ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (75)391
Vol.1975/0154

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COMMISSION OFTHEEUROPEAN COMMUNITES
COM(75)391 Final
Brussels ,23July 1975
ACTION PROGRAMME FOR TAXATION
(Communication from theCommission totheCouncil )
COM (75)391 final

-I-
ACTION PROGRAMME FORTAXAIHON
1* Despitethedisappointments ofthefirststage,achievement of
economic andmonetary unionremainsthepriorityobjective intheworkof
building thenewEurope,
Theunioncannotbeattained without anumberofmeasures with
regardtotaxation .Theimportance ofthesemeasures hasbeanstressed on
manyoccasions bytheCommunity institutions tinitsResolution of22March1971,
whichestablished thebasesoftheunion,theCouncilgaveaprominent place
tofiscalharmonization ,anditreaffirmed theimportance ofthemeasuresto
beadoptedinthisfieldinitsResolution of21March1972#
2* However,noneoftheimportant proposals whichtheCommission
submitted undertheseResolutions hasbeenadoptedbytheCouncil,although
thelatter,initsResolution of21March1972,agreedtogivetheseproposals
priority treatment onitsagendaandtoreachdecisions onthemwithinsix
monthsfromthedateoftheirentryontheagenda.TheCommission muchregrets
thelackofpolitical willamongtheMemberStates,whichhaspreventedall
progressinthisfield,andfeelsthatitisnowtimetoreconsider thematter:
itsscaleandimportance aresuchthatitmustbetackledresolutely ,and
withoutfurtherdelay.
TheCommission iswellawarethattaxharmonization issubject
tolimitssetbyalargenumberofconstraints *Thefiscalsystemofanygiven
countrydependscloselyonitseconomic andsocialstructures *Taxationis,
also,fortheGovernments ,animportant instrument forachieving economic
andsocialobjectives ,whethertheyaffectstructures orcurrenteconomic
trends.Untiltheseobjectives canbedefinedandachievedatCommunity level,
theauthorities willhavetoensurethatharmonization innowayhampersthe
(1)O.J»noC28,27March1971»
(2)O.J.noC38,18April1972.

useoftaxation asaninstrumfeht'Offt&tional policy,Tax:harmonization
mustsupportworkontheconvergence ofeconomicpolicies ,without
•• \ ■
imposingrestrictions ontheMemberStatesearlierthanisnecessary ,=
especially asregardstheratesofthemaintaxesandcharges.
r
4» Accordingly ,theCommission feelsthat,forthenearfuture,
itwould "be"bettertoconcentrate onessentials andtorestrict Community
measurestothosewhichareabsolute^indispensable .However,itmust
stressthatinthelongertermothermeasureswillbenecessaryif
integration istobetakenfurther. .:
5. Theprogramme proposed thushastwomainparts:
(i)inthefirstplace,theaimistocompleteworkonestablishing tax"
conditions whichwouldenablethehighestpossible degreeof
liberalization inthemovementofpersons,goods,serviceandcapital
"andofinterpenetration ofeconomies.Thiscontextincludesin
particular measuresforharmonization ofthestructures and
implementing procedures relatingtovariouscategories oftaxesand
charges ;
(ii)secondly,preparations mustbemade,withaviewtofurtherEuropean
integration ,tobringclosertogether therespective burdensofthose
taxesandchargeshavinganysubstantial impactinthiscontext *A
pointwhichisrelevant heroistheuseoftaxation asaninstrument
ofcommonpolicies.
6. TheCommissiori hasconsulted theemployers *federations ,the
unions,andtherevenuedepartments ofthemembercountries .The
suggestions andproposals whichitismakingtakefullyintoaccountthe
viewsexpressed intheseconsultations andreflectthedesiderata of
manageaents andunions.Responsibility forpromptactionwithregardto
theCommission^proposals nowlieswiththeCouncil,

