregards thefollow-up tothefindings ofinspections *,itmaybe 1
noted that each inspection ofVATownresources sofarconducted bythe
Commission has ledtoobservations bytheCommission 'sofficials andthat
these observations have nearly always hadimplications fortheVATown .
resources base .TheCommission ,which implements therevenue side of
theCommunity budget ,must beable toadminister theVATownresources .
Where theCommission 'sinspectors make observations intheir findings ,
oneoftwothings canhappen :
(i)theMember State accepts theCommission 'spoint ofview andundertakes
tomodify this aspect ofthemethod fordetermining itsVATown
resources bases
*Seethereport annexed#

theCommission acts accordingly andadjusts theamount given by
theMember State inthe annual statement ofthebase ;
(ii)theMember State does notaccept theCommission 'spoint ofview ,
inwhich case the Commission must take anyappropriate measures
within itspowers and itsobligations toadminister ownresources .
Thenewprovisions proposed inthis field ,contained essentially in
Article 10b ,would enable theCommission :
(i)tomake these adjustments alltogether once ayear ;
(ii)incertain cases notcovered bytheexisting provisions ,totake an
immediate decision tosafeguard itsrights ,without having each time
tobring acase before the Court ofJustice ;
Given that theCommission 'sinspections areannual ,itisalso proposed
that nocorrections tothe Member States' statements should beallowed
after three years have passed .
8.Asregards thecalculation oftheweighted average rate fortheMember
States applying the revenue method ,the inspections conducted bythe
Commission 'sofficials have revealed just how complex are theoperations
performed bytheMember States' authorities tokeep national statistics for
ι
the sole purpose ofownresources .
The various methods applied intheMember States todetermine taxable final
expenditure andbreak itdown byrate have onefeature incommon :the
general economic statistics drawn from thenational accounts andpresented
inaccordance with theEuropean System ofIntegrated Economic Accounts must
beinterpreted andbroken down toreveal the actual tax situation which has
tobeanalysed .Furthermore ,thestatistics needed forthis analysis are
notalways available intime orfor each year .
Theprovisions proposed inthenewArticle 7aredesigned toprovide abetter
definition offinal expenditure ofyear n–2,which represents theMember
State 'sassessment base fortheyear n.They also amend theexisting
provisions fordealing with cases where theMember States have experienced
difficulties ,e.g. toadjust forachange inVATrates during theyear orto
take account ofthefinal consumption offlat-rate farmers (consumption on
thefarm anddirect sales bythese farmers ).

Ill-DETAILSOPTHEPROPOSED ATTJIDMENTS
Theproposedamendmentsarepresentedbelowinthesameorderasinthe
originalRegulation®
9.TITLEI-GENERALPROVISIONS
TheCommissionisnotproposinganyamendmentstothistitle.
1°.TITLEII-SCOPE
Article2(3)
*
ThreechangestoArticle2(3)shouldguaranteeuniformapplicationofthe
RegulationandmakeiteasierfortheKemberStatestodeterminethe
correction ,intheirfavour,oftheVATownresources "baseinrespectof
transactions performed "bytaxablepersonswhoseannualturnoverdoesnot
exceed10000ECU:
(a)thisprovisionismadeoptional;
(b)aruleforconvertingthe10000ECUlimitisproposed;
(c)amethodofcalculationisproposedwhichshouldputalltheKemberStates
onanequalfooting.Thecorrection mustbecalculatedinsuchawayas
tocomeintoline,asregardsownresources,withcountriesnotapplying
theexemptionarrangements .
11.TITLEIII-METHODSOFCALCULATION
Article3,
Theonlyproposalconcerningthisarticleisaredraftingtoremovethe
referencetothefirstyearinwhichtheRegulationenteredintoforce.
Article4(3)
Theobjectoftheproposalistoclarifytheterm"estimatedassessment *,
sincethistypeofassessmentisnotusedsolelyincaseswherethereisan
absenceofreturns,owingtofailureofthetaxablepersontofulfilhis
obligations .
Article6
Thisarticleisredraftedsothatthemethodsofcalculation areharmonized.

