12. 11. 74 Official  Journal  of the  European  Communities No C 139/15 
CONSULTATION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
on the  proposal  for  a sixth  Council  Directive  on the  harmonization  of the  legisla-
tion  of the  Member  States  concerning  turnover  taxes—  common  system  of value 
added  tax  : uniform  basis  of assessment 
A. REQUEST  FOR  AN  OPINION 
At its 252nd  meeting  held  on 23 and  24 July  1973,  the Council  decided,  in accordance 
with  the  provisions  of Article  100  of the  Treaty  establishing  the  European  Economic 
Community,  to consult  the Economic  and  Social  Committee  on the above  proposal  for a 
Directive. 
The request  for an Opinion  was  sent  by the President  of the Council  to the Chairman  of 
the Economic  and  Social  Committee  on 25 July  1973. 
B. TEXT  WHICH  WAS  THE  SUBJECT  OF  THE  CONSULTATION 
The text  which  was  the subject  of the consultation  was  published  in Official  Journal  of 
the European  Communities  No  C 80 of 5 October  1973. 
C. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
At its 117th  plenary  session  held  in Brussels  on 31 January  1974  the Committee  adopted 
its Opinion  on the text  referred  to under  B by a majority,  with  three  dissenting  votes  and 
one abstention. 
The 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 letter  of 25 July  1973,  in which 
the President  of the Council  of the European  Commu-
nities  requested  an Opinion  from  the Economic  and 
Social  Committee  on the proposal  for a sixth  Council 
Directive  on  the  harmonization  of legislation  of 
Member  States  concerning  turnover  taxes  — common 
system  of value  added  tax  : uniform  basis  of assess-
ment  ; Having  regard  to the supplementary  Opinions  of the 
Sections  for Industry,  Commerce,  Crafts  and  Services 
and Agriculture  ; 
Having  regard  to the  Opinion  delivered  by  the 
Section  for Economic  and  Financial  Questions  at the 
ninth  meeting  on 8 January  1974; 
Having  regard  to the report  presented  to the Section 
by Mr Peyromaure-Debord-Broca,  Rapporteur,  and  Mr 
Fredersdorf,  Co-rapporteur; 
Having  regard  to its discussions  at its 117th  plenary 
session  on 30 and  31 January  1974,  meeting  of 30 
January  1974, 
Having  regard  to its Rules  of Procedure  and  in parti-
cular  Article  22 thereof; 
Having  regard  to the Decision  taken  by its Bureau  on 
26 September  1973  entrusting  the  Section  for 
Economic  and  Financial  Questions  in  the  first 
instance,  and  the  Sections  for  Industry,  Commerce, 
Crafts  and  Services,  and  Agriculture  on a supplemen-
tary basis,  with  the  preparation  of an Opinion  and  a 
report  on the  matter  ; HAS  ADOPTED  THE  FOLLOWING  OPINION 
by a show  of hands,  under  Article  45 of the Rules  of 
Procedure,  by a majority,  with  three  dissenting  votes 
and one  abstention  : 
The committee  records  its  satisfaction  at being 
consulted  and  at being  able  to keep  the  progressive 
introduction  of a unified  Community  VAT  system 
under  review. 
No C 139/16 Official  Journal  of the  European  Communities 12. 11.  74 
I. GENERAL  COMMENTS 
Objectives 
The committee  has  taken  note  of the  objectives 
pursued  by this  Directive,  namely  : 
1. to create  a comparable  base  as between  the  States 
by harmonizing  the  assessment  basis,  in pursuance 
of the  Council  Decision  of 21 April  1970  (Article 
4), which  provided  for  replacement  of the  financial 
contribution  from  each  Member  State  by  the 
Communities'  own  resources.  These  own  resources 
include  a tax  component  —  a levy  on  each 
Member  State  calculated  by applying  a rate  of not 
more  than  1 % to a basis  of assessment  determined 
in a uniform  manner  for  the  Member  States 
according  to Community  rules  ; 
2. to advance  towards  economic  integration  which,  in 
the field  of indirect  taxation,  must  lead,  at a later 
date,  to  complete  harmonization,  including 
harmonization  of rates  ; 
3. to arrive  thus  at the  abolition  of intra-Community 
tax frontiers,  this  and  the  previous  operation  being 
necessarily  concomitant. 
