NoC19/50 OfficialJournaloftheEuropeanCommunities 25.1.93
OpinionontheproposalforaCouncilDirectiveamendingDirective77/388/EECasregards
thevalueaddedtaxarrangementsapplicabletopassengertransport
(93/C19/18)
On12November1992theCouncildecidedtoconsulttheEconomicandSocialCommittee
underArticle198oftheEECTreatyontheabovementioned proposal.
TheSectionforEconomic,FinancialandMonetaryQuestionswasresponsibleforpreparing
theCommittee'sworkonthesubject.MrGiacomelliwasappointedRapporteur-General .
Atits301stPlenarySession(meetingof24November1992),theEconomicandSocial
CommitteeadoptedthefollowingOpinionbyamajorityvote,withoneabstention.
1.Introduction theCommissionprovidesfortheCounciltoreviewthis
questionby31December1995onthebasisofareport
onallformsofpassengertransport,whichitwillpresent
by31December1994;particularattentionistobe
paidtotherisksofdistortionofcompetitionbetween
differentmodesoftransport.1.1.TheproposalseekstoamendthesixthValue
AddedTax(VAT)Directiveasregardspassengertrans­
portbyroadandinlandwaterway,inordertosuitthe
conditionsontheSingleMarketwhichentersintoforce
on1January1993.
2.Generalcomments
1.1.1.Theprovisionsconcernedmustbeamended
becauseVATonpassengertransporthashithertobeen
collectedandmonitoredatfrontierposts. 2.1.TheCommitteeendorsestheproposal'saims.
TherulesontheapplicationofVATtopassenger
transportmustindeedbeadaptedtotheconditionson
theSingleMarket,includingtheabolitionoftaxcon­
trolsatintra-Community frontierson1January1993. 1.2.TheCommissionaccordinglyconsidersitessen­
tialforthefollowingstepstobetakenby1January
1993:
—theplacewherepassengertransportservicesbyroad
andinlandwaterwayareconsideredtobesupplied
mustbechanged—theterritorialcriterioncurrently
inforce(taxationofthatpartofthefarecorrespond­
ingtothedistancecoveredineachMemberState)
istobereplacedbytaxationoftheentireservicein
thecountryofdeparture[firstandsecondsubpara­
graphsofArticle1(1)];
—theconceptofsuccessivetransportservices,each
withanewplaceofdeparture,mustbeintroduced
[thirdandfourthsubparagraphs ofArticle1(1)];
—thetaxableamountmustbeadapted(principleof
breakdownbetweenMemberStates)totake
accountofsuccessivetransportservices[Article2.2.Undertheexistingarrangements ,VATonroad
passengertransportiscollectedandmonitoredatthe
bordersoffourMemberStates:GermanyandDenmark
levyataxonnon-residentcarriersoneachkilometre
travelledbyeachpassenger(DM0,007/pkminGerm­
anyandDkr0,05/pkminDenmark);theyconsider
thistobeequivalenttotheVAT(14%and25%
respectively )leviedondomesticservicesprovidedby
domesticbuscompanies;Belgiumleviesadailyflat­
ratechargeonforeigncoacheswhichreplacesthe6%
VATleviedonthedomesticturnoverofitsown
nationals.
2.2.1.VATisleviedatFrenchbordersontransit
operationsinvolvinggroupsofuptoten.passengers
(5,5%leviedonthetransitfareoncoachesandtaxis).
1(2);
—transportservicestoaplacesituatedoutsidethe
Community (i.e.toanon-membercountry)must
beexempted [Article1(3)].2.3.ThesameVATapplicationprinciplesapplyto
passengertransportbyinlandwaterway,exceptinthe
specificcaseofwaterwaysinborderareaswhichare
managedincondominium orsubjecttootherinter­
nationalarrangements .