7» TheCouncil 'sattitude inthis connection will show its
desire tomake progress towards economic andmonetary union .Failure
over along period toestablish thetaxarrangements necessary to
economic andmonetary union could only beinterpreted bypublic opinion ,
despite allthedeclarations ofintention ,asadecision toabandon the
idea ofestablishing theunion *
•MEASURES DESIGNED TOMEET THE TAXATION REQUIREMENTS FOR ECONOMIC AND
MONETARY UITIOrT
Value added tax « •
8. Inthefield ofturnover taxes ,theaction ofCommunity
institutions aims topreserve neutrality ofcompetition (internal and
external )from thedangers constantly posed inthepast bytheexistence
of"cascade "taxes inmost countries andbytheoperation offlat-rate
set-offs atfrontiers ,andtopave thewayfortheutmost economic inter­
penetration soastoform alarge economic area with thefeatures ofa
domestic market *
Some progress wasmade towards attainment ofthese objectives
when theCouncil adopted ,in1967 »twoinitial directives which ledtothe
introduction ofVATinalltheMember States (l)»Thenext step nowdue
istheadoption oftheproposal forasixth Directive ontheestablishment
ofauniform basis ofassessment forVAT (2),submitted bytheCommission
inJune 1973 .
TheCommission feels that theCouncil should actrapidly on
this proposal ,foruntil itisadopted ,the "ownresources "scheme setup
bytheCouncil 'sDecision of21April 1970 cannot beproperly implemented
on1January 1978 .
•A
(l)ESCDirectives nos67/227and67/228-O.J. ,14April 19^7 »
(2)O.J. noC80,5October 1973 ;0fJ.noC121 ,11October 1974 .
(3)O.J. noL94,28April 1970 .

...-4
9. Ifthe"ownresources "mechanism ■«-involving ;thetransfer of
notmorethan1foofVATassessed onauniformbasis-istofunction -
correctly ,uniformmeasuresforthecollection oftheresources mustbe
adopted.OnoetheCouncilhastakenadecisionastotheproposedsixth
Directive ,theCommission willaccordingly drawupproposals tosupplement
and,wherenecessary ,adapttothespecificcharacteristics ofthis
category ofownresources therulesandprocedures alreadyinforceunder
CouncilRegulation no2/71of2January1971(l).–
10. Theprocedures usedandtheformalities required in
connection withVATatintra-Community frontiers arecomplicated ,cumbersome
andcostly.Thisbearsheavilyonfirms,particularly thesmallerones,
somuchsothattheyarefrequently deterred fromengagingininternational
trade#Inaddition,therefore ,totheprogramme whichithasputbefore
theCouncilforsimplifying customsprocedures andformalities (2)the
Commission intendstodrawupproposals forsimilarly simplifying VAT
arrangements asquicklyaspossible.
11. TheCommission hasascertained thatcertainproblemspeculiar
toimportation couldnotbesolvedintheproposeddirective onthe
uniformbasisofassessment .Toovercometheseproblems ,itintendsto
- ■:' *
takeactioninthefollowing fields:
-temporary admission :withoutprejudice totheapplication ofthe
provisions oftheTreatyrelatingtothesupplyofservicestheaimis
toharmonize certainlaws,regulations andadministrative provisions ,
oneofthekeyobjectives beingtomakeiteasierforundertakings in
oneMemberStatetotenderforpublicprocurement workinotherMember
States.Participation insuchtenders,whichisamattertheCommission
attachesthehighestimportance to,isatpresenthanpcred byavery
largenumberofobstacles ,including taxation oneswhichsimplymustbe
removed :
(1)O^J.noL3,5January1971i
(2)Doc,CQM(75)67final,25February 1975*/.

