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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(81)572 final
Brussels,14thOctober19&1
STRENGTHENING OFTHEINTERNAL MARKET
(Communication fromtheCommission totheCouncil)
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COM(81)572final

2_
EXPLANATORY MSHOHAHPUH •
"c-or?forrr.GasMrcstofacilitatethefreemovementoffloodsandpersons
v;ithintheCOrnrunity .■
Korcthantwentythree yearsaftertheTreatyofRomeenteredintoforce,
thefreemovementofgoods,oneoftheessentialpillarsoftheCommunity,
hasnotyetbeenfullyachieved.
Admittedly ,somesignificantstepsforwardhavebeenmade,including
establishment oftheCommunitytransitsystem.Butagreatdealremainsto
bedonebeforetheobjectiveeffectivefreemovementofgoodsinthe
CommunityunderthesameconditionsasobtainedWithinanindividual
country,isachieved.
"Theobstaclesthatremainareformidable?.Aboveall,theyhaveonefeature
incommonsthehighcoststheyimposeontheeconomicoperatorsconcerned.
Comprehensive actiontoreducethesecostswould,withoutdoubt,havea
beneficial economicimpact.Itwouldgive4boosttoCommunitypreference
byenablingCommunityproductstocompetemoreeffectively withproducts
fromoutsidetheCommunity,andthiswould"beundeniably welcomeinthe
presenteconomicclimate.Moreover,alltheseobstaclesnurturethe
protectionist tendenciesthatareboundtoemergewithintheCommunity
• •
itselfattimesofeconomicdifficulty andarecontrarytotheprinciples
thatwereuppermostinthemindsoftheTreaty'sarchitects .Thesedifferent
aspectsoftheproblemwere-viewedwithconcernatthemostrecentEuropean
Council',held:inLuxembourgon29and30June1931.Atitsmeeting,the
Councilcametotheconclusionthatanefforthad.tobemadetostrengthen
anddeveloptheinternalmarketbecauseofallthethreatstowhichit
wasexposed, ,'- ,

Anrmalyr;Isoftheobligations incumbentuponeconomicoperatorsreveals
firstthattheformalitiesthathavetobecompletedatthemomentbypersons
wishingtosendgoodsfromoneMemberStatetoanotherareidenticalin
virtuallyallrespectswiththoserequiredintradewithnon-membercountries.
Asituationofthiskindisclearlyincompatible withtheconceptsof
.customsunionandsinglemarket.Itisfurthercomplicated bytheextremely
widediversityofdocumentsthathave"tobeproducedinsomeMemberStates
inconnectionwiththecompletionofsuchformalities .
Therecan,ofcourse,benoquestionofabolishingtherulesrequiring
productionoftheserelateddocumentssincetheyfloweitherfrom
Communityprovisions(cf.monetarycompensatory amounts),orfromnational
provisionsthathavenotyetbeenharmonized(exciseduties)orhavebeen
adoptedbycertainMemberStatesunder,the'Treaty(Articles36»73»103,
103and115inparticular).
Inthetaxfield,forexample,VAT,whichislevied ,on"imports"of
Communitygoods,isstillappliedinsomeMemberStatesexactlyasifit
wereacustomsduty.ThisWasunderstandable priorto1July1963,wheri
customsdutiesinintra-Community tradewereabolished,butishardlyso
nowadays.Whatismoreanapproachofthiskindtakesnoaccountwhatsoever
ofthespecificnatureofVATascomparedwithcustomsdutiesorother
chargesorinparticularoftheprincipleofdeductibility .Shifting
collectionofVATtoapointwithinthenationalterritorywouldpermit
asubstantialeasingofformalitiesatfrontiers.Thisfacilitycouldbe
accordedtoallpersonswho,intheircapacityastaxablepersons,are
requiredtosubmitperiodicreturnstothetaxauthorities inrespectof
transactions carriedoutbythemunderthenationalarrangements ,since
thereisnoreasonswhythearrangements forpayingtheVATchargeable
i
^onsuchtransactions shouldbedivorcedfromthoseapplicableintrade
betv/eentwoMemberStates.
Inparalleltoasimplification inthecollectionofVATinintra–Community
trade,actionshouldbetakentoeasetheformalitiestobecompletedin
themovementofgoodsfromoneMemberStatetoanother.Inparticular ,
thenumerovisdocumentsnecessaryatpresentinallstepsoftheoperation
fromdeparturetoarrival,shouldbereplacedbyasingledocumentsuch
astheinvoice.Similarilyanimprovementintheproceduresforthe
collection -ofstatisticaldatawouldsupporttheeffectsthatsuch

