COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 603 final 
Brussels, 12.12.1994 
Proposal for a 
COUNCIL DIRECTIVE 
AMENDING DIRECTIVE 77/388/EEC AND INTRODUCING 
TRANSITIONAL MEASURES APPLICABLE IN THE CONTEXT 
OF THE ENLARGEMENT OF THE EUROPEAN UNION 
ON 1 JANUARY 1995 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
1. INTRODUCTION 
Article 2 of the Act concerning the conditions of accession of the Kingdom of Norway, 
the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the 
adjustments to the Treaties on which the European Union is founded provides that 
"From the date of accession, the provisions of the original Treaties and the acts adopted 
by the institutions before accession shall be binding on the new Member States and shall 
apply in those States under the conditions laid down in those Treaties and in this Act. " 
With the exception of the cases specifically provided for in Annex XV to the Act of 
Accession, therefore, the new Member States will, on accession, apply the common 
system of value added tax based on the Sixth VAT Directive. As a result, the provisions 
of Title XVIa of that Directive laying down transitional arrangements for the taxation of 
trade between Member States will apply, from the moment of accession, to trade between 
the Community and the new Member States as well as to trade between the new 
Member States themselves. 
In such trade, the accession of the new Member States will have the effect of abolishing 
all tax checks at frontiers. In other words, on accession, the transitional arrangements for 
taxing trade between Member States will replace the system of imposition of tax on 
importation and remission of tax on exportation. 
This situation is similar to that which existed when the internal market was launched on 
1 January 1993. Transitional measures were then adopted (Article 28n incorporated into 
the Sixth VAT Directive by Directive 92/111/EEC ) with a view to safeguarding the 
neutrality of the common system of value added tax and to preventing cases of double 
taxation or non-taxation. For the same reason, measures governing the transition to the 
enlarged Community, similar to those referred to above, are now required. 
1 OJ No C 241, 29.8.1994, p. 21. 
2 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 lax: uniform basis of 
assessment (OJ No L 145, 13.6.1977, p. 1), as last amended by Directive 94/5/EC (OJ No L 60, 
3.3.1994, p. 16). 
OJNoL384, 30.12.1992, p. 47. 
The nature of the transitional measures to be taken depends principally on the customs 
status of the goods at the time of their removal, after the date of accession, from the 
customs regime under which they were placed prior to accession. In the customs field, 
the mechanisms are based on proof being furnished after that date of the goods being in 
free circulation in the current Community or in one of the new Member States. Thus, 
goods which, prior to the date of accession, were in free circulation in one of the new 
Member States and which had been placed, prior to that date, in a customs warehouse in 
the current Community will be regarded as being in free circulation in the enlarged 
Community when they leave that warehouse after accession. The same applies to goods 
in free circulation in the current Community which were placed, prior to the date of 
accession, in a customs warehouse in one of the applicant countries and which leave that 
warehouse after that date. The goods being in free circulation, their removal from those 
warehouses after accession cannot be subject to VAT under Article 7(1 )(a) of the 
Sixth VAT Directive. In order to prevent non-taxation, therefore, it is necessary to treat 
that removal as an import within the meaning of Article 7(1) of the Sixth VAT Directive. 
II. DESCRIPTION OF HYPOTHETICAL CASES NECESSITATING 
TRANSITIONAL MEASURES 
The need for transitional measures has been assessed on the basis of the customs approach 
set out in the final paragraph in Section I. A distinction is made between the following 
situations: 
1) goods that have been placed, prior to the date of accession, in the current 
Community or in one of the new Member States under a temporary admission 
regime with full exemption from import duties or under one of the suspensive 
customs regimes referred to in Article 16(l)(B)(a) to (d) of the 
Sixth VAT Directive (e.g. customs warehousing arrangements and inward 
processing arrangements). The goods leave those regimes after the date of 
accession; 
2) goods that have been placed, prior to the date of accession, in one of the new 
Member States or in the current Community either under the common I^M.^U 
procedure or another customs transit procedure or under an export procedure. 
However, the goods leave that procedure after the date of accession or, where they 
are placed under an export procedure, were not imported prior to the date of 
accession into the current Community or into one of the new Member States. 
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1. Termination of a temporary admission regime with full exemption from 
import duties or of one of the suspensive customs regimes referred to in 
Article 16(l)(B)(a) to (d) of the Sixth VAT Directive 
(a) Termination of one of these regimes in the current Community 
The goods in question were imported from the new Member States into the current 
Community prior to accession. After importation they were placed under a temporary 
admission regime with full exemption from import duties or under one of the suspensive 
customs regimes referred to in Article 16(l)(B)(a) to (d). The chargeable event on 
importation was therefore deferred until removal of the goods from one of those regimes. 
In order to prevent any hiatus in the conditions for taxing such transactions, it is proposed 
that the benefit of the provisions in force prior to accession be extended until the goods 
leave those regimes (Article 1(2)). At the same time, and in order to prevent cases of 
non-taxation, it is proposed to treat the removal of goods from those regimes after 
accession as an importation of goods within the meaning of Article 7(l)(a) where, al fk 
time of their removal, it is clear that the goods in question, prior to entry into the current 
Community, were in free circulation in one of the new Member States (Article l(4)(a) 
and (b)). This treatment as an importation is necessitated by the absence of taxation 
within the meaning of Article 7(l)(a) of the Sixth VAT Directive, as this provision applies 
only to goods which are not in free circulation. 
These measures will ensure that transactions carried out under similar conditions actually 
receive equivalent treatment. All goods imported into the current Community from the 
new Member States prior to accession will be taxed in the same way, whether or not the 
chargeable event has been deferred. 
By way of derogation from these taxation principles, special measures are proposed in 
order for tax not to be applied where the goods are re-exported from the enlarged 
Community (Article l(7)(a)) or are redispatched to the new Member State from which 
they were temporarily exported (Article l(7)(b)). These measures will also apply to 
means of transport where these have been acquired or imported in accordance with the 
general tax conditions in force on the domestic market of a new Member State or where 
they were first put into service prior to 1 January 1987 or where the amount of tax due is 
insignificant (Article l(7)(c)). 
These special measures will considerably simplify the arrangements for taxing means of 
transport which, prior to accession, were placed in the current Community under a 
temporary admission regime with full exemption from import duties and which were not 
removed from that regime by the date of accession. 
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(b) Termination of one of these regimes in the new Member States 
This involves, firstly, goods from the current Community which were imported into one of 
the new Member States prior to accession and, secondly, goods covered by such regimes 
in the context of trade between the new Member States. Following their importation into 
one of the new Member States, they were placed under a temporary admission regime 
with full exemption from import duties or under a suspensive customs regime similar to 
those referred to in Article 16(l)(B)(a) to (d). 
For the reasons given at 1(a) above, parallel transitional measures must also apply after 
the date of accession to the removal of goods from those regimes in one of the new 
Member States where, at the time of removal, it is clear that the goods in question were, 
prior to their importation into one of the new Member States, in free circulation in the 
current Community or in one of those States (Article 1(2), (4)(a) and (b), and 7(a), (b) 
and (c)). 
2. Termination of a common transit procedure or another customs transit 
procedure or of a procedure under which goods are exported from the new 
Member States to the current Community or vice versa 
(a) Termination of a common transit procedure or another customs transit procedure 
or of an export procedure initiated in one of the new Member States 
This involves goods from the new Member States which, prior to accession, were placed 
under the common transit procedure or another customs transit procedure (e.g. the 
procedure for the international transport of goods under cover of TIR carnets) in order to 
be transported to the Community or to one of the other new Member States. At the time 
of accession, this procedure has not yet been discharged by an importation. In order to 
prevent a hiatus in the conditions for taxing such transactions, it is proposed to extend the 
benefit of the provisions in force prior to accession until the moment the goods are 
removed from those procedures (Article 1(3)). In order to prevent cases of non-taxation, 
it is also proposed to treat the removal of goods from those procedures, following 
accession, as an importation of goods within the meaning of Article 7(1 )(a) where, at the . 
time of removal of the goods, it is clear that they were in free circulation in one of the new 
Member States and where the time of the supply predates accession (Article l(4)(c) and 
(d)). This treatment as an importation is necessitated by the absence of taxation within 
the meaning of Article 7(1 )(a) of the Sixth VAT Directive,- as this provision applies only 
to goods which are not in free circulation. Furthermore, since the time of the supply 
predates accession, there is also no intra-Community acquisition subject to VAT in the 
Member State of arrival of the goods. 
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These measures will ensure that transactions carried out under similar conditions actually 
receive equivalent treatment. All goods imported into the current Community or into one 
of the new Member States from anew Member State will then be taxed in the same way, 
whether or not the chargeable event has been deferred. 
By way of derogation from these taxation principles, special measures are proposed in 
order for tax not to be applied where the goods are re-exported from the enlarged 
Community (Article l(7)(a)). 
In order to prevent cases of non-taxation where the transport or consignment of goods is 
not carried out under the common transit procedure or another customs transit procedure, 
it is also proposed to treat as an importation the use within a Member State by a taxable 
person or non-taxable person of goods supplied to him prior to the date of accession in 
one of the new Member States provided certain conditions are met (Article 1(5)). 