Contents  of the Directive 
The committee  recognizes  that  the  Directive  is 
designed  to : 
1. remove  certain  differences  which  exist  between  the 
laws  of Member  States  : The  first  two  Directives 
allowed  a pertain  degree  of flexibility  in order  to 
ease the  establishment  of VAT  in all the  Member 
States,  which  has  now  been  completed  in both  the 
founding  and  the  new  Member  States  ; 
2. harmonize  the  fields  of application  ; 
3. standardize  the  lists  of exemptions  ; 
4. ensure  that  taxable  amounts  are  identical; 
.5. ensure,  whatever  the  rate  may  be (reduced  rate),  the 
possibility  of deduction  of tax  already  paid  ; 
6. harmonize  the  special  schemes  for  : 
— agriculture  : the  creation  of a flat  rate  scheme 
for deduction  of tax  already  paid, 
— small  undertakings  : exemption  from  tax  and 
tax relief,  simplified  rules  for  applying  the 
normal  system, 
— second-hand  goods; 
7. Set  up a Value  Added  Tax  Committee  responsible 
for examining  the  conditions  of application  of the 
tax, interpreting  where  necessary  the  rules  which 
have  been  laid  down,  ascertaining  any  deficiencies 
and proposing  solutions. Nature  of the contribution 
Harmonization  of the  basis  of assessment  enabling  the 
Community  to obtain  its own  resources  from  each 
Member  State  on the  basis  of a levy  amounting  to a 
maximum  of 1 % does  in fact  appear  to be an equi-
table  means  of apportioning  the  contribution  to the 
Community  budget  between  the  Member  States. 
In virtue  of the  Council's  decisions  to date  (1970, 
1971  and  1972),  the  present  financial  contribution 
paid  by the  Member  States  should  be replaced  by a 
contribution  of a tax nature. 
How will  the  Community  tax  contribution  be  funded 
in each  Member  State 
The committee  discussed  the  question  whether  the 
new levy  would  have  to lead  to a rise  in the  rates  of 
taxation  in each  Member  State,  since  there  would 
otherwise  be a corresponding  loss  of revenue.  On this 
subject,  the committee  points  out  that  while  the  prin-
ciple  of this  contribution  has  been  established  by 
Council  decision,  the  way  in which  the  Community 
contribution  is to be funded  has  evidently  been  left 
completely  to the  discretion  of the  Member  States. 
Examination  of  other  formulae 
It was  also  asked  why  the  harmonization  of VAT 
should  not  be  extended  by  harmonizing  the  rates 
instead  of the  bases  of assessment.  The  answer  to this 
question  is that  harmonization  of the  rates  before 
harmonization  of  the  bases  of assessment  would 
present  a lengthy  problem  of apportionment  between 
direct  and  indirect  taxes  which  could  only  be effected 
very  gradually  in the  various  States,  let  alone  at 
Community  level.  Furthermore,  absence  of harmoniza-
tion of rates  is offset  by the  adoption  of a single  levy 
on a harmonized  basis  of assessment. 
The committee  wishes  to point  out  that  harmoniza-
tion of rates  before  harmonization  of the  bases  of 
assessment  would  be  illogical,  since,  technically, 
harmonization  of  the  bases  of  assessment  must 
precede  harmonization  of the  rates. 
Special  schemes 
The scheme  for  small  undertakings  and  the  common 
flat rate  scheme  for  farmers  are  dealt  with  in the 
annexed  supplementary  Opinions,  the  former  being 
covered  by the  Opinion  of the  Section  for  Industry, 
Commerce,  Crafts  and  Services,  and  the  latter  by the 
Opinion  of  the  Section  for  Agriculture.  (See  the 
remarks  on  Articles  25  and  27  in  the  specific 
comments.) 
12. 11.  74 Official  Journal  of the  European  Communities No C 139/17 
II. SPECIFIC  COMMENTS 
Article  1 
Article  1 provides  that  Member  States  must  have  modi-
fied their  value  added  tax  systems  in accordance  with 
the provisions  of the  sixth  Directive  by 1 January 
1975. 
The committee  considers  that  the difficulties  of imple-
menting  these  provisions  will  certainly  not  allow  such 
a brief  time  limit  to be complied  with. 
For the  deadline  of 1 January  1975  to be met  every-
thing  would  have  had  to have  been  ready  and  adapted 
at European  level  by 31 December  1973,  because  of 
the constitutional  and  legislative  requirements  which 
have  to be complied  with  in certain  Member  States. 