–repairscarriedoutfornon-taxable personsinanother MemberState-
stepsmust "betakentoavoidthedoubletaxation whichoccursatpresent
-mail-order sales:thecross-frontier development ofthistypeofsaleto
non-taxable persons,whichhastheundeniable advantage ofwidening the
choiceavailable toconsumers andconsequently helpingtokeepdownprices,
encounters serioustaxandotherobstacles,Asystemthusneedstobe
introduced whichisadministratively simpleandatthesametimeensures
thattheStatesconcerned eachreceivetherightshareoftaxreceipts#
Excisedutiesandotherindirect taxes
12, Inthefieldofexciseduties,threeproblemsfirsthadtobe
solved:whichexcisedutiestoretain,theharmonization oftheirstructures
andhowtoprevent MemberStatesfromintroducing newexcisedutiesentailing
set-offorcheckingatfrontiers# Appropriate proposals weremadebytheCommission
in1972and197,3(outlinedirective anddirectives onbeer,wine,spiritsand
mineraloils)(l),
13* Afirstdirective concerning excisedutiesonmanufactured tobacco
*wasalsoadoptedbytheCouncilon19December 1972(2)®Thetwoyearsspecified
inthisDirective forimplementing provisions onthestructure oftheexcise
dutyoncigarettes were,however,extendedforayearbyCouncilDirective
no74/318of25June1974(3)«TheCommission hasnowproposedafurther
one-year extension.Thisextension isneededtoworkoutanacceptable solution
toaproblemwhichwasdifficult enoughwithjusttheSixandbecamemore
complicated withtheenlargement oftheCommunity ,
Onthebasisoftheoriginaltext,thd-^Commission hasalsolaid
beforetheCouncilaproposalfordefining andclassifying manufactured
tobaccoinvariousgroups(4)0Itintendstomoveontothenextstageof
harmonization bysubmitting furtherproposals inthenearfuture.
•/•
(1)0,J,noC43,29April1972andO.J,no.C92,31October1973.
(2)Directive no72/464-0,J,L303,31December 1972*
(3)O.J,noL130,3July1974*
(4)O.J.noC72,27June1974.

14* Inviewoftheeconando importance ofthesectorsinwhichthese
excisedutiesapply,allfurtherprogressingradually establishing asingle
marketdependsontheadoptionoftheaboveproposals# Onceadopted,they,
wouldalsoenabledistortions stemming fromthedifferences inthetaxstructures
tobeeliminated .Thereisnoreasonwhysuchdistortions shouldsurvivein
suchamajorfieldofconsumption severalyearsafterthosecausedbyturnover
taxeswereeliminated withtheintroduction ofVAT#
Awareoftheimportance ofthisproblem,theCouncilundertook ,
initsResolution of22March1971»"totakedecisions withregardtothese
textsby1January1974•TheCommission therefore urgespromptactionin
thisfield#
15• Intra-Community tradeinproductssubjecttoexcisedutyinvolves
procedures andformalities thatcostmoney#Suchprocedures andformalities
alsoexistwithintheMemberStates,althoughinasimplerform,andare
largelytheresultofthegenerally highlevelofexciseduty#However,steps
couldusefully betakentosimplifytradebetween MemberStates#TheCommission
willaccordingly seektodevisesolutions whichenableformalities andcontrols
toberelaxedwithoutdetracting fromthepropercollection ofexciseduties#
16# Onotherindirecttaxes,theCouncilhasalreadyadoptedthree
directives ontheharmonization ofprovisions concerning capitalduty(l)
(indirecttaxesontheraisingofcapital)#
■TheCommission planstolaybeforetheCouncilbeforetheend
of1975aproposalforadirective ontheharmonization ofindirecttaxes
ontransactions insecurities# Theaimofthisproposalistoeliminate tax
obstacles tothefreemovementofcapitalbetweenMemberStates,anditis
therefore partoftheworktoestablish aEuropeancapitalmarket#The
Commission *slong-term objectiveisinfacttheabolition ofthistax,
whichhasnoplaceinamoderntaxsystem#
•/.
(l)Directivo no69/335-0#J«noL249»3October1969
Directive no73/80-0#J#noL103,18Aprii1973 • >
Directive no73/79-O.J#noL103,18April1973