Theproposalsrelatingtothisarticlearesomeofthemostimportant.
HavingconductedinspectionsinalltheMemberStates,insomeofthemfor
twofinancialyears,theCommissionseestheneedforamendmentstothe
provisionsgoverningthedetermination oftheweightedaverageratesothat
thecalculation methodsused"bytheMemberStatesVJill"beasuniformaspossible.
(a)Inordertoproduceamoreaccuratestatisticalpictureoffinal
consumptionfortheyearn-2,thecategoriesofconsumptiontobe
takenintoconsideration aremoreclearlydefined.
(b)Anotionalrateisappliedtofinalconsumptioncorresponding to
consumption onthefarmanddirectsalesbyflat–ratefarmersinthe
calculationoftheweightedaveragerate(newparagraph3).
(c)Thesourcesofstatisticsarerankedsothatpreferencecanbegiven
tofiguresfromnationalaccountspreparedinaccordancewiththe
EuropeanSystemofIntegratedEconomicAccounts(ESA)forthe
penultimate yearprecedingthefinancialyear.
ThesenationalaccountspreparedinaccordancewiththeESAshould
bethemainsourceofdata;internalnationalaccountsorother
sourcesshouldnotbeusedunlessadequatestatisticsofthistype
arenotavailable.
IftheMemberStateshavedifficultiesobtainingthestatisticsfor
yearn-2ingoodtime,theymay,asinthepast,seekauthorization
tousedatarelatingtoapreviousyearundertheprocedurelaid
downinArticle13(newparagraphs4and5)«
(d)Asimplermethodthanthepresentoneisproposedwhichwouldenable
MemberStatestoavoidhavingtocalculateanewweightedaverage
ratewhenVATratesarechangedduringthereferenceyear(new
paragraph7)•
(e)Theprovisionfordeterminingtheweightingofeachrateisredrafted.

-8-
Article 8(2_)
Itisproposed that more detailed rules "belaid down fortnecalculation
oftheundercompensation offlat~farmers fortheir input taxcharge in
some Member States .
Since Article 8(2)oftheRegulation refers toArticle 25(3 )ofthe
Sixth Directive ,itwould beappropriate topoint outthat this isa
restatement oftheprinciple ofthe special scheme that Member States
mayundercompensate flat-rate farmers fortheir input taxcharge .But
from thepoint ofview ofthecalculation ofthecompensation ,aswith
thecalculation ofany other compensation under the ownresources
arrangements ,the exact effect ofthestructural undercompensation must
befound fortheyear inquestion .Todothis ,itisnecessary to
calculate thedifference between theflat-rate percentage applied tothe
,agricultural production oftheflat-rate farmers andtheinput VAT
charge for that year .
The reference inthe same article tothe average ofthe three previous
years isofrelevance only for the calculation oftheflat-rate
compensation percentages which ,being fixed inadvance forthesales of
thecoming year ,must relate toanaverage production figure inorder to
eliminate annual fluctuations ,which arefrequent inagriculture .
.Article 9
Itisproposed that theprovision beadapted :
(i)totake into account theexpiry ofthethree years specified in
paragraph 2ofAnnex Gtothe Sixth Directive ;
(ii)tospecify thelimited scope ofparagraph 4inline with the
statement entered inthe Council minutes ,
12# TITLE IV-PROVISIONS RELATING TOTHE ACCOUNTING AND MAKING
AVAILABLE OPOWN RESOURCES
'Artide 10
t
Itisproposed that thearticle beadapted :
(i)toclarify theobligations oftheMember States asregards the
content ofthe annual statement ofthe total final amount ofthe
base :

(ii)toreflectthefactthatalltheMemberStateshavechosenthe
calendaryearasthetwelve–monthperiod#
Article10a
SincemostMemberStateshaveeachyearsuppliedanestimateofthevalue
ofthebaseforeachcategoryoftransactionqualifyingforfinancial
compensation ,thisarticlesetsout,ingreaterdetail,theprovisions
previouslycontainedinArticle10(4)•
Article,10b
Itisproposedthatthecurrentparagraph3bereplacedbyanarticle
containingthesamestatementofprincipleasregardscorrectionofthe
VATbase,whiletwofurtherparagraphsbeaddedstatinghowtheCommission
takesintoaccountthecorrections madetotheannualstatement onits
owninitiativefrominformation providedeitherbytheCommissionorby
theMemberStates.
Theconsequences ofthesecorrections asregardstheannualadjustment
oftheVATbaseoftheMemberStatesaredealtwithinRegulationNo2891/77*
13.TITLEV-PROVISIONS CONCERNING MEASURESr
Article.j_1
Itisproposedthatthefirstparagraphofthisarticleberedraftedas
regardstheprovisionsfortheentryinforceoftheRegulation.
Article12
Athirdparagraphisaddedtoindicatethatthechecksreferredtoin
Article12giverise,inmostcases,toacorrectionoftheVATbaseof
theMemberStatesascontainedintheannualstatementforagivenfinancial
year.
t
Article13
SincetheCommission maywishtodrawconclusions fromthechecksrelating
toyearnbeforeproposingdecisionsrelatingtoyearn+1,itisnotrealistic
toallowonlysixtydaysafterreceiptoftheapplication .Itistherefore
proposedthatthistimelimitberemoved.