Moreover,  the  committee  feels  that  the  deadline  must 
be extended  to give  undertakings  a breathing  space  in 
view  of the  fact  that  (a) the introduction  of VAT  has 
entailed  for  the  Member  States  a difficult  information 
task and  an arduous  adaptation  process  which  are  not 
yet complete  in the  Member  States  that  have  only 
introduced  VAT  quite  recently,  and  (b)  small  and 
medium-sized  undertakings  in particular  have  had 
considerable  difficulty  in getting  accustomed  to the 
new system. 
Article  4 
The problem  of whether  or not  to include  building 
land  in the  field  of application  of VAT  led  to very 
lengthy  discussion  within  the  committee.  Both 
systems  exist  at present  among  the Member  States  and 
each  State  appears  to be satisfied  with  the  solution  it 
has arrived  at, for the reasons  given  in the  report.  One 
solution  could  be  to allow  the  States  freedom  of 
choice.  However,  this  solution  is bound  to create 
inequalities  between  the  Member  States  in respect  of 
the Community  tax  from  which  Community 
resources  are  obtained,  in view  of the  fact  that  an 
important  component  of the  assessment  basis  would 
not be harmonized.  In the  event  of such  an option 
being  provided,  the  basis  of assessment  for  the 
Community  levy  would  therefore  have  to  be 
re-established  notionally  in the  case  of those  states 
which  leave  building  land  outside  the  scope  of VAT. 
Under  Article  4 'each  Member  State  may  treat  as a 
single  taxable  person,  persons  established  in  its 
national  territory  who  are  legally  independent  but 
bound  to one  another  by financial,  economic  or organ-
izational  relationships'. 
But according  to this  text  the  'Organschaft'  (single-
entity  relationship)  existing  in the  Netherlands  and Germany  would  only  be maintained  until  tax frontiers 
were  eliminated.  The  committee  wonders  why  this 
time  limit  has  been  imposed  on a system  which  is not 
contrary  to tax  neutrality. 
In addition,  the committee  requests  that  the  Directive 
permits  Member  States  in which  this  system  does  not 
exist  to use  it according  to common  rules. 
The committee  asks  that  the  concept  of tax  defer-
ment,  an operation  which  does  not  run  contrary  to tax 
neutrality,  should  be definitely  accepted  in cases  to be 
determined. 
The committee  considers  it essential  that  the  concept 
of activities  carried  out  by  public  authorities  be 
defined  in an identical  manner  in all the  Member 
States.  (See,  for example  the  comments  on Article  14 
A (1) (k)). 
Article  5 
Article  5 defines  and  lists  what  should  be understood 
by 'supply  of goods'. 
1. Paragraph  1  states  that  'all  interests  or shares 
giving  the  holder  thereof  de jure  or de facto  rights  of 
ownership  or possession  over  immoveable  property  or 
part thereof  are  to be treated  as property  attracting 
VAT.  The  committee  requests  that  this  should  only 
apply  in the  very  rare  cases  where  there  is an undeni-
able relationship  between  the  sale  of shares  and  the 
property  in question. 
2. The  committee  opposes  the  treatment  of leasing 
as a 'supply  of goods'  {paragraph  2  (b)).  It feels  that 
the Member  States  should  be free  to consider  leasing 
either  as a form  of rental  followed  by transfer  of a 
used  item  of property,  or as a contract  involving  from 
the moment  of its conclusion,  a taxable  'supply'.  The 
latter  solution,  which  has  been  adopted  in the  pro-
posal  for a Directive,  means  that  VAT  will  have  to be 
paid as soon  as supply  occurs  and  cannot  be spread 
over  the  whole  duration  of the  contract. 
The committee  wonders  why  the  Member  States 
should  not  be allowed  freedom  to choose,  since  the 
effect  of both  formulae  on the  harmonized  basis  of 
assessment  as a whole  ought  to be slight  and  equality 
should  be ensured  in the  medium  term. 
3. If  contracts  under  which  commission  is payable 
on purchase  or sale  (paragraph  2  (c))  and  contracts  to 
make  up work  from  customers'  material  (paragraph  2 
(d)) are  treated  as supplies,  this  will  considerably 
extend  the  assessment  basis  for VAT  in countries  such 
as France,  where  such  transactions  are considered  as a 
supply  of services. 
