ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
 
 
 
 
COM (85) 102 
 
 
 
Vol. 1985/0 032 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(85) 102 final  
Brussels, 12 March 1985
COMMUNICATION BY THE COMMISSION TO THE COUNCIL
Negotiating Directive to enable the Community to resolve the 
Dispute following the Conclusions of the VAT Report adopted 
by the GATT Committee on Government Procurement
COM(85) 102 final

COMMUNICATION BY THE COMMISSION TO THE COUNCIL
Negociating Directive to enable the Community to resolve the 
Dispute following the Conclusions of the VAT Report adopted 
by the GATT Committee on Government Procurement
Explanatory Memorandum
Following a complaint from the United States, the GATT Committee 
on Government Procurement set up on 23 February 1983 a panel 
to examine whether the EEC practice of excluding value added tax 
(VAT) from the contract price for the purposes of determining 
whether or not a contract should fall under the GATT Agreement 
on Government Procurement, was in conformity with Article 1 (b) 
of this Agreement. It is recalled that this article states that 
the Agreement applies to quote any procurement contract of a value 
of SDR 150.000 or more.
In the panel report of 17th January 1984, the view is expressed 
that the term"contract value"in Article I 1 (b) should be inter­
preted to be the full cost to the entity, taking into account 
all the elements that would normally enter into the final price, 
and would therefore include any VAT payable, unless the entity 
was exempted from paying VAT. In the light of this finding, the 
panel concluded that the present EEC practice of excluding the 
VAT was not in conformity with this interpretation.
At the time of the adoption of the panel report on 16th May 1984 
by the Committee, the Community made a declaration pointing to the 
existence of different tax systems and practices affecting Govern­
ment purchasing, and particularly the application of different tax 
rates both within the Community and in certain other countries.

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The Community declared that in these circumstances there was a need 
to explore various avenues and formulae in addition to the inter­
pretation of the panel in order to arrive at a balance of advantages 
and commitments for all signatories to the Agreement.
The Community has made it known that any change to the present Commu­
nity practice resulting in the inclusion of VAT for the purpose of 
determining the threshold of 150.000 SDRS laid down in the Agreement, 
would raise major problems of application and would impose an unequal 
burden of adjustment on the different Member States of the Community.
This problem is due, in particular, to the wide disparity of VAT 
rates in Member States and to the number of exemptions or specific 
rates applied both to products and purchase entities covered by 
the Agreement.
In these circumstances, the Commission is of the view that the Commu­
nity should make an appropriate adjustment to the level of the threshold 
applied by the Community for the purpose of determining whether a public 
contract falls under the Agreement,on the understanding that such adjust­
ment is accepted by other signatories of the Agreement as final compen­
sation towards settlement of the dispute.
To do this, the Commission will need to enter into contact with the 
other signatories to the Agreement, so as to establish whether a settle­
ment of the dispute can be achieved on the basis of the proposed adjust­
ment.
Negotiating Directive
In the light of the foregoing, the Commission recommends that the 
Council authorise it, on the basis of Article 113, to enter into 
contact with other signatories to the Agreement with a view to

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establishing whether a settlement of the dispute can be achieved 
on the basis of an appropriate adjustment to the Government Procure­
ment threshold applied by the Community.
The Commission will report to the Council on the outcome of these 
contacts.