(b) Termination of an export procedure initiated in the current Community 
The goods in question are those from the current Community which, prior to accession, 
were placed under the procedure for exporting goods to one of the new Member States. 
At the time of accession, those goods had not been imported into one of the new 
Member States because they had not arrived there prior to that date or because, at the 
time of their arrival on the territory concerned, they were situated or were placed under 
the common transit procedure or another customs transit procedure. 
For the reasons given at 2(a) above, parallel transitional measures must also apply in one 
of the new Member States in this hypothetical case where, at the time of departure, it is 
clear that the goods in question were, prior to their importation into one of the new 
Member States, in free circulation in the current Community or in one of those States 
(Article 1(3), (4)(c), (d), (5) and (7)(a)) 
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The description of the situations in which transitional measures are necessary in the 
context of the enlargement of the European Union reflects their essentially technical 
nature, which is closely linked to the practical arrangements for trade between the current 
Community and the new Member States and between the new Member States themselves. 
The measures contained in this proposal are thus strictly limited, both in nature and over 
time. 
That is why this proposal is based on Article 169 of the Act concerning the conditions of 
accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland 
and the Kingdom of Sweden and the adjustments to the Treaties on which the European 
Union is founded. That Article is designed to permit, prior to accession, adaptation of 
acts of the Community institutions necessitated by accession and not provided for in the 
Act on accession and its annexes. 
PROPOSAL FOR A COUNCIL DIRECTIVE 
AMENDING DIRECTIVE 77/388/EEC AND 
INTRODUCING TRANSITIONAL MEASURES 
APPLICABLE IN THE CONTEXT OF THE 
ENLARGEMENT OF THE EUROPEAN UNION 
ON 1 JANUARY 1995 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to the Treaty concerning the accession of the Kingdom of Norway, the 
Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European 
Union1 , and in particular Articles 2 and 3 thereof, as well as the Act concerning the 
conditions of accession which is added thereto, and in particular Article 169 thereof, 
Having regard to the Commission proposal2, 
Whereas, subject to the special provisions set out in Chapter IX of Annex XV to that Act, 
the common system of value added tax is to apply to the new Member States as from the 
date of accession; 
Whereas, as a result of the abolition on that date of the imposition of tax on importation 
and remission of tax on exportation in trade between the Community in its current 
composition and the new Member States and between the new Member States 
themselves, transitional measures are necessary to safeguard the neutrality ol" 
system of value added tax and to prevent situations of double taxation or non-taxation; 
OJ No C 241, 29.8.1994, p. Û. 
Whereas such measures must, in this respect, meet concerns akin to those that led to the 
measures adopted on completion of the internal market on 1 January 1993, and in 
particular Article 28n of Directive 77/388/EEC3, as last amended by Directive 94/5/EC4 ; 
Whereas, in the customs sphere, goods will be deemed to be in free circulation in the 
enlarged Community where it is shown that they were in free circulation in the current 
Community or in one of the new Member States at the time of accession; whereas 
conclusions should be drawn from this, particularly for Article 7(1) and (3) and 
Article 10(3) of Council Directive 77/388/EEC of 17 May 1977; 
Whereas it is necessary in particular to cover situations in which goods have been placed* 
prior to accession, under one of the arrangements referred to in Article 16(l)(B)(a) to (d), 
under a temporary admission procedure with full exemption from import duties or under a 
similar procedure in the new Member States; 
Whereas it is also necessary to lay down specific arrangements for cases where a special 
procedure (export or transit), initiated prior to the entry into force of the Accession 
Treaty in the framework of trade between the current Community and the new Member 
States and between those Member States for the purposes of a supply effected pi tor to 
that date by a taxable person acting as such, is not terminated until after the date of 
accession; 
HAS ADOPTED THIS DIRECTIVE: 
3 OJ No L 145, 13.6.1977, pi. 
4 OJ No L 60, 3.3.1994, p. 16. 
Article 1 
Directive 77/388/EEC is hereby amended as follows: 
The following Title XVIc and Article 28p are inserted: 
"Title XVIc 
TRANSITIONAL MEASURES APPLICABLE IN THE CONTEXT OF THE 
ACCESSION TO THE EUROPEAN UNION OF 
THE REPUBLIC OF AUSTRIA, THE REPUBLIC OF FINLAND AND THE 
KINGDOM OF SWEDEN 
Article 28p 
1. For the purposes of applying this Article: 
- "the Community" means the territory of the Community as defined before accession 
in Article 3 of this Directive; 
- "the new Member States" means the territory of the Member States acceding to the 
European Union by the Treaty signed on 24 June 1994, as defined for each of those 
Member States in Article 3 of this Directive; 
- "the enlarged Community" means the territory of the Community as defined, after 
accession, in Article 3 of this Directive. 