17• Aproposalisbeingdrawnupforadirective designedto
facilitate theeffective exerciseofthefreedom ,tosupplyservicesin
connection v;ithindemnity insurance.Thedisparities inthetaxsystemsin
thisfieldcouldimpaircompetition .Withoutrulingoutfullerharmonization
lateron,theproposalwilltherefore containaclauseaimedatavoiding
casesofdoubletaxation orofnon-taxation .
Directtaxes
18, yThecomplexity oftheproblemstobesolved-stemming from
historical grounds,technical factorsandtheuseofthesetaxesasamajor
instrument ofeconomic andsocialpolicy-together withtheenlargement
oftheCommunity havecausedconsiderable delayintheprocessofharmonizing
directtaxes.Itwouldbedangerous toallowthissituation tolast,forthe
difficulties causedbydisparities inthisfieldareaggravated bythelacfe
ofset-offarrangements atfrontiers toneutralize theireffects.Thework
whichhasbeengoingonforseveralyearswithaviewtoeliminating tax
obstacles tothecross-frontier mergeroffirmsandtothefreemovement
ofcapitalshouldnowbesteppedupandothermeasurestakenatthe.sametime#
19, TheCommission recallsinthisconnection thatasrequested
bytheCouncilitputforwardinJanuary1969twoproposalsfordirectives (l)
concerning thecommontaxarrangements applyingtomergers,divisions and
contributions ofassetsbetweencompanies indifferent MemberStatesand
thecommontaxarrangements applyingtoparentcompanies andsubsidiaries
indifferent MemberStates,Itdeeplyregretsthatdespitetheundertakings
enteredintoinseveralresolutions onindustrial policyandtheconcern
shownonthismatteratthehighestpolitical levelattheParisSummit
conference in1972,theCouncilhasstillnotactedontheseproposals ,
whicharealsoindispensable ifthenew"European"companies aretooperate
properly# TheCommission stresses theneedforanearlydecision.
(1)0,J.noC39,22MarchI969.

-8-
20.TheCommission willalsotransmittotheCouncilintheverynear
futureaproposalforadirective harmonizing the'systcans.ofo^mpany -taxation and
ofwithholding taxesondividends .AsitpointedouttotheCouncilinaletter
datedJDecember 1973iharmonization will "be"basedonacommonimputation
systempartially relieving thedoubleeconomictaxation ofdividends andwill
involve somenarrowing ofdifferences "bothintheratesoftaxesonprofitsand
inthoseoftaxcredit.Thisisoneof-thestepstowardstheestablishment of
aEuropeancapitalmarketandpavesthewayforafurthernarrowing ofdiffe­
rencesbetweentaxesonfirms'profits.
TheCommission willalsoputforwardsolutions tothetechnical
problemsraisedbydividends whentheyarepaidthroughcompanies investing
insecurities orthroughunittrusts.
21. Asregardsbondinterest ,in1973 "theCommission cameoutinfavour
oftheprinciple ofasubstantial withholding tax,somethinglike23%$reflecting
theneedtoensurefairtaxation andtheconcernforsocialimplications shown
bytheHeadsofStateorGovernment .TheCommission maintains thisposition ,
but,asithasalreadystated,willmakeaproposalalongtheselinesonly
whenthe'Community hasasystemforcontrolling externalcapitalmovements.
22.TheCommission alsointendstopursueitsworkrelatingtothebasis
ofassessment 'oftaxesontheprofitsoffirms.Thisisaverywidefieldco­
veringawholerangeofprovisions suchasdepreciation ,capitalgains,valua­
tionofstocks,carry-foi*ward oflosses,treatment oftax-freereserves ,etc.
Whileharmonization oftheparticularly largenumberofincentives
inthisfieldmustberuledoutforthetimebeing-suchmeasures comeunder
theeconomicpolicyofeachMemberState-adefinition ofa"normal"basisof
assessment mustbeworkedoutifdistortions ofcompetition aretobeelimi­
nated,taxesmadetransparent andratessubsequently broughtclosertogether.
/.