No C 139/18 Official  Journal  of the European  Communities 12. 11. 74 
Such  an extension  of the basis  of assessment  should 
only be applied  if the one-month  time  lag for deduc-
tions,  where  it exists,  as in France,  has been  abolished 
beforehand  in accordance  with  Article  18 (2) of the 
proposal  for a Directive. 
Article  12 
Article  12 defines  the taxable  amount. 
Paragraph  A (l)(b)  introduces  the concept  of 'open 
market  value'  of goods  or services  where  the  price 
expressed  as a sum  of money  is not the sole  considera-
tion for the supply  of goods  or services  (own  consump-
tion of goods  and  services,  barter  transactions  etc.). 
The committee  unanimously  recognized  that  the 
'open  market  value'  is a theoretical  concept  which  is 
difficult  to define,  so that  it will  doubtless  lead  to 
disputes,  especially  in view  of the  particular  diffi-
culties  involved  in the  self-supply  of land  (Article  5 
(3))-
However,  no alternative  solution  is suggested. 
The committee  proposes  that  the  concept  of 'open 
market  value'  should  not be applied  in all cases  such 
as, for example,  delay  in payment  where  the  price 
agreed  upon  by the interested  parties  is known. 
Paragraph  A (3) lists  what  the taxable  amount  is not 
to include. 
The committee  wonders  whether  it would  not  be 
possible  to exclude  from  the basis  of assessment  the 
sums  due  as penalties  for delays  or other  irregularities 
in the performance  of the obligations  of the seller  or 
the party  who  placed  the order. 
The committee  proposes  that  the sums  paid  out  to 
gamblers  by automatic  machines  also  be excluded 
from  the basis  of assessment. 
Paragraph  C (1) leaves  it to the Member  States  to lay 
down  the rules  to be applied  in the case  of goods  or 
services  which  remain  unpaid  or are cancelled.  This  is 
regrettable,  for some  countries,  such  as France,  have 
adopted  provisions  which  in effect  mean  that  unpaid 
transactions  are partially  taxed.  The  volume  of opera-
tions  of this  kind,  especially  in periods  of recession, 
should  have  warranted  Community  provisions  binding 
on the Member  States  in keeping  with  the principle  of 
neutrality  on which  value  added  tax is based. 
Article  13 
Article  13 sets  out the principles  applicable  to value 
added  tax rates  and  basically  incorporates  the provi-
sions  of Article  9 of the second  Directive. 1. The  reduction  of the  number  of rates 
On this  matter  it is regretted  that,  while  harmoniza-
tion of the rates  is deferred  and  their  amounts  can be 
varied,  no attempt  has  been  made  to reduce  their 
number  by, for example,  prohibiting  the creation  of 
new rates  after  1 August  1973. 
On the  other  hand,  it must  be pointed  out that  one 
Member  State,  Denmark,  only  has  one  rate,  whereas, 
according  to the proposal  for a Directive,  it could  have 
two or three.  Denmark  should  not  be forbidden  to 
introduce  new  rates,  as this  would  be contrary  to a 
sound  harmonization  policy. 
The committee  notes  that  the Commission  is making 
a study  of proposals  concerning  the number  of rates 
to be applied. 
2. Article  13 (3) provides  that  each  reduced  rate 
'shall  be so fixed  that  the amount  of value  added  tax 
resulting  from  the application  thereof  shall  be such  as 
in the normal  way  to permit  the deduction  therefrom 
of the whole  of the value  added  tax deductible  under 
Article  17'.  This  is an indirect  way  of ensuring  the 
future  elimination  of the zero  rating. 
The committee  believes  that  it would  be premature  at 
this stage  to take  a decision  on whether  zero-rating  of 
certain  goods  and  services  should  be allowed  in the 
future.  That  decision  should  be made  in the light  of 
the circumstances  at the time  when  the  charging  of 
tax on imports  and  the remitting  of tax on exports  in 
trade  between  Member  States  are abolished. 
The committee  furthermore  regrets  that  the Directive 
is not more  precise  on the relationship  which  should 
exist  between  the standard  rate  and  the reduced  rate. 
Article  14 
Article  14 lists  the exemptions  within  the territory  of 
a country. 
1. Exemption  of  trade  unions,  professional 
organizations,  churches,  etc.  < 
The committee  considers  that  it would  be preferable 
to make  provision  for exemptibn  of trade  unions  and 
professional  organizations  in so far as they  do not 
engage  in competitive  operations  — such  as commer-
cial transactions  or the  giving  of advice  involving 
12. 11. 74 Official  Journal  of the  European  Communities No C 139/19 
payments  separate  from  the general  contributions  and 
varying  according  to the  extent  of the  services 
rendered. 
