No C 201/6 Official Journal of the European Communities 7. 8. 89 
Opinion on the proposal for a Council Directive supplementing the common system of value 
added tax and amending Articles 32 and 28 of Directive 77/388/EEC—Special arrangements 
for second-hand goods, works of art, antiques and collector's items. 
(89/C 201/03) 
On 23 January 1989 the Council decided to consult the Economic and Social Committee, 
under Article 99 of the Treaty establishing the European Economic Community, on the 
abovementioned proposal. 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 13 June 1989. The 
rapporteur was Mr Delia Croce. 
At its 267th plenary session (meeting of 21 June 1989), the Economic and Social Committee 
adopted the following Opinion with no dissenting votes and with two abstentions. 
1. Introduction 
1.1. The proposal covers the value added tax (VAT) 
to be paid on second-hand goods, works of art, antiques 
and collector's items as defined in the annex to the 
proposal and in accordance with Article 32 of the sixth 
VAT Directive. 
1.2. The aim is to introduce common VAT arrange­
ments which respect the requirements that the common 
system should be neutral and that double taxation 
should be avoided. The Court of Justice has stated on 
several occasions that second-hand goods on which 
VAT has already been charged cannot be taxed again 
when being resold. 
1.3. Article 32 of the sixth VAT Directive, which 
forms the legal basis of the proposal, is to be replaced 
by a new text. 
1.4. Article 32 slated that a Community taxation 
scheme for the goods in question was to be adopted by 
the Council before 31 December 1977. The Commission 
presented a proposal on this on 11 January 1978, which 
it amended on 14 May 1979. This was later considered 
to be inadequate and was withdrawn. The Committee 
issued an Opinion on this proposal on 1 June 1978 
(rapporteur: Mr Peyromaure-Debord-Broca). 
The present proposal differs substantially from this 
previous one. 
1.5. This is thus a delicate and complex problem, as 
the differing systems used by the Member States also 
demonstrate. 
1.6. The results achieved in getting VAT introduced 
in all Member States are to be appreciated. However, 
the Commission's specific proposals have met with little 
success, and many have been before the Council for some time. The number of cases before the Court of 
Justice is also rather high. 
2. General comments 
2.1. A common VAT system for these goods appears 
useful. It is appropriate to implement the common 
system required in Article 32 of the sixth Directive, 
making it consistent with the judgements of the Court 
of Justice and helping to further the Internal Market. 
2.2. The aims pursued by the proposal are thus 
acceptable, and can be supported. 
2.3. However, this is a very complex subject, and 
the introduction of a common system is complicated 
by the differing situations in the Member States. 
2.4. The principle which underlies the proposal is to 
be supported. However, the Section has some misgiv­
ings about the actual provisions and various technical 
aspects of the proposal. 
2.5. The Commission proposal does not completely 
resolve the double taxation problem raised by the Court 
of Justice. The principle that VAT can never be charged 
twice on the same item must be implemented fully. 
2.6. The scope of the special arrangements— 
which the Commission itself considers to be very wide-
—should probably be made more specific. 
This does not necessarily mean reducing the field of 
application, but it should make it possible to limit the 
special arrangements to goods which first appeared on 
the market either (a) already bearing VAT, (b) exemp­
ted from VAT by their special nature, or (c) before the 
introduction of VAT. 
7. 8. 89 Official Journal of the European Communities No C 201/7 
2.7. The principle that the tax should be based on 
the profit made by the dealer when re-selling the item 
may in some respects appear a simple solution, but in 
other respects it makes the tax different from traditional 
VAT. The special arrangements would tax the dealer's 
profit (as defined by the Commission i.e. the difference 
between the purchase price, inclusive of tax, and the 
selling price, exclusive of tax) rather than the value of 
the item. 
2.8. The proposal specifies that Member States may 
take as the taxable amount the overall profit made over 
each tax-period. This would alter the nature of the tax 
still further. It would remove any real link with the 
value of the individual items sold, and the final con­
sumer would be quite unaware of the tax being levied 
on him. 
3. Specific comments 
3.1. It is right to exclude precious metals and pre­
cious stones from the field of application, and to include 
items of jewellery. 
However, the proposal to include objects containing 
precious stones and metals only when the value of the 
incorporated materials accounts for less than 50% of 
the selling price seems somewhat arbitrary. The diffi­
culty of an objective valuation would probably give rise 
to numerous disputes or cases of fraud. It would per­
haps have been more helpful to exclude items which 
are suitable for re-working. 
Done at Brussels, 21 June 1989. 3.2. The rules on keeping two separate sets of 
accounts for activities coming under the normal and 
special arrangements respectively need to be specified 
in considerable detail with, for example, clear pro­
visions laid down by the Member States. 
3.3. The difference between the purchase price and 
the selling price may be an appropriate taxable base 
for goods which are easily marketable, but it is not 
justified for objects purchased a long time before re­
sale, which tie up large amounts of capital and whose 
nominal value is also changed by inflation. 
3.4. As stated in the general comments, the option 
of considering jointly all operations conducted over a 
tax-period changes the nature of the tax. 
3.5. The taxation of exports to third countries and 
the exemption of goods imported from these countries 
may cause problems and could encourage fraud, 
especially in the case of luxury goods. 
3.6. The option described in point D of Article 1 
may increase the price for the final consumer. 
3.7. Should a decision be taken to retain the desti­
nation principle for the charging of VAT on goods 
moving between Member States then the provision in 
Article 28 will require further revision. 
3.8. Annex H needs careful examination. This is a 
difficult subject which it would perhaps be unwise to 
tackle here. The text of the Annex should be more 
extensive and precise, and its adoption should be pre­
ceded by the consultation of experts and interested 
parties. In particular, a definition is needed of 'original 
sculptures and statuary' and 'works of conventional 
craftsmanship'. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE