No C 297/16 Official Journal of the European Communities 28.11.79 
Opinion on the proposal for a Tenth Council Directive on the harmonization of the laws 
of the Member States relating to turnover taxes, supplementing Directive 77/388/EEC 
— application of value added tax to the hiring out of moveable tangible property 
The text referred to the Committee has been published in Official Journal of the European 
Communities No C 116 of 9 May 1979, page 4. 
A. LEGAL BASIS FOR THE OPINION 
On 3 May 1979, the Council referred the abovementioned proposal to the Economic 
and Social Committee in accordance with Articles 99, 100 and 198 of the Treaty 
establishing the European Economic Community. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 
171st plenary session, held in Brussels on 26 and 27 September 1979. 
The full text of the opinion is as follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, 
Having regard to the Treaty establishing the 
European Economic Community, and in particular 
Articles 99, 100 and 198 thereof, 
Having regard to the request made by the Council of 
the European Communities on 3 May 1979 for an 
opinion, 
Having regard to the Decision taken by the Bureau 
of the Economic and Social Committee on 21 May 
1979, entrusting the Section for Economic and 
Financial Questions with the preparation of an 
opinion and report on the matter, 
Having regard to the Section's discussions on 
18 September 1979, 
Having regard to the oral report made by Mr van 
Campen, 
Having regard to the discussions at its 171st plenary 
session, held on 26 and 27 September 1979 (meeting 
of 26 September 1979), 
HAS ADOPTED THE FOLLOWING OPINION 
unanimously: 1. The Commission's proposals in the Tenth 
Directive cannot be assessed without considering the 
history of the Sixth Directive. This Sixth Directive on 
the harmonization of the laws of the Member States 
relating to turnover taxes was adopted on 17 May 
1977. 
The Directive has since been incorporated into the 
national legislation of all the countries of the 
Community with the exception of Germany. The 
Commission's original proposal for a sixth Directive 
was approved by the European Parliament and the 
Committee. Subsequently, the draft Directive was 
altered radically at Council level.. Because first 
priority was being given to the Community's 'own 
resources' from 1 January 1978, the European Par­
liament decided to waive the consultation procedure 
for this amended version. Unlike the simple rule 
proposed in the original draft, the concept of 'place 
of supply of a service' was now defined in a provision 
with varying criteria, complicated by many 
compromises between the Council's experts. 
2. The draft Tenth Directive is intended to deal 
with specific problems concerning the concept 'place 
of supply of a service' as applied to the hiring out of 
moveable tangible property, these problems having 
arisen in two Member States since the adoption of the 
Sixth Directive. 
28. 11.79 Official Journal of the European Communities No C 297/17 
If an entrepreneur established in an EEC country (A) 
with a low rate of tax hires out property in an EEC 
country (B) with a higher rate, without being 
established there and using imported property or 
property purchased locally, the low rate of country A 
currently takes precedence over the higher rate of 
country B, the country in which the economic 
transactions actually take place. 
Furthermore, by virtue of the as yet unadopted 
Eighth Directive, the lessor can obtain refund in 
country B of the turnover tax paid on import into or 
purchase in country B. Member States with higher 
rates of tax are objecting to this state of affairs. 
3. The Tenth Directive aims to put an end to this 
undesirable situation by regarding the place where 
moveable property is actually made available to the 
customer as the place of establishment. 
4. The Commission's proposal resolves the specific 
problem mentioned. However, it raises difficulties in 
the case of transactions between EEC countries and 
third countries in that distortions may occur as a 
result of inter alia, double taxation or non-taxation. 
5. Discussions of the draft Tenth Directive were 
centred around the concepts of 'place where the 
property is made available' and 'place of use'. 
It was felt that for this particular problem 'place of 
use' was to be preferred to the 'place where the 
property is made available'. 
Done at Brussels, 26 September 1979. The Commission argued that 'place of use' is difficult 
to define and also leads to distortions. It also argued 
that 'place of use' is identical to 'place where the 
property is made available' in 90 % of cases. 
6. The Council of Ministers now also has before it 
the Eighth Directive on the harmonization of 
turnover taxes. This Directive deals with tax refunds 
to taxable persons not established in the country and 
is of particular importance for business; however, it it 
is claimed that this Directive cannot be approved 
unless the problem of the Sixth Directive is solved by 
the adoption of the Tenth. 
7. Only for purely realistic reasons does the 
Section think that the Commission's proposal can be 
approved, subject to the following comments. 
8. The Committee would point out that if the tax 
rates were aligned the present problems would resolve 
themselves. 
The Committee is further of the opinion that Article 
17 (4) of the Sixth Directive on refunds must also 
cover third countries. 
Finally, the Committee considers that the 
Commission must get together again with experts and 
representatives of the business community to study 
the controversial concepts of 'use' and/or 'making 
available' so as to avoid major distortions while the 
rates continue to differ. 
The Chairman 
of the Economic and Social Committee 
Raffaele VANNI