2. When goods: 
- entered the territory of the Community or of one of the new Member States before 
the date of accession, 
and 
- were placed, on entry into the territory of the Community or of one of the new 
Member States, under a temporary admission procedure with full exemption from 
import duties, under one of the regimes referred to in Article 16(l)(B)(a) to (d) or 
under a similar regime in one of the new Member States, 
and 
- have not left that regime before the date of accession, 
the provisions in force at the moment the goods were placed under that regime shall 
continue to apply until the goods leave this regime, after the date of accession. 
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3. When goods: 
- were placed, before the date of accession, under the common transit procedure or 
under another customs transit procedure, 
and 
- have not left that procedure before the date of accession, 
the provisions in force at the moment the goods were placed under that procedure shall 
continue to apply until the goods leave this procedure, after the date of accession. 
For the purposes of the first indent, "common transit procedure" means the measures 
for the transport of goods in transit between the Community and the countries of the 
European Free Trade Association (EFTA) and between the EFTA countries 
themselves, as provided for in the Convention of 20 May 1987 on a common transit 
procedure5. 
4. The following shall be deemed to be an importation of goods within the meaning of 
Article 7(1) where it is shown that the goods were in free circulation in one of the new 
Member States or in the Community: 
(a) the removal, including irregular removal, of goods from a temporary admission 
procedure under which they were placed before the date of accession under the 
conditions set out in paragraph 2; 
(b) the removal, including irregular removal, of goods either from one of the regimes 
referred to in Article 16(l)(B)(a) to (d) or from a similar regime under which they 
were placed before the date of accession under the conditions set out in paragraph 2; 
(c) the termination of one of the procedures referred to in paragraph 3 which was 
started before the date of accession in one of the new Member States for the 
purposes of a supply of goods for consideration effected before that date in that 
Member State by a taxable person acting as such; 
(d) any irregularity or offence committed during one of the procedures referred to in 
paragraph 3 under the conditions set out at (c). 
5 OJ No L226, 13.8.1987, p,2. 
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5. The use after the date of accession within a Member State, by a taxable or non-taxable 
person, of goods supplied to him before the date of accession within the Community or 
one of the new Member States shall also be deemed to be an importation of goods 
within the meaning of Article 7(1) where the following conditions are met: 
- the supply of those goods has been exempted, or was likely to be exempted, either 
under Article 15(1) and (2) or under a similar provision in the new Member States; 
- the goods were not imported into one of the new Member States or into the 
Community before the date of accession. 
6. In the cases referred to in paragraph 4, the place of import within the meaning of 
Article 7(3) shall be the Member State within whose territory the goods cease to be 
covered by the regime under which they were placed before the date of accession. 
7. By way of derogation from Article 10(3), the importation of goods within the meaning 
of paragraphs 4 and 5 of this Article shall terminate without the occurrence of a 
chargeable event when: 
(a) the imported goods are dispatched or transported outside the enlarged Community, 
or 
(b) the imported goods within the meaning of paragraph 4(a) are other than means of 
transport and are redispatched or transported to the Member State from which they 
were exported and to the person who exported them, 
or 
(c) the imported goods within the meaning of paragraph 4(a) are means of transport 
which were acquired or imported before the date of accession in accordance with the 
general conditions of taxation in force on the domestic market of one of the new 
Member States or of one of the Member States of the Community and/or have not 
been subject by reason of their exportation to any exemption from or refund of value 
added tax. 
This condition shall be deemed to be fulfilled when the date of the first use of the 
means of transport was before 1 January 1987 or when the amount of tax due V 
reason of the importation is insignificant." 
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Article 2 
1 Subject to the entry into force of the Treaty of Accession to the European Union of the 
Kingdom of Norway, the Republic of Austria, the Republic of Finland and the 
Kingdom of Sweden, Member States shall bring into force the laws, regulations and 
administrative provisions necessary to comply with this Directive at the latest by the 
date of entry into force of the said Treaty of Accession. They shall forthwith inform 
the Commission thereof. 
When Member States adopt those provisions, they shall contain a reference to this 
Directive or shall be accompanied by such reference on the occasion of their official 
publication. The methods of making such a reference shall be laid down by Xh 
Member States. 
2. Member States shall communicate to the Commission the provisions of domestic law 
which they adopt in the field covered by this Directive. 
Article 3 
This Directive is addressed to the Member States. 
Done at Brussels, December 1994 
For the Council 
The President 
ISSN 0254-1475 
COM (94) 603 final 
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