-3-
facilitation measureswouldhaveinintra-Community trade.
Lastly,turningtothefreemovementofpersons,thepresentsituation
canonly"bedeploredinspiteofthesimplifications thathavebeen
introduced,Apartfromthefactthat,"becauseof"theinadequacies which
existanyway,customschecksj>ntravellersatfrontiersareofdoubtful
utility,therewillbeevenlessneedtocheckgoodscarriedbytravellers
asdutyfreeallowancesincrease.Itshouldbeclearlyunderstoodthat
thesimplification -perhapseventheabolition-ofcustomscheckswithin
theCommunitywouldgoalongwaytoreinforcethepublic'ssenseof
belongingtoaunitedEurope,andwouldalsoavoidtherecurrenceof•
regrettable incidentsofthetypereferredtofrequentlyinquestions
fromI'cmbcrsoftheEuropeanParliament .
ThisdraftResolutionhighlights 'theareasforimmediatepriorityaction.
Itspurposeistoobtainapoliticalcommitment from'theCouncilon
preciseaimswhichitwillthenbemandatorytoachieve.
2.Sconnofthoproposedmeasures .■ ■'
Clearly,totallyfreemovementofgoodscannotbeachievedovernight.
Thorearetoomanyproblemstoovercome.Untilthewidevarietyofrules
thatcanapplytotrade-betweenMemberStateshasbeenharmonized ,there
willalwaysbespecificformalities tobecarriedout.Immediate
harmonization ofalltheserulesisnotfeasiblealthoughtheaimshould
obviouslybetocompletetheworkinthisdirectionassoonaspossible.
Butsubstantialprogressinspecificareasispossibleatonce,andwill
helptocreatethepracticalandpsychological conditionsrequiredtobring
.theinternalmarket,nearertocompletion. -' ■.

Content o:thc pror-onril , *
Theproposal foraResolution Gets outanaction programme for the
Community ,andpurposes binding obligations ontheMember States ina
number offields .
\
Tnese are :
(i) asregards customs formalities :
(a)tosimplify procedures andchecks soastoreduce theburden
onusers without increasing therisk offraud ;
(b)tocirplify paperwork ingeneral inintra-Coirrouaity trade so
astosubstitute asingle document ,ifpossible the standard
commercial invoice ,forboth the customs declaration itself
and thesupporting documents used foratransaction :
(ii) asregards taxation :
(a)tosimplify thepayment ofVATbydiscontinuing therequirement
ofpayment when import formalities arecarried out (except
forprivate individuals )andbytherequiring that theuser
I
should enter the amount oftax duemthe periodic returns
sent tothe tax authorities for transactions carried out
within thecountry ;
(b)toincrease substantially thetax-free allowances inintra -
Cominunity relations ;
(c)totake other measures ,inparticular toabolish double
• -
taxation ortocreate auniform basis ofassessment forVAT ,
soastoremove asfaraspossible themajor barriers tothe
achievement ofthe internal market ;
(iii)where statistics arcconcerned :
(a)toreconsider whether thestatistical data atpresent required ,
bytheMember States are indispensable : _
, «
(b)topromote methods encouraging data-gathering elsewhere than
atInternal Community frontiers ;
(c)toharmonize oreliminate national subdivisions of1IEIEX /.;
codes soastoachieve single nomenclature forgoods .

-5-
ThinRnooiution ,whonacoptec !,willboasolidfoundationforthevarious
proposalstheConimissionintendstopresenttotheCouncilonthisquestion
itwillmakeiteasiertocorrectunfairdifferences inthetreatmentof
economicoperatorsindifferentMemberStates,itwillbeanimportantstep
towardsachieveingtheinternalmarket.

Resolution
The Council oftheEuropean Communities ,
-having regard totheCommission Communication of17June 1981 on
the state ofthe internal market , ~
-Whereas ,atitsmeeting inLuxembourg on29and .30June 1981 ,the
European Council reached theconclusion that aconcerted effort must
bemade tostrengthen anddevelop theCommunity 'sinternal market ,
-Whereas ,23years after theentry into force oftheTreaty ofRome ,
trade ingoods between Member States isstill subject toadministrative
formalities that arepractically indentical tothose required intrade
with third countries ,
-Aware that &decrease inthecosts oftheformalities required intrade
between Member States would improve thecompetitiveness ofCommunity
products ascompared with products from third countries ,
-Convinced that itwould beanimportant step towards thecreation ofa
genuine single market within theCommunity iftheCommunity were to
introduce facilities onthe lines ofthose which have forseveral years
applied ,totrade between theBenelux Member States ,
-Whereas ,byimproving theconditions governing themovement ofpersons
andoftheir goods ,theintroduction ofsuch facilities supported by
ancillary measures which Parliament hasrepeatedly called for ,will
make thecitizens ofEurope more tangibly aware that they belong to
theCommunity entity ;
HAS AGREED ASFOLLOWS :

TheCouncil
1.agreesthattheformalitiesandchecksapplyingtotradewithinthe
Communitymustnolongerresemblethoserequiredintradewiththird
countries,butonthecontrarymusthenceforthapproximateasclosely
aspossibletothesituationobtainingwithinaMemberState;
2.recognizestheimportanceofachievinguniformityinthebasisof
VATbyreducingderogationsasmuchaspossibleandadoptingthe
directivesnecessarytocompletethisharmonization ;
3.recognisesthat,asafirststepbothtaxformalities andtheother
formalitiesrequiredintradebetweenMemberStatesmustbesimplified ;
4.agreesthatthesimplification offormalities mustincludethe
following: v . ■
(a)asregardsthemethodofcollecting VAT:taxablepersonsmyst
beable,ontheirownresponsibiliy ,todeferpaymentofthe
taxdueintheMemberStateofdestination byreferenceto
theperiodicobligations incumbentuponthembyreasonof
theireconomicactivitieswithinacountry;itisforthe
authorities oftheMemberStateofdestination toinspectthe
accountsofthetaxablepersonsand,ifneedbe,tomakea
physicalinspectionofthegoods;
(b)asregardstheformalitiesrequiredinintta-Community trade:
-inplaceofthepresentadministrative documents,a;single
documentsuchastheinvoice,-tobestandardized ,istobe
used,itbeingunderstoodthatthisdocumentmustmeetthe
administrative requirements ofeachstageoftheoperation
fromdeparturetoarrivalofdestination ;
-theproceduresforgatheringstatisticaldatabymeansofthe
freturnssentdirecttotheappropriateauthorities underthe
responsibility ofthepersonrequiredtoprovidetheinformation
mustbeeased,subjecttothenecessaryguarantees ;
*••J•••

-measuresmustbeadoptedinthemediumtermwherebytheMember
Stateswillrequirenomorethanthedataagreedonat
Communitylevel;
-administrative procedures mustbemodifiedtoeasethetask
ofoperationsforusers; '
considersthatfrontierchecksshouldbefurtherreducedbyincreasing
graduallybutsignificantly thetax-freeallowancesgrantedtoprivate
personsandbyabolishingassoonaspossibletheinstancesofdouble
taxationthatstillremaininintra-Community trade;
invitestheCommissiontopresentappropriate proposalsand
undertakestoadoptthemwithoutdelay;
recognisestheurgentneedtoadopttheproposalslistedinthe
annexheretothattheCommissionhasalreadypresentedinthe
mattersofcustomsandtaxation,particularly asregardstax-free
allowances onimports. ^

•ANNEX
List ofthe'proposals still before theCouncil (point 7)
V.
-Proposal foraCouncil Directive ontaxexemptions forcertain means
oftransport temporarily imported into oneMember State from another ,
presented totheCouncil on30October 1975 (OJNoC267 ,21November
-1975 ,P.8) 6
«
-Proposal for aCouncil Directive ontax exemptions applicable to
personal property ofindividuals onpermanent importation from
another Member State ,presented tothe Council on30October 1975
(OJNoC267 ,21November 1975 ,p.11)
-Proposal foraCouncil Regulation introducing arrangements for
movement within theCommunity ofgoods sent from oneMember State *
fortemporary use inoneormore other Member States ,presented
totheCouncil on28July 1981 (OJNoC227 ,8September 1981 ,p.3)
«