1.3.Passengertransportbyairandbyrailare
excludedfromthescopeoftheproposedDirectiveand2.4.Theproposalconcernsonlypassengertransport
byroadandinlandwaterway.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/51
transport(point4onpage10).Inmostcases,consumers
willinfactpaymore.2.4.1.TheExplanatoryMemorandum (point6on
page12)statesthattheCommissionwilldrawupa
generalreportby31December1994evaluatingthe
overallsituationregardingVATonpassengertransport
withrespecttotheevolutionnotedandthenecessities
oftheproperfunctioningoftheinternalmarket.The
reportwill,asapriority,examinetherisksofdistortion
ofcompetitionbetweendifferentmodesoftransport
andtakeaccountofnewformsofrailtransport(TGV,
ICE)whichcompetemainlywithairtransport.3.2.Theabovecommentsapplyalsotointra-Com­
munitypassengertransportbyinlandwaterway,with
theexceptionofwaterwaysmanagedincondominium
orsubjecttootherinternationalarrangements .
3.3.Thereisthereforeatotalcontradiction between
theabovecalculationsandtheExplanatoryMemor­
andum'sassessmentwithrespecttotheconsumerben­
efitsoftheproposedprovisionsandtheexpansionof
tourismintheCommunity .2.5.TheproposalconfinesVATtotwomodesof
transport,thusintroducingdiscrimination between
modesoftransport;theCommitteeconsidersthatuni­
formtaxarrangementsshouldbedevisedforallmodes
oftransport.Moreover,forthereasonssetoutbelow
(seespecificcomments),theCommitteetakestheview
thatthecurrentproposalshouldbesuspendeduntila
draftDirectiveapplyingVATtoallmodesoftransport
hasbeendrawnup.3.4.Theintroductionoftheconceptof'successive
transportservices'[thirdandfourthsubparagraphs of
Article1(1)]anditsdefinition,henceforthsubjectcar­
rierstotheVATsystemsofalltheMemberStatesfrom
whichtheyoperatetransportservices.Theoutward
andreturnlegsofshuttleserviceswillautomaticallybe
subjecttoseparatetaxationinthetwoMemberStates
concerned .
2.5.1.TheCommitteeaccordinglyconsidersthe
levyingofVATonintra-Community passengertrans­
porttobenotonlyaburdenonusersnotsubjectto
VAT,butalsoanobstacletothefreemovementof
personsandtotheprocessofeconomicintegration .
TheCommitteethereforebelievesthatconsideration
shouldbegiventozero-ratingallmodesoftransport.
Thiswouldeliminatealldangerofdistortionofcompe­
titionbetweentransportmodesandbetweeninternal
andexternaljourneys.Theabolitionofbordercontrols
on1January1993wouldalsobefacilitatedbythe
abolitionofthetaxleviedinDenmark,Germany,
BelgiumandFrance.Shouldthisapproachnotsecure
unanimousapprovalatthisstage,itshouldnonetheless
beconsideredbytheCouncilwhenpreparingits
decisionsonthebasisofthereportwhichtheCom­
missionistopresentby31December1994.3.4.1.TheVATarrangements willevenchangein
thecourseofajourneybyoccasionalserviceswhere
themeansoftransportspendsmorethan24hourson
theterritoryofaStateoftransitordestination .
3.4.2.Thisprovisionwillnotonlyincreasethe
amountofVATpayableinrespectofpassengerson
manyjourneysbetweenMemberStates;itwillalso
generateconsiderableadministrative costsduetothe
obligationto:
—appointtaxrepresentatives outsidethecountryin
whichthecarrierisestablished ;
—keepaccountsinseveralMemberStatesforVAT
purposes;
—createaplethoraofsupportingdocuments (invoices
forinputs,listsofticketsales,passengerwaybills,
etc.).