-9-
23. Inthefield ofpersonal income tax ,anumber ofparticular
problems arebeing examined jinparticular there aretheincreasingly
common cases oftax-payers who .onmoving from oneMember State to
another ,arepenalized because they areunable forinstance todeduct ;
certain expenses from their taxable incomes .
International tax evca .onand avoidance
24• International taxevasion andavoidance lead tolosses of
revenue andbreaohes oftheprinciple oftaxfairness ;itcanalso cause
distortions incapital movements andtheconditions ofcompetition .
Accordingly ,on10February 1975 »"theCouncil adopted aresolution (l)
proposed bytheCommission laying down theprinciples ofthemeasures to
betaken bytheCommunity toensure that taxes onincomes andprofits
arecorrectly determined .
Toimplement this Resolution ,theCommission will shortly
putforward proposals on:
-themutual exchange ofinformation between Member States ;
-enquiries tobecarried out inoneMember State attherequest of
another ;
-constant collaboration bytheMember States andtheCommission soasto
keep under review theoperation ofmachinery formutual assistance and
toimprove it.
(l)O.J. noC35,14February 1975 *

-10-
>• Initswork onimplementing this resolution ,theCommission
will also look into thepossibility ofmaking iteasier forofficials of
one State tobeassociated with work carried out inanother State and of
harmonizing thelegal andadministrative instruments oftherevenue
departments forcollecting information andexercising their right ofcontrol .
25. Following upitsCommunication totheCouncil ofNovember 1973
onmultinational undertakings (l),theCommission will cbntinue itswork
with aview topresenting proposals on:
-theelimination ofdouble taxation which canresult from adjustments made
toprofits byaMember State ;
-thefixing ofcommon rules foravoiding artificial transfers ofprofits
between undertakings inthe same group bymeans oftransfer pricing .
t
Itfurther calls attention tothesuggestions which itmade
inthereport onthetaxarrangements applying toholding companies (2)
drawn upinJune 1973 attherequest oftheCouncil ,andinparticular
those concerning theshifting oftheburden ofproof where there isa
presumption oftaxavoidance andthecharging ofawithholding taxon
intorest androyalties paid tocompanies bearing little ornotaxonsuch
income .
26. vInthematter ofindirect taxes ,theCommission will shortly
transmit totheCouncil aproposal onmutual assistance between Member
States toenforce collection ofamounts dueinconnection with VAT ,excise
duty andother indirect taxes onconsumption along the same lines as
proposals already putforward concerning agricultural levies andcustoms
duties .Theadoption ofthis proposal would enable Member States to-
recover amounts owed byaperson liable toVATorother indirect tax ,even
ifthis person resided orhadhisonly'seizable property inaMember State
other than that inwhich the tax debt arose .
(1)Doe.COM(73 )1930 ,7Nveraber 1973 .
(2)Doe.COM(73 )1008 final ,18June 1973
Λ