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14.TITLE VI-FINAL PROVISIONS
Article J_4
/'Theproposed amendments should enter
r' , ,
For the reasons set out inthe first
itisproposed that thetransitional
31December 1985 »into force on1January 19o3 «
- '*■
part oftheexplanatory memorandum ,
period "beextended bythree years to
I

ANNEX
PRELIMINARY REPORTONTHEINSPECTIONVISITSCONCERNEDWITHVATOWNRESOURCES
Article12ofRegulationNo2892/77describestheobjectivesandprocedure
fortheCommission'sassociatedinspectionsofownresourcesaccruingfrom
VAT.TheserulesofproceduresupplementthosecontainedinCouncilRegulation
No165/74whichapplytoalltheCommunities' ownresources.
A.Theseinspections mainlyinvolvetheexamination andfinalverification
oftheannualstatementofVATresourceswhicheachMemberStatemust
sendtotheCommission ;theyarenotintendedtoensurethattheMemberStates
areapplyingtheprovisionsoftheSixthVATDirectivecorrectly.Nevertheless ,
establishment oftheuniformVATownresourcesbasedependsonthe
correctapplication ofthisDirective.
Article12ofRegulationNo2892/7?readsasfollows;
"1.Asregai'dsVATownresources,theCommission'schecksshallbecarried
outwiththecompetentauthorities intheMemberStates.Duringthose
checks,theCommissionshallensure,inparticular ,thattheoperationsto
centralizetheassessmentbasisandtodeterminetheweightedaveragerate
referredtoinArticles6and7andalsothetotalnetVATrevenuecollected
havebeencarriedoutcorrectly,andshallascertainthatthedatausedwere
appropriate andthatthecalculations madetodeterminetheamountofVAT
resourcesresultingfromthetransactionsreferredtoinArticle5(2)and(3),
andArticles8and9(l)to(4)complywiththisRegulation.
2.CouncilRegulation(EEC,Euratom,ECSC)NoI65/74of21JanuaryI974
determiningthepowersandobligationsofofficialsappointedbytheCommission
pursuanttoArticle14(5)ofRegulation(EEC,Euratom,ECSC)No2/71shall
applytochecksrelatingtoVATownresources.Forthepurposesofapplying
Article5ofthatRegulation,itshallbeunderstoodthattheinformation
referredtothereinmaybecommunicatedonlytothosepersonswho,

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"byvirtueof"theirdutiesinmakingavailableandcheckingVATresources,
musthaveknowledgeofsuchinformation."
ThewordingofArticle12showsthattheinspectionofVATownresources
isdifferentincharacterfromtheinspectionoftraditional ownresources.
TheVATownresources "baseiBdeterminedasfollows:
(i)undermethodA,thereturnsmethod,"feyreferencetotheparticulars
containedinthereturnsmadebytaxablepersonsfortheyearinquestion
(ii)undermethodB,therevenuemethod,"byapplyingtothetotalrevenue
collectedduringthefinancialyearinquestionaweightedaveragerate
calculatedmainlyfromstatistics.
TheseVAT"basesmust."becorrected "byapplyingcompensation asprovidedin
Article9RegulationHo2892/77*
OnlysixMemberStatespaidVATownresourcesfor1979»theothershaving
delayedapplication oftheSixthVATDirectiveharmonizing theVATbase.
InJulyI98OtheCommissionreceivedthestatementsofthe1979VAT"base
(Article10ofRegulation No2892/77)fromthesixMemberStatesconcerned
andconductedthechecksreferredtointheabove&emtioned Article12"between
SeptemberI98OandMarchI98I.
ThestatementsoftheI98OVATbasesforallnineMemberStatesxvereavailable
from1July1981andtheCommissioninnpectedthissecond "batchbetv;een
I
SeptemberI98IandMarch1982,beginningwiththethreeMemberStateswhichhad
notpaidVATownresourcesthepreviousyear.
InthesefirsttwoyearsofoperationfortheVATownresourcessystem,
theCommissionconcentrated oncheckingth©accuracyofthebasecalculated
bytheMemberStates,i.e.allth©resultsofthecalculationssetoutin

theannualstatfimontsfor197919^0.
Inviewofthedifferingnatureoftheoperationsdescribed "belowfor.the
entryintheaccountsandcentralization ofrevenueandforthedetermination
oftheweightedaveragerate,differentnationalauthoritiesgenerallydeal
withthesesubjects:aspecialdepartmentspecializingintheprocessing
ofstatisticsisgiventhetaskofcalculatingtheweightedaveragerate
whileanotherdepartmentisresponsiblefordeterminingthenetrevenue.
InsomeMemberState3,thesetwooperationsareevenperformedintwodifferent
geographical locations.
Thefollowingaspectshavethusbeenchecked:
1.Centralization (revenueorreturns)
Theentryintheaccountaandcentralization ofrevenue(methodB)orreturns
(MethodA)isanintegralpartofthenationaltaxaccountancysystemsand,
assuch,isgenerallysubjecttostrictintei-nalchecks.However,itis
importantfortheCommission ,toexaminethefollowingaspectsindetail:
(i)centralization ;
(ii)comparisonofaccountingdocumentsatcentralandlocallevel;
(iii)correctionproceduresandtheirapplication ;
(iv)analysisofthedata-processing systemsandinspectionofcomputer
outputdata.
RegulationNo2892/77doesnotexpresslystatethattheCommission,aspart
ofitsordinaryinspections ,mustcheckthevalidityandaccuracyofthe
individualreturnsmadebytaxablepersonswhichdeterminethepayment
orrefundofVAT.However,RegulationNo165/74doesnotruleoutsuchchecks,
2.Theweightedaveragerate(methodBonly)
TCieweightingoftheweightedaverageratereflectsthetotalvalueofthe
categoriesoftransactionsubjectofthedifferentnationalVATrates,
themselvesbrokendownintothefivecategoriesofconsumption