This  exemption  would  be particularly  appropriate  as 
regards  trade  union  contributions,  since  otherwise 
trade  unions'  income  from  contributions  would  be 
reduced  by  the  amount  of the  tax  without  the 
members  being  able  to deduct  this  tax,  as they  them-
selves  are not  taxable  persons. 
It is pointed  out  that  trade  unions  and  professional 
organizations  ought  to be able  to renounce  exemption 
by opting  for VAT  in order  to recover  VAT  already 
paid (taxes  on immoveables  and  office  equipment). 
The above  remarks  also  apply  to churches  and  equiva-
lent institutions  in so far as their  activities  are  not 
governed  by public  law  and  they  are  not  already 
exempted  for that  reason. 
2. Exemption  of invalids 
The following  provision  should  be added  to Article  14 
on exemptions  within  the  territory  of a country  : 
Member  States  shall  exempt  deliveries  of motor  vehi-
cles imported  or acquired  for  use  as a means  of 
personal  transport  for persons  who  are at least  50 % 
permanently  disabled. 
This  exemption  shall  apply  in the manner  and  within 
the limits  laid  down  by each  Member  State,  until 
uniform  rules  are adopted  by the procedure  laid  down 
in Article  31. 
Such  exemption  may  take  the form  of reimbursement 
of the  tax. 
3. Exemption  of bank  transactions 
The making  of advances  and  the granting  of credit  are 
exempted  under  Article  14 B (j). 
There  are two  schools  of thought  here  : 
— certain  members  propose  that  all bank  transac-
tions  including  the  making  of advances  and  the 
granting  of credit  should  be taxable  ; 
— others  consider  that  the  making  of advances  and 
the granting  of credit  should  be exempted. 
The disadvantage  of this  second  system  for  banks  is 
that the  possibilities  of deduction  of tax already  paid 
are greatly  limited. 
Furthermore,  in the  context  of the  proposal  for  a 
Directive,  all the members  feel  that  it would  be advis-
able for  define  the  exact  scope  of the  concepts 
contained  in Article  14 B, and  in particular  subpara-
graphs  (f), (h) and  (j). The committee  is also  agreed  that  it would  like  to see 
the disappearance  of specific  taxes  on turnover  in the 
banking  sector  where  they  still  exist. 
4. Other  observations 
Paragraph  A (l)(a) 
Telecommunications  services  and  related  services 
provided  by  public  authorities  should  not  be 
exempted. 
Paragraph  A (1) (k) 
The committee  wonders  why  state  radio  and  television 
is not  exempted  from  VAT  when  it engages  in the 
same  activities  as theatres,  cinema  clubs,  concerts  and 
other  entertainment,  which  are  exempted.  Logically, 
only  the receipts  from  radio  and  television  advertising 
should  be taxed.  Tax  neutrality  should  at all events  be 
respected  at both  sectoral  and  regional  level. 
Paragraph  B (d) (2) 
The committeee  wonders  why  a lessor  of agricultural 
property  should  not  be allowed  to opt for VAT  if the 
lessee  is a taxable  person. 
Article  16 
The committee  requests  the  Commission  to make 
sure that  paragraph  10 does,  in fact,  lead  to the exemp-
tion of the  transmission  of 'know-how'  and  data-pro-
cessing  information,  market  surveys,  checking,  mainte-
nance  and  inspection  services  as well  as all other 
similar  services. 
As regards  paragraph  12,  the  Committee  wonders 
about  the justification  of such  a comprehensive  exemp-
tion for diplomatic  and  consular  missions  and  interna-
tional  organizations  recognized  as such  by the  host 
Member  State,  since  this  is fundamentally  incompat-
ible with  VAT's  character  of a general  tax on consump-
tion. 
The phrase  'by  sea  or air'  should  be deleted  from 
point  13(c),  leaving  the following  wording: 
'(c) international  passenger  transport,  subject  to the 
time  limit  set in Article  28.' 
In addition  the  committee  feels  that  provision  should 
be made  for  suspension  of liability  for  payment  of 
value  added  tax  in the  case  of purchases  made  by 
undertakings  which  are mainly  engaged  in exporting. 
Article  17 
Article  17 defines  the existence  and  scope  of the right 
to deduct. 