-11-
27»Asmthefieldofdirecttaxes,theCommission intendstopromote
mutualassistance betweentaxauthorities inconnection withindirect taxes
inordertopreventfraudatinternational level.Itwill,inaddition ,study
waysandmeansofquantifying thethoroughness ofcontrolsineachStateand
alsoseektodiscoverthemostwidespread methodsoffraudwithaviewto
proposing measuresforpreventing infringements ofnational lawsandprosecu­
tingoffenders .
Taxexemptionforindividuals ;--- ;-:y
28mAsregardsgoodsimported bytravellers ,afirstdirective was
adoptedbytheCouncilin1969(l).Theexemptions wereincreasedin1972(2).
TheCommission intendstopursuethispolicyofextending theexemptions and
willsubmitaproposalearlyin1976.Itisalsoplanningtoproposeadjustments
atregularintervals totheseexemption amountswhoserealvaluealreadyfalls
wellbelowwhatitwasoriginally becauseofthosteadyriseinprices.
29. Asregardsconsignments ofgoodsbyindividuals ,theCouncilhas
alreadyintroduced exemption forsmallconsignments ofanon-commercial cha­
racterwithintheEEC(3)butstillhastoactonaCommission proposalfor
Introducing similarfacilities forconsignments fromnon-member countries (4)•
30.Supplementing thearrangements forexemptions forindividuals ,the
Commission willsubmit,beforetheendoftheyear,twonewproposals fordi­
rectives concerning :
-thepermanent importation ofcertainpersonaleffects,especially onthe
occasion ofremoval,inheritance ,marriage ,etc.,
-thetemporary importation ofcertaingoods(privatecars,caravans,etc.).
(l)Birective ÌT0.69/I69-O.J.No.L133,4June1969»
(2)Directive Ho.72/230-O.J.No.L139»17June1972.
(3)Directive TIo.74/651-O.J.No.L354.30December1974.
(4/1O.J4Ho.C18,25January1975*
•Λ

31•TheCommission takestheviowthatallthesemeasuresdealingwith
exemptions ,thoughnotindispensable totheestablishment ofeconomic andmone­
taryunion,areofgreatimportance,sincetheyareconcerned withsatisfying
theinterests andtheneedsofindividuals .andconstituetangible andmeaningful
evidenceforthepublicatlargeoftheCommunity^existence .
Priorexamination andconsultation procedure
32."hesucoessofthesortofprogramme advocated inthiscommunication ,
graduated andspreadoveraperiodoftime,impliesaconsensus ,ifnomore
thantacit,betweentheMemberStatesastotheobjectives tobeattained and
theirwillingness torefrainfronunilateral measures whichcompromise there­
quisiteandeventual convergence oftheirtaxsystems.
Thisisafundamental oondition ,butifitistobefulfilled ,the
Community institutions andtheMemberStatesmusthaveattheirdisposalall.
therelevant information onthemainprovisions whichthenationalauthorities
plantoadoptinthefieldscoveredbythetaxharmonization process,andit
wouldperhapsbeappropriate togivetheCommission theopportunity ofmaking
knownitsviewsontheseplansandinparticular ontheeffectsthattheir
adoption mighthaveonthisprocess# Accordingly theCommission willasearly
asthebeginning of1976proposetotheCouncilthataprocedure forprior .
examination andconsultation beinstituted ,therulesofwhichwouldbemodelled
onthoseoperating inthetransport fieldpursuanttotheCouncil'sdecisionof
21March1962(l).
Timetable
33*Thetimetable plannedbytheCommission forthesubmission ofthe
proposals mentioned inthispartisattached.
(1)O.J.of3April1962.

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I1.LOEG-TEKM MEASURES frJITHATOTTOFULLER INTEGRATION
34•Themeasures setforthintheprevious paragraphs arenot
sufficient iftheaimistoachieveagenuinesinglemarket,entailing
interaliatheabolition oftaxfrontiers .Taxes,whichaccountfor
asubstantial proportion ofthegrossnational productoftheMember
States,areoneofthekeyforcesintheireconomic andsociallife,
theystronglyinfluence manyfactors,including thestructure of
consumption ,andconsequently ,thatofproduction ,theprofitability
offirms,thelocation ofinvestments ,andtheconditions of
competition ingeneral.
Inacoinmunity ofStatescloselyintegrated notonlyinthe
economicfieldbutalso,toacertainextent,inthepolitical field,
thesevariousfactorsshouldnotbeartificially influenced by
differences infiscalburdens.Somealignment oftheseburdenswill
therefore eventually bonecessary .
Thisalignment isalsonecessary inviewoftheroleoftaxation
asaninstrument ofeconomic andsocialpolicy,ifwearetoachieve
anevercloserco-ordination ofnationalpolicies andtodevelop
genuine commonpolicies inthekeyareasofeconomic andsociallife.
Valueaddedtax
;35.bringing VATratescloselyintolineisanobviousrequirement
foracommonmarkethavingthefeatures ofadomestic market.This
objective hastherefore neverreallybeenchallenged ,butthecourse
tobetakenandaboveallthepaceatwhichprogressistobemade
havegivenrisetoconcern.Awareofthedifficulties ofattaining
suchanobjective ,theCommission feelsthatthisshouldbealonger
termandgradualprocess.