-A4-
andinvestment specified inArticle 7ofRegulation No2892/77.This
"breakdown offinal expenditure "byrate isderived from national accounts
stati sties drawn upinaccordance with theEuropean System ofIntegrated
Economic Accounts ;ifnecessary ,appropriate data can "beused toproduce
this "breakdown .Thenational accounts inquestion must relate to
ih®penultimate year preceding thefinancial year inquestion .
Theobject ofthechecks must therefore "betoestablish :
(i)whether thenational accounts statistics used have actually
"been drawn upinaccordance with theEuropean System ofIntegrated
Economic Accounts (EBA );
(ii)whether thedata used intheanalysis ofthenational accounts actually
were "appropriate data "within themeaning ofArticle 7(2);
(iii)whether allthecategories ofexpenditure covered "bytheVATown
resources "base have actually "been taken into account ;
(iv)whether the "breakdown "byrate and "bycategory ofexpenditure has
been effected correctly .
Theofficials ofthaStatistical Office (SCEC )have thestatistical documents
required and the specialist knowledge andthenecessary experience ofnational
accounts toconduct inspections inthis field inacompetent manner .
Officials from theOffice have therefor® taken part inthese inspections .
I
3*Adjustments andcompensation provided for "byRegulation No2892 /77
Some articles oftheRegulation provide foradjustment ofrevenue orthe
base forvarious reasons .
Article 9ofRegulation No2892/77,which refers toArticle 28(3 )ofthe
Sixth YlTDirective andthelists ofexceptions totheuniform basis of
assessment (Annexes E,FandG)provides that theMember States' VATbases
should beadjusted tooffset these exceptions during thetransitional period laid
downbytheSixth Directive ,AnyMember State which makes useofthepossibility
oftaxing tduring this transitional period fcertain categories oftransactions
exempted under theDirective isrecruirad tocalculate tk©VATownresources base

-,\5-
asiflhe»0otranofietienawere-exempted(AnnexE)tontheotherhand,any
MemberStateexemptingcertaincategoriesoftransactionswhichBhould.
be"taxedroustcalculatetheVATomresources "baseasifthesetransactions
weretaxed(AnnexF).
AnnexGallowsMemberStatestoopt"betweenexemptionortaxationfor
certainrestrictedcategoriesoftaxpayer,butonlyforthreeyearswhen
itdoesnotconcerntransactionslistedinAnnexesEandF.
Theobjectoftheinspectionwastoensurethatthedatasourcesandmethods
ofcaculationproposedbytheMemberStateBforfindingthesepartsof
thebasecouldbeconsideredappropriate .
C.TheMemberStateswereverycooperative andpositiveintheirresponses
totheCommission'srequestsinthethreeareascoveredbytheinspection
(seeabove).Thedegreeofparticipation withthecompetentnationalauthorities
variedfromoneKemberStatetoanother.Therecanbenocriticismwhatsoever
oftheMemberStates,whichhaveprovidedallthecooperationrequiredfor
theinspections tobeperformedcorrectly.
TheMemberStatesrecognizedthemajordifferencebetweeninspections ofVAT
ownresourcesandthoseoftraditional ownresources,inthattheofficials
designatedbytheCommissionassumeanadministrative responsibility for
VATownresourceswhichrecjuireethemtofindsolutionswiththenational
authoritiestotheproblemsencounteredinalltheareasofinspectionin
accordancewiththecomplexprocedureslaiddowninArticles9and13of
RegulationNo289^/77andelsewhere.Theinspectorswereconcerned v/ithall
corrections fwhethertotheadvantageorthedisadvantage oftheMemberStates.
Thesixstatementsfor1979andtheninestatementsforI98Owhichhaveso
farbeaninspectedhaveallneededchangesfollowinginspection.These
changesrelatedtoallaspectsofthestatements,includingtheaccuracy
ofthevariouacalculations .TheerrorsoccurredeventhoughtheCoiLmission
badgonetogreat "beforehandproducingastandardformforthestatement
togetherwithdetailedannexesandarrangingbriefingsbeforetheactual
inspection ?!„Ine%ehMemberState,theCommissionofficialswereableto
oheckeachsti^eofthecentralization process.
Iheerrorsfoundincentralization mainlyconcernedmarginalaspects
ofthecalculations ,suchastheadjustmentsorcompensation