Moreover,aperiodof1-2yearswillbeneededtomake
thenecessaryarrangements .3.Specificcomments
3.1.LevyingVATattheplaceofdeparturewillhave
atangibleeffectonintra-Community busfares.Levying
VATonthetotaldistancecoveredfromaplaceof
departureinaMemberStatewhichleviesVATat
thestandardorreducedrate(Belgium:6%;Germany:
14(15)%;Denmark:25%;Spain:6%;France:5.5%;
Greece:8%;Netherlands :6%)will,inmostcases,
increasetheamountofVATpayable.Thisrefutesthe
ExplanatoryMemorandum 'sclaimthatthenewpro­
visionswillnotadverselyaffectthepriceofpassenger3.4.3.TheCommitteebelievesthattheapplication
ofthisprovisionwillgenerateseriousproblemsforthis
transportsector,whichisdominatedbySMEs.There
areevengroundsforfearingthatthesenewadministrat­
iveandbureaucraticconstraintswillexcludemany
smallandmedium-sized carriersfrommarketsoutside
theircountryofestablishment .Thisisaperverseeffect
atatimewhentheCommunityispreparingtoabolish
itsinternalfrontiersandopenupthelargeinternal
marketandemphasizingthenewopeningsforSMEs.

NoC19/52 OfficialJournaloftheEuropeanCommunities 25.1.93
3.9.2.ThepracticalapplicationofVATdoesafter
allrequireadministrative rules.3.5.Theproposal[Article1(2)]includesrathervague
rulesonthedetermination ofthetaxableamountinthe
caseofsuccessivetransportservices,wheretheamount
ofVATistobedividedupbetweenseveralMember
States.3.10.Achangeintherulesontheapplicationof
VATwillclearlyhaveaneffectontheamountsdue
andonfares;itisthereforeessentialforthecarriers
concernedtohaveanappropriateperiodinwhichto
adapt.Asaverylargeproportionoftouristproducts
aredeveloped,organized,costedandmarketedsome6
to12monthsbeforethejourneyisundertaken,itis
unrealisticfortheproposedDirectivetoenterintoforce
on1January1993,andisquiteinconceivable forthe
economicoperatorsconcerned .3.5.1.Therearegroundsforfearingthatexcessive
flexibilityinthisrespectmayleadtoconflictingassess­
mentsbytheauthoritiesofthevariousMemberStates
involved.Inanycase,thebreakdownofVATshould
followclearparameterswhichitshouldbepossiblefor
thecarrierstocalculatethemselves .
4.Conclusions3.6.TheCommitteebelievesthatexemptingtraffic
toathird-country destinationinvolvinginputtax
deductibilitywoulddiscriminateagainstintra-Com­
munitycoachandinlandwaterwaytransportservices
whicharesubjecttoVAT.4.1.TheCommitteehascometotheconclusionthat
itcannotendorsetheproposalandthatneitheralegal
instrumentnortheapproachproposedbytheCom­
missioncanapplyfrom1January1993. 3.6.1.TheformulaproposedbytheCommission
couldevengeneratedistortionsofcompetitionintrans­
porttoorfromMemberStates,insofarascarrierscould
usetransitthroughathirdcountrytocreatesuccessive
transportservices.4.2.Inanycase,theprovisionsofArticle28(3)of
thesixthVATDirectiveandthederogationreferredto
inAnnexF,point17ofthesixthVATDirectiveareto
remaininforce,initiallyuntiltheendofthetransitional
period(Directive91/680/EECof16December1991). 3.6.2.Thisshouldbetreatedasseriouslyastherisk
ofdeflectionoftraffictoanumberofthirdcountries
intheabsenceofexemption (commentaryonthe
articles,page17,point3,secondparagraph).
3.7.Sincefrontiercontrolsareduetobeabolished
on1January1993,asystempermittingcontrol-free
passageisinprincipletooperatefromthatdate.Inthe
caseofintra-Community tradeingoods,thesystem
waslaiddownbyDirective91/680/EECof16December
1991.4.3.Underthesecircumstances ,theCommitteemust
concludethatVATonpassengertransportservices
shouldcontinuetobeleviedinaccordancewiththe
principleofterritorialityandattheratescurrently
appliedbytheMemberStatesforthesametransitional
period.