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36,Harmonizing rateswillbepossibleonlyifcertainconditions ,which
arefarfrombeingfulfilled atpresent,aremetinadvance.Differences exist
betweennational systemsnotonlyasregardst'h'elSVelofratesbutalsoas
regardsthenumberoftheseratesandtheirscope.Theintroduction ofauniform ,
basisofassessment wouldnotalterthissituation .Accordingly ,agreement
mustfirstbesoughtonthenumberofratesand,ifasolutionotherthan
thatofasingleratewereselected onalistofgoodsandservicessubject
tothevariousratesandtherelationships betweentheserates.
Otherbenefits wouldaccruofromsuchmeasures :
-neutrality incompetition ontheinternal market-seenfromtheoutsetas
thefundamental objective ofVAT-wouldbecreatedforsubstitutable products ;
-largerexemptions wouldbepossible,asamajorsourceofvariation inthe
taxburdenfromonecountrytothenextwouldberemoved ;
-itwouldbeeasiertosimplifycertainprocedures andformalities inintra-
Community trade,1
Exciseduties
37*Inthefieldofexciseduties,theharmonization ofratesisases­
sentialasforVAT.Theproblemstobesolvedarelargelythesameorsimilar
andwilltherefore betackledfromthesaneangl$.However,,fortheseduties,
afurtherfactormustbetakenintoaccount:certainexcisedutiesarekey
components ofsectoralpolicies (e.g.energypolicy,transport policy,envi-
ronnement policyandagricultural policy)atbothnationalandCommunity level.
Thefixingofharmonized rateswilltherefore dependontheobjectives set
forthesecommonpolicies.
TheCommission recallsinthisconnection thatithasalreadylaid
beforetheCouncilproposals ,forexampleunderthecommontransport policy,
havingasubstantial impactontaxharmonization .Theseincludetheproposal
forafirstCouncilDirective ontheadjustment ofnationaltaxation systems

-15-
forcommercial road vehicles (l)and -theproposed Council decision onthe
introduction ofacommon system ofcharging fortheuseoftransport infra­
structures (2).
Direct taxes
3o. Disparities inthearea ofdirect taxes will become more andmore
noticeable aseconomic integration advances andasdifferences inthe
other factors influencing economic life aregradually narrowed .These
disparities will therefore need tobeeliminated .
39. Inthis context ,attention will have tobedirected tothe
incentive measures which Member States resort toinsofarasthey affect
thebasis ofassessment ofthese taxes .
These measures are ,whether permanent ortemporary ,designed to
encourage investment ingeneral orselectively ;thus theauthorities can
influence thegeneral business climate ,grant actual aids tocertain
industries ,orencourage thedevelopment ofcertain regions .Depending
onthecase ,such measures ,whose exact scope isoften difficult toassess ,
consist infact either indepreciating atagreater rate than canbe
justified byactual technical oreconomic depreciation ,orintotal or
partial exemption ofprofits ,generally oncondition that they arere­
invested ,oreven intaxrebates .Their impact ,whether ontheeconomy
ingeneral oronthespecific competitive situation ofthe industries ,
favoured endoftheassisted regions ,isnotinconsiderable .
Ifeconomic andmonetary union istobefully achieved ,itis
unthinkable that such measures should beadopted bytheMember States
without being properly related toanoverall policy ,even where ,asaids ,
they donotactually conflict with theTreaty :asconcerted economic
policies aregradually worked outandimplemented ,itwill prove
increasingly necessary tocoordinate theuseofthetaxsystem asan
instrument ofintervention .
(1)O.J. No.C90,11September 1971
(2)O.J. No.C62.22June 1971 .

–16–
40.Inthefieldofcompanytaxation ,theprocessofbringingrates
closerintoline,beginning withtheintroduction ofacommonsystembf
taxcreditswillhavetobecontinued.Howfarthisprocessshouldgo
willbedetermined byreference totherequirements ofcompetition .
41.Anotherproblemiswhether,andifsotowhatextent,actionwill
berequiredinotherfieldsofdirecttaxation suchaswealthtaxes,
taxesonspecificoccupations ,etc.,inordertoattaincommunity
objectives .
Conclusions
42,ThisCommunication doesnotpurporttoproduceafinaland
exhaustive listofthemeasures whichshouldbeundertaken bythe
Community ,infutureyears,inthefiscalarea.Theprogramme shouldbe
reviewedperiodically inthelightofprogress madeindefining and
establishing theunion.
Inanycase,itisimpossible toplaninadvanceforallcases
wheretaxation couldproveausefulinstrument forattaining specific
economic andsocialobjectives .TheCommission iswellawareofthisand
willincludethenecessary measures intheproposals whichitwillbe
makinginthesefields,
43.Inadditiontaxation problemsariseinthefieldofexternal
relations .Theseproblems areconnected inparticular withinvestments
andwiththetaxation ofcapitalandoftheincomederivedfromit.In
thefuturetheseproblems maybemoresharplymarked.Anincrease in
directandindirect investment intheCommunity bythirdcountries ,and
viceversa,isindeedalreadytakingplace.Moreover ,theCommunity has
undertaken aprocessofindustrial co-operation withthedeveloping
countries ,especially undertheLomeConvention ,Thisco-operation has
taxationaspects,whichhitherto haveprimarily beendealtwiththrough
bilateral agreements .TheCommission intendstoexaminethepossibility
ofenabling MemberStatestotackletheseproblemsbetteronaCommunity
basisandsotomakeiteasiertocarryoutapolicyofindustrial -co­
operation withthedeveloping countries .

A1OTCTDETABLE
Timetable ofr.ensuressetforthinpartI
2221
-Harmonization ofsystemsofcompanytaxation andofwithholding taxes
ondividends ;
-Harmonization ofindirect taxesontransactions insecurities ;
-Mutualassistance "betweentheMemberStateswithaviewtoenforcing
recovery oftaxesduoinrespectofVATandexciseduties.
2m
-Uniformcollection ofownresources deriving fromVAT(thisproposal
assumesthattheCouncilhasalreadytakenactionwithregardtothe
"uniformbasisofassessment");
-Solution ofVATproblems connected withrepairscarriedoutabroad,
mail-order salesandtemporary admission ofcertaingoods;
-Extension ofexemptions forindividuals ;
-Measures toestablish effective co-operation betweenrevenuedepartments
tocombattaxavoidance inthefieldofdirecttaxes;
-Elimination ofdoubletaxationlikelytoarisefromprofitadjustments
madebyaMemberState;
-Priorexamination andconsultation procedure ;
-Simplification ofVATformalities atintra-Community frontiers .
From1977onwards
-Measures enabling excisedutiestobeproperlycollected andformalities
andcheckstobestreamlined ;
-Fixingofcommonrulestopreventartificial transfers ofprofitsbetween
firmsofthesamocorporate groupthroughtransferpricing ;
-Harrowing ofdivergences inthebasesofassessment oftaxesonthe
profitsofenterprises .