-Ί6-
forwhich clear rules arelaid down inRegulation No2892/77 (e*g *
Article 2(3)orArticle 8(l))Tautforwhich thecalculations inthe
statements were approximate orincomplete .
Requests byGerraany andLuxembourg toreduce their netrevenue for
reasons notallowed bytheRegulation were notaccepted .
The errors established inthedetermination oftheweighted average
rate were mainly todowith theincorrect breakdown oftransactions
byVAT rate ,inparticular where alarge number ofrates exist ,or
a"distortion "caused byachange intheVAT rate atthebeginning
oforduring ayear .Since theexisting breakdown ofstatistical
series isnot sufficient insuch cases ,appropriate data had tobe
used (Article 7(2)oftheRegulation)®
Theweighted average rates ofseveral Member States had tobeadjusted
following inspection ;inone case theCommission rejected the calculation
completely ,theNetherlands being then required todetermine anew
weighted average rate .Despite this recalculation ,nomajor difference
isexpected toresult inthis Member State 'sVAT ownresources base .
!
Another aspect oftheweighted average rate which proved unsatisfactory
oninspection wasthebreakdown oftransactions into thecategories la-id
down inArticle 7(l)ofRegulation Ho2892/'77® ^hebreakdown given inthe
Regulation wasnotapplied initsentirety byanyMember State .Each Member
State used its owndefinition ofthecategories depending ontheextent to
which itsnational accounts areharmonised with theEuropean System of
Integrated Economic Accounts (ESA);they did ,however ,attempt tomake ,
this breakdown for the total value oftransactions which are taxable
under national legislation and constitute final expenditure .
Theimperfections found insome aspects oftheprocedure fordetermining the
weighted average rate ,such asthetreatment ofthefinal consumption of
flat-rate farmers (direct sales andon-the-farm consumption )orchanges
inVATrates during theyear ,aredue totheinadequacies of
Regulation No2892/77itself .
Itwasfound that themethods used bysome Member States forcalculating
thecompensation andother adjustments provided forbyRegulation No2892/7?

M7-
(Article5(2)andArticle9(3))weremoreaccuratethanthoseusedby
others.TheCommission'sinspectorsaskedformanycorrections to"be
made*
D.Inmostofthecaseswherepointswerecontested,theMemberStatesand
theCommission wereeventuallyabletoagreeonarevisedcalculation and
theCommission madeacorresponding adjustmenttotheVATbasesofthe
MemberStatesconcerned ..Buttherearestillanumberofissuesunresolved .
Manyoftheseissuesconcernmattersof-principlearisingfromtheMember
States'interpretation oftheprovisionsoftheSixthVATDirective.
Thefollowingexamplescanbegiven;
-Germany:ExemptionoftheservicesofFederalPostOfficecarriers
(Article13A(l)(a)oftheSixthVATDirective
SuchanexemptionisnotcoveredbytheSixthVATDirectivesince
thisispossibleonlyfortheservicesperformedbythepostoffice
itself.
-UnitedKingdom:Exemptionofcertainservicescarriedoutbythe
medicalandparamedical professions :supplyof
correctivespectacles(Article13A(l)(c)ofthe
SixthVATDirective)
UndertheSixthVATDirectiveonlythesupplyofservicesinthis
sectorcanbeexempted.
-Italy:Procedureforcalculating theflat-ratecompensation percentages
forflat-ratefarmers:pigmeatandbeef
TheSixthVATDirectivedoesnotallowovercompensation oftheinputtax.
Othordisputesinvolving .applicationofRegulation No2892/77*
r
-Denmark:TaxationofcertainserviceswhichtheStateandthelocal
authoritiessupplytothemselves(firstparagraphofArticle6
ofRegulationHo2892/77
Sincethesetransactions aresubjecttoVAT,Denmarkmustincludethemin
itscalculation ofthebase.Ithasinfactnowdoneso.

-Λ8-
-Denmark :Exemption 01transactions relating to "buildings andbuilding
land (Article 9(3)ofRegulation No2892/77)
TheCommission finds themethod ofcalculating thecompensation
provided forinArticle 9ofRegulation No2892/77unsatisfactory .
~France ?Exemption ofthedomestic section ofinternational passenger
transport operations (Articles 9and11ofRegulation Ho2892/77)
France mayexempt operations ofthis type under point 17ofAnnex Fto
theSixth Directive provided that they areincluded intheFrench VAT
ownresources base ,which isnot the case D
-France ;Exclusion ofpassenger transport between Corsica andFrance
from thescope ofVAT (Articles 9and11ofRegulation Ho2892/77)
France mayexempt operations ofthis type under point 17ofAnnex Fto
the Sixth Directive provided that they a,reincluded intheFrench VAT
■ownresources base ,which isnotthecase .
\
Exclusion ofthese operations from the scope ofVAT ,instead ofexemption ,
isinitself apresumed infringement ofthe Sixth Directive .
-United Kingdoms Refusal toallow deductions for theuse ofcompany cars
(Article 9(4)ofRegulation No2892/77andArticle 7(6)
and .(7)oftheSixth VATDirective )
TheCommission finds themethod ofcalculating thecompensation provided
for .inArticle 9ofRegulation No2892/77unsatisfactory®
3E
3£ S
Article 6ofRegulation No165/74states that theMember States maysubmit
observations ontheresults oftheCommission 'sinspection measures ;this
procedure isstill inprogress forthe1980 base .,Whatever theoutcome of
current contacts with theMember States totryand settle theproblems
outstanding itwould bedesirable for theCommission topresent amore
definitive version ofthereport assoon asithasdrawn all theconclusions
from itsinspection ofVATownresources for1979 and 1980®