4.3.1.Appropriateprovisionsmustaccordinglybe
adoptedsothat:
—VATcanbeappliedandmonitoredwithoutfrontier
controls,inlinewiththeabolitionofformalities ;
—theVATdueisnotgreaterthanatpresent;
—theadministrative provisionsadaptedtotheSingle
Marketdonotcreateadditionaladministrative and
bureaucratic structures .3.8.Asregardsthematterinhand,theCommittee
issurethat(a)eveniftheadhocDirectiveisadopted
by1January1993,italmostcertainlycannotbeincor­
poratedintonationallawontime;(b)neitherthe
nationalauthoritiesorthecarriersconcernedwillbe
abletoapplythesenewprovisionsbythatdate.Autho­
ritiesandcarrierswillthereforecontinuetoapplytheir
nationallegislation,andtherewillinevitablybeacon­
flictwithCommunitylaw.
3.9.TherelevantCommunitylegislativeprocedure
hasindeedonlyjuststarted,onaccountofthedelayin
thepresentationoftheproposaltotheCouncil.4.4.Onthisbasis,allintra-Community passenger
transportserviceswillbesubjecttotheterritorialVAT
ofthecountryofdepartureuptotheintra-Community
frontier,and,thereafter,totheVATratesapplicable
inthecountriesoftransitanddestination .
4.4.1.Controlsinthecountryofdeparturewilltake
theformofaVATdeclarationbythecarrieroroper­
ator,whowillbeobligedtohaveaVATregistration
numberforservicesprovidedinotherMemberStates;3.9.1.Thetransposition oftheseECrulesinto
nationallawissubjecttotheparliamentaryprocedures
inforceintheMemberStates.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/53
thecomparisonbetweenthedeclarationlodgedintheprovidedintheotherMemberStateswillserveasa
countryoforiginandthoselodgedinrespectofservicesmeansofverification .
DoneatBrussels,24November1992.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN
OpinionontheproposalforaCouncilDirectiveamendingDirective77/388/EECand
introducingSimplificationMeasures
(93/C19/19)
TheCouncildecidedon10November1992,inaccordancewithArticle198oftheTreaty
establishingtheEuropeanEconomicCommunity,toasktheEconomicandSocialCommittee
foranOpinionontheabovementioned proposal.
TheCommitteedecidedtoappointMrGiacomelliasRapporteur-General responsiblefor
preparingitsworkonthematter.
Atits301stPlenarySession(meetingof24November1992)theEconomicandSocial
CommitteeadoptedunanimouslythefollowingOpinion.
1.Introduction
1.1.IntheabsenceofanagreementintheCouncil
ontheintroductionoftheprincipleofValueAdded
Tax(VAT)onintra-Community tradebeinglevied
inthecountryoforigin,andasrateshavenotbeen
harmonisedwithinasufficientlyreducedrange,Direc­
tive91/680/EECof16December1991introducedtran­
sitionalarrangementswherebychecksandformalities
atinternalCommunityfrontierswouldbeabolished
from1January1993,whentheSingleMarketcomes
intoforce,whileratedifferentialsintheMemberStates
andtaxationinthecountryofdestinationwouldbe
maintained .
1.2.Majorchangescoveringbothintra-Community
tradeandtransactionswithnon-ECcountrieswerethus
madetotheSixthVATDirective.
1.3.Inaccordancewiththecommitment madewhen
Directive91/680/EECwasadoptedon16December1991,measureshavebeentakentofacilitatethe
implementation andapplicationofthetransitional
arrangements .Theaimofthesemeasuresistosimplify,
inthetruesenseoftheterm,theproceduresfortaxing
certaintransactions .Inaddition,theyhelptoclarify
thetaxprincipleswhichwillapplyfrom1January
1993.
1.4.Totheextentthatthesimplificationandclarifi­
cationmeasuresfulfiltheexpectationsofbusiness
circlesandanswerstheconcernsexpressedbytheMem­
berStateswhenDirective91/680/EECwastransposed
intonationallaw,theESCapprovesthepresentpro­
posal.Butwhilethisappliestotheproposal'scontents
(whichdonotmodifythetransitionalarrangementsfor
VAT)andaims(simplificationandclarification),the
ESChasfarmorereservationsabouttheproposal's
formandtheextremelyshort,orevenclearlyinad­
equate,periodoftimeallowedbetweennowand1
January1993foranalyzingeachofthearrangements
proposedandconsultingthetradinginterestscon­
cerned.