No C 139/20 Official  Journal  of the  European  Communities 12. 11.  74 
Paragraph  4 
The Committee  welcomes  the  fact  that  the  Directive 
provides  that  each  Member  State  will  have  to refund 
to taxable  persons  established  in another  country  the 
VAT  invoiced  to them  for  goods  and  services  supplied 
in the  Member  State. 
However,  some  members  would  like  it to be possible 
for applications  to be made  in respect  of credits  of 50 
units  of account  and  over,  instead  of 100. 
In addition,  the  committee  requests  that  the  refunding 
procedure  be standardized. 
The committee  draws  the  Commission's  attention  to 
the economic  consequences  of a practice  whereby  a 
supplier  in a Member  State  would  invoice  that  State's 
VAT  to his customer  in another  Member  State.  In this 
case there  would  be cumulative  taxation  with  all the 
consequences  this  may  entail,  especially  for  the 
consumer  in  the  country  of  destination  of  the 
supplies. 
Paragraph  6 
The committee  notes  that,  since  VAT  is a tax  on 
consumption  imposed  on products  and  services  with  a 
view  to avoiding  double  taxation,  to achieve  this  goal 
it is necessary  to allow  deduction  of the  VAT  levied 
on all elements  of the  cost  price.  Any  restriction  of 
the right  to deduct  prevents  the  tax  from  being 
neutral  and  creates  distortions  in competition. 
Logically,  the  system  of VAT  deductions  should  be 
brought  into  line  with  the  provisions  governing  indus-
trial and  commercial  profits.  In other  words,  the  VAT 
imposed  on all goods  and  services  which  are  necessary 
for operations  and  qualify  as deductions  in respect  of 
industrial  and  commercial  profits  (commercial  vehi-
cles,  supplies  to social  services,  transport,  hotels,  etc.) 
should  be deductible. 
The committee  considers  that  the  provisions 
governing  the  cases  in which  VAT  is not  to be deduct-
ible will  present  problems  because  of  their 
complexity. 
The committee  deplores,  moreover,  the  vagueness  of 
the expressions  'expenditure  on luxuries'  and  'enter-
tainment  expenditure'  used  in  the  Directive,  and 
trusts  that  the  VAT  Committee  will  define  them  more 
precisely,  in so far  as this  is possible. 
Article  18 
Article  18 defines  the  rules  for exercising  the  right  to 
deduct. 
Paragraph  2 
The committee  approves  the  principle  of immediate 
deduction,  which  precludes  the  deduction  time-lag 
found  in some  countries  (e.g.  France). On the  other  hand,  the  committee  regrets  the  fact  that 
the right  to deduct  is to lapse  on 31 December  of the 
year  following  that  in which  the  deduction  should 
have  been  made  and  proposes  that  this  period  be 
extended. 
It would  be necessary  in the  case  of checks  for  the 
taxpayer's  right  to deduct  to be exercisable  over  the 
same  period  as the  authorities'  right  to increase  the 
tax. 
Paragraph  3 
As regards  tax  credit,  the  committee  feels  that  the 
periods  for  refund  should  be shortened  considerably. 
Article  21 
This  Article  defines  persons  liable  for  payment  of tax. 
In paragraph  1  (a), the  agent  of the  taxable  person 
should  not  be  placed  on  the  same  footing  as the 
taxable  person  himself,  and  the  committee  considers 
that the  wording  should  be  amended  by  replacing 
'and agents'  by 'and,  where  appropriate,  agents'. 
Article  22 
Article  22 deals  with  assessment  of the  amount  of tax 
to be paid  and  liability  for  payment  of the  tax. 
The committee  notes  that  there  are  problems  in the 
translation  of the  different  concepts  in paragraphs  1 
and 2. These  concepts  are  clear  in five  languages  but 
lead to confusion  in the  German  text.  In this  text,  the 
word  'Festsetzung'  should  always  be used. 
Article  23 
Article  23 determines  the  obligations  of persons  liable 
for payment  under  the  internal  system. 
Paragraph  3  (c) states  that  'the  invoice  shall  be issued 
within  30 days  following  the  chargeable  event'. 
This  obligation  to invoice  within  a certain  time  limit, 
which  does  not  exist  in countries  where  the  charge-
able event  and  liability  for  tax  coincide,  derives 
precisely  from  the  fact  that  these  two  factors  are separ-
ated in the  proposal  for  a sixth  Directive. 