-A9-
Theconclusions outlinedabovemaybesummedupasfollows:
-Thefirstchecksrevealedimperfections inthesystem;toremedythis,
theCommissionisproposingamendmentstothecurrentprovisionsof
RegulationNo2892/77.
-AfterthefirstcheckstheCommissionhadtoaskformanycorrections
tothestatementspresentedbytheMemberStatesfor1979and1980.
InmostcasestheMemberStatesacceptedthesecorrections andtheVAT
baseshavealreadybeenadjustedaccordingly,
-LessfrequentlytheMemberStateshaverefusedthecorrections requested
bytheCommissionincaseswherethereisdisagreement aboutthe
interpretation oftheSixthVATDirectiveandRegulationNo2892/77*
InthesecasestheMemberStates'figuresfortheirVATbasesaretoo
low.TheCommissionisendeavouring theresolvethedisputes,where
necessarybyinitiatingtheinfringement procedureagainsttheMemberStates.

PROPOSAL FORACOUNCIL REGULATION (ECSC ,EEC,EURATOM")AMENDING ANDEXTENDING
THt TEkii UFVALIDITY OFKEGULATION (EEC,EURATOM ,'Ease )NO2892 /77
IMPLEMENTING INRESPECT OFCM RESOURCES ACCRUING FROM VALUE ADDED TAX THE
DECISION OF21APRIL 1970 ONTHE REPLACEMENT OFFINANCIAL CONTRIBUTIONS FROM
MEMBER STATES BYTHE COMMUNITIES' OV,N RESOURCES
THE COUNCIL OFTHEEUROPEAN COMMUNITIES ,
Having regard toCouncil Decision 70/243/ECSC ^EECEuratom of21April 1970
onthereplacement offinancial contributions from Member States bytheCom-
1liiunities' own resources ,hereinafter referred toas"theDecision of21April
1970 ,and inparticular Article 6(2 )thereof ;
Having regard totheproposal from the Commission ,
2Having regard totheopinion oftheEuropean Parliament ,
Having regard totheopinion oftheCourt ofAuditors "^,
Whereas .theconciliation procedure provided forintho joint declaration of
4March 1975 ^.ytheEuropean .Parliament ,theCouncil andtheCommission ^has
taken place inthe Conciliation Committee ;
Whereas Article 14of .Regulation (EEC ,Euratom ,SCSC )No2892/7T5
states that that Regulation shall apply from 1January 1978 for atransitional
period expiring on31December 1982 ;
Whereas ,because ofthedelay inthe entry into force intheMember States
oftheSixth Council Directive 77/388/EECof17May1977 0-1theharmonization
ofthe laws oftheMember States relating toturnover taxes -Common system
OJL94,28.4.1970 ,pe19.
2
3
5)JC 89,22,4.1975 *P.1.
30JL336 f27.12.1977 ,p.8,

ofvalue added tax :uniform "basis ofassessment ,the Commission hasnot
hdcr theBenefit ofthe five-year transitional perioa Laid duwn bythe Council for
-establishing provisions relating tothedefinitive uniform system for
levying VATownresources andthe detailed rules foritsimplementation ;
Whereas this transitional period should "beextended to31December 1985
andtheprovisions ofRegulation tEEC ,Euratom ,ECSC )No2392 /77should
remain inforce for thetime being sothat theCommission candraw upthese
measures ;
Whereas thepractical application ofRegulation (EEC,Euratom ,ECSC)' No2892 /77
since itsentry into force has revealed theneed toadapt and supplement several
its provisions ,even before adefinitive uniform system ischosen ;
Whereas ,inparticular ,itisnecessary toeliminate thedifficultj.es in
establishing aweighted average rate encountered bytheMember States which
apply therevenue method ;
Whereas provisions must beadded toRegulation' (EEC,Euratom ,ECSC )No2892 /77
forthecorrection oftheannual summary accounts ofVA^ownresources ;
HAS ADOPTED THIS REGULATION :
10JL145»13.6.1977 ,p.1.

-II-
Article 1
Regulation (EEC -Euratom ,ECSC )No2892 /77ishereby amended asfollows .
Article 2(3)isreplaced bythe following :
"3.Byway ofderogation from paragraph 1,Member States shall have t>eoption of
leaving out ofaccount ,for thepurpose ofdetermining VAT own resources ,
transactions performed "bytaxable persons whone annual turnover ,
determined according totherules la.id dovm inArticle 24(4 )of
Directive 77/388/SZE ,does notexceed 10000ECUconverted into the
national currencies atthe average rate for the financial year .
Member States mayround upwards ordownwards "byupto10fcthe
equivalent suminthenational currency .
Member States which exercise this option shall calculate the
own resources basis asthough taxaDle persons who
maybe eligible forexemption voider Article 24(2 )ofthesaid
Directive were subject tothenormal rules laid dovm therein forthe
application ofvalue added tax ",,

-o -
2.Article 3isamended asfollows :
(a)Thefollowing isadded tothefirst paragraph :
informing theCommission ofthemethod they propose toapply ."
(b)Thesecond paragraph isdeleted .
(c)The last tparagraph isreplaced bythefollowing :
"The Commission shall communicate the information referred tointhe first
andsecond paragraphs totheMember States ." .
•3. InArticle 4(3 ) the words :
,intheabsence ofanysuch returns ,owing tofailure ofthe
taxable person tofulfil hisobligations ,from theestimated assessment
made bythecompetent authority oftheMember State arereplaced bythe
words :"...derived from theestimated assessment made bythecompetent authority
ofthe member State ".
4.Article 6isreplaced bythefollowing :
Article 6
Foragiven year ,andwithout prejudice toArticle 9»"theVATown
resources basis shall becalculated "byreference tothetotal netVAT
revenue collected andtherate atwhich VATislevied during thesame
year .
Ifseveral VATrates areapplied inaMember State ,theVATownresources
baais shall becalculated byreference tothetotal netVATrevenue
collected andtheweighted average rate ofVAT.Inthis case ,theMember
S'5uteshall determine theweighted average rate perhundred currency
units byapplying thecommon method ofcalculation defined inArticle 7»
theresult being rounded off tofour decimal places ."
?>.Article 7isamended asfollows :
\.i)Thosecond subparagraph ofparagraph 1isreplaced bythefollowing :
"TheVATrates used forthepurposes ofsuch calculation shall bethose in
force intheMember State fortheyear inquestion "*

Paragraphs
2to7:2,3and4arereplaced bythefollowing paragraphs
"2»The "breakdown "byrate ofVAT shall beapplied tothefollowing
statistical categories :
»
(a)thefollowing categories oftransaction subject tonon-deductible VAT:
–final consumption ofhouseholds ,including consumption onthe
farm anddirect sales "byflat-rate farmers ,ontheterritory
referred toinArticle 3ofDirective 77/388/EECfortheMember
State inquestion ;
–intermediate consumption ofgeneral government ,private non-profit
institutions ,insurance enterprises andcredit institutions ;
«-gross fixed-capital formation ofgeneral government ,private
non-profit institutions ,insurance enterprises andcredit
institutions ;
(b)thefollowing categories oftransaction where they aresubject to
non-deductible VAT :
–intermediate consumption ofnon-financial corporate and
quasi –corporate enterprises ; '
–gross fixed-capital formation ofnon-financial corporate ,and
quasi-corporate enterprises ;
(c)transactions corresponding tothesale ofbuilding land .
3®Forthepurposes ofthebreakdown byrate ofVATreferred tointhe
preceding paragraph ,transactions relating toconsumption onthefarm
anddirect sales byflat-rate farmers which arenot subject toVATshall
beclassified atanotional rate which would produce revenue equivalent to
thevalue added taxcharge oninputs .
4«Thebreakdown oftransactions bystatistical category shall beeffected
bymeans ofdata taken from national accounts prepared inaccordance with
theEuropean system ofintegrated economic accounts (ESA).Inorder to
calculate theVAT o;»nresources basis foranygiven financial year reference
shall bemade tothenational accounts relating tothepenultimate year
preceding that financial year®

Member States maybeauthorized under theprocedure laid down inArticle 13
tousedata relating toanearlier year . .
5.Forthepurposes ofidentifying transactions subject tonon-deductible
VATandeffecting thebreakdown byrate ofVATMember States mayin
addition refer todata taken from sources other than theESA ,andin
particular from internal national accounts ifthey provide thenecessary
breakdown ,orintheabsence ofstlch .accounts ,toanyother appropriate
source .
6.Inorder todetermine theweighting ofeach rate ,Member States shall
calculate the ratio between the value ofthe transactions towhich that
rate applies andtheaggregate value ofallrelevant transactions .
7.Should aMember State during afinancial year amend theVAT rate
-applicable toall orsome transactions orthe taxtreatment forcertain
transactions insuch away astoaffect theVATrevenue collected during
thecalendar year inquestion ,itshall calculate anewweighted average
rate .Thenewweighted average rate shall beapplied totherevenue
derived from application oftheamended rate ortaxtreatment
Bywayofderogation from theforegoing subparagraph ,theMember State
maycalculate asingle weighted average rate ;transactions inrespect
ofwhich therate ortreatment hasbeen changed shall then beallocated
tothe oldandnew rates ortothe old andnew treatments pro rata
temporis , account being taken of the '
average period oftime elapsing between entry into force ofthenew
rate ortreatment andthecollection ofrevenue resulting therefrom "
6.Article 8(2)isreplaced Dythefollowing :
"2.Therevenue actually collected byaMember State shall bereduced
*
byanamount corresponding tothetotal input tax ,with theexception
ofthat relating toconsumption onthefarm anddirect sales tofinal
consumers ,which flat-rate farmers have notrecouped byvirtue ofthe
application bythat Member State oftheoption toreduce theflat-rate