The Committee  agrees  : 
— that  it is a normal  thing  to fix  a time  limit  for 
invoicing  ; 
— that  this  time  limit  should  nonetheless  be 
extended. 
12. 11.  74 Official  Journal  of the  European  Communities No C 139/21 
Article  25 
In principle,  the  committee  is able  to accept  the 
special  scheme  for  small  undertakings  described  in 
Article  25,  since  Member  States  after  all retain  the 
possibility  of introducing  special  schemes  adapted  to 
the situation  of small  undertakings  in their  country. 
The committee  requests  that  the  turnover  criteria 
applied  by the  Commission  be increased  and  agrees 
that the  new  figures  adopted  could  be periodically 
adjusted  in line  with  the  trend  in the  cost  of living. 
The objective  is to allow  small-  and  medium-sized 
undertakings  to be  progressively  included  in  the 
general  common  VAT  system. 
Article  26 
Article  26 proposes  a novel  system  for taxing  second-
hand  goods.  This  is approved  by the  committee  ; it 
avoids  the  cumulative  taxation  of second-hand  goods 
which  still  exists  in many  countries. 
Article  27 
The committee  approves  in principle  the  Commis-
sion's  proposals  the  aim  of which  is to facilitate  the 
progressive  integration  of the  entire  agricultural  sector 
in the  normal  VAT  system. 
However,  account  should  be taken  of the  situations  in 
the various  Member  States  and  of'  the specific  diffi-
culties  of the  agricultural  sector,  which  can  only  be 
solved  over  a long  period.  Farmers  must  be left  the 
right  of choice  in view  of the  fact  that  changeover 
from  the  flat-rate  to the  normal  scheme  must  be 
undertaken  very  gradually,  within  the  framework  of 
the progress  of common  policies  in other  sectors,  and 
particularly  of the  achievement  of economic  and 
monetary  union. 
Flat-rate  taxation  must  be neutral  so on balance  it 
must  not  work  to the  advantage  or disadvantage  of 
farmers. 
In addition,  the  committee  asks  the  Commission  to 
amend  paragraph  12(a),  first  and  second  indents,  to 
avoid  the  risk  of distortions  to the  disadvantage  of 
industrial  undertakings  processing  farm  products, 
which  could  be subject  to the  ordinary  tax  system, 
whereas  farmers  who  carry  out  processing  activities 
would  be subject  to the  flat-rate  system. 
Article  28(1) 
The phrase  'by sea  or air'  should  be deleted  from  the 
second  subparagraph  leaving  the  following  wording  : 'The  Commission  shall  in due  course  make  to the 
Council  proposals  concerning  the  tax  scheme  to 
be applied  from  1 January  1977  to international 
passenger  transport.' 
Articles  29  to 31 
Value  Added  Tax  Committee. 
Article  29 
The committee  has  received  the  assurance  that  deci-
sions  will  only  be taken  by the  VAT  Committee  after 
consultation  of the  representatives  of economic  and 
social  activities  in accordance  with  a procedure  which 
is still  to be determined.  Only  under  this  condition 
does  the  committee  agree  with  the  setting-up,  compo-
sition  and  terms  of reference  to the  VAT  Committee. 
CONCLUSION 
The committee  recognizes  the  need  to lay down  rules 
for a Community  basis  of assessment,  which  is a neces-
sary step  towards  a new  phase  in the  harmonization  of 
the Community  VAT  system. 
The committee  also  recognizes  the  need  for  this 
measure,  if it is desired  to  achieve  neutral  and 
balanced  apportionment  of the  contribution  to the 
Community  budget  through  a tax levied  bn a harmon-
ized assessment  basis. 
Both  in its opinion  and  in the  annexed  report,  the 
committee  finds  that  although  a major  effort  has been 
made  to achieve  such  neutrality,  the provisions  are not 
yet ideal  and  ought  therefore  to be improved  in this 
respect. 
The committee  recognizes  that  the  Value  Added  Tax 
Committee  can  help  here. 
The committee  stresses  the  need  for  the  Directive  to 
be adopted  and  applied  as a whole,  so as to avoid  — 
in view  of existing  laws  — significant  distortions  at 
Member  State  level  resulting  from  the  application  of 
certain  provisions  but  not  all the measures  which  are a 
logical  consequence  thereof. 
Done  at Brussels,  31 January  1974. 
The Chairman 
of the  Economic  and  Social  Committee 
Alfons  LAPPAS