compensation perceniages^calculated inaccordance with Article 25(3)of
Directive 77/388/EEC,applicable totransactions carried outbyflat-
rate farmers *
Theamount ofinput taxes and theamount ofcompensation shall bethose
relating totheyear inquestion®
This provision maybeapplied only where theflat-rate percentages fixed
inaccordance with Article 25(3 )ofDirective 77/388/EECdonotprovide
full compensation inrespect ofathree-year average ofthevalue added
taxcharge oninputs expressed asapercentage rounded down tothenearest
half-point ,calculated inaccordance with themethod described inAnnex C
ofthe said Directive "
7.Articleyisamendedasfollows:
<a>Inthethird indent ofparagraph 2thewords "paragraphs 1(a)and (2)"are
replaced bythewords "paragraph l(a)"»
*b)Thesecond subparagraph ofparagraph 3is"del'eted G
Thefollowing second subparagraph isadded toparagraph 4.*
"Thepreceding subparagraph shall apply inrelation tothesecond subparagraph of
Article 17(6 )only inrespect ofthepurchase ofpetroleum products
andpassenger cars used forbusiness purposes ," ■

8. 10isamended asfollows :
Ca) second subparagraph ofparagraph 1isreplaced "bythefollowing ;
"Thesummary account shall contain allthedata "used todetermine
the "basis which arerequired forthechecks referred ,toinArticle 12.
Itshall indicate separately the basis
resulting from thetransactions referred toinArticle 5(l)»(2)
and (3)andArticles 8and9(l)"to(4)."
(b)Thethird subparagraph ofparagraph 1isdeleted .
(c)Inthe first indent ofthefirst subparagraph ofparagraph 2,the
words "... oranyother continuous 12-month period tobedetermined
bytheMember States "aredeleted .
Cd)Inthesecond indent ofthefirst subparagraph ofparagraph 2,
thewords "... oranyother contirfiQis 12-month period tobedetermined
bytheMember States "aredeleted .
(e)Thethird subparagraph ofparagraph 2isdeleted .
(f)Paragraph 4isdeleted .
9.Thefollowing newArticles 10aand 1l)bareinserted :
"Article 10a
Member States shall forward totheCommission "by30April each
year anestimate oftheVATownresources basis forthefollowing
financial year .They shall inter alia give anestimate ofthebasis
ofassessment foreach ofthecategories oftransaction referred
toinArticle 5(2)and (3)andArticles 8and9(1)to(4).".

-M -
"Article <Go
Corrections toth© sufe*t*ry account reifVffsd toinArtist *?TOO )
shall bemade bythe Cctowission and shall beSneon>oAi)«tj ina
summary estimate adopted on30June .,
TheCommission nay?however ,bysr«2io*iiS<3 decision ^call onrteaber
States towake .-such corrections tiithit ".thre® Kscnths .
Hofurther corrections »aybe«€«etoth©annual suftfe&ry ssttount
referred toinArticle 10<1 >after thr«e y©«rs h#ve el3j#&e<i frosa
theendofagiven financial year ,unt®as they concern poirsts
previously notified either byth®Co&ssission orbythe^isfebsr
State concerned ."
<
Thefirst andsecond subparagraphs ofArticle 11(1 )arereplaced bythe
following :
" Member States shall inform theCommission by30April ofeach financial
year ofthesolutions they propose toadopt inorder todetermine theVAT
ownresources basis foreach ofthecategories oftransaction referred to
inArticle 5(2)and (3)andArticles 3and9(l)to(4)1indicating ,where
applicable ,thenature ofthedata which they consider appropriate and
an -estimate ofthe value ofthe assessment basis foreach ofthese
categories oftransaction .
They shall <inform theCommission ofthemodifications
they intend tomake tothesolutions adopted under Article 13forprevious
financial years ,subject tothesame conditions ".

-29-
11.Thefollowingparagraph 3isaddedtoArticle12:
"3.Followingthechecksreferredtoinparagraph 1theannualsummary
accountforagivenfinancialyearshallbecorrected bytheCommission
inaccordance withArticle10b."
12.Inthesecondsubparagraph ofArticle13(2),thewords"...andnotlater
than60daysafterreceiptoftheapplication..."aredeleted.
13.Article14isamendedasfollows:
(a)Inthesecondparagraph,"1982"isreplacedby"1985".
(b)Inthethirdparagraph."1982"isreplacedby"1985".
Article2
i
ThisRegulation shallenterintoforceonthedayfollowingthatofitspubli­
cationintheOfficialJournaloftheEuropeanCommunities .Itshallapply
from1January1983.
ThisRegulationshallbebindinginitsentiretyanddirectlyapplicable in
allMemberStates.