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DOCUMENTS "COM"
COM(81)195
Vol.1981/0074

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(81)195 final
Brussels,14thMay1981
VPROGRAMME FORTHESIMPLIFICATION OFVALUE
ADDEDTAXPROCEDURES ANDFORMALITIES IN
INTRA-COMMUNITY TRADE
(Communication fromtheCommission totheCouncil)
'Ονν.
fC!-
\–
VI. •
VVν..-
C0MC81)195final

-1-
-I.INTRODUCTION •
1.Initscommunication totheCouncilof30July1975settingoutan
actionprogramme "fortaxation,theCommission announcedthatitplannedto
makeproposalsaimedatsimplifying valueaddedtaxandotherprocedures and
formalities applicableinintra-Community trade;
2.Theseprocedures andformalities makeitdifficultforsomeeconomic ,
traders,notablysmallandmedium-sized enterprises,toengageinintra-Commu-
nitytrade,butalsogiverise,becausetheydifferbetweenMemberStates,to
distortions ofcompetition byaffectingfirms'cashposition,forexample*
3.Since1975,effortshavemainlyfocusedontheadoptionand.subse­
quentimplementation inMemberStatesofthe'SixthCouncilDirectiveof
17May1977concerning auniformbasisofassessmentfor,VAT.' ■-
.•Withregardtotheformalities andprocedures ,applicable inintra-
Communitytrade,theSixthDirectivereflectsthedesiretopursueapolicy;.
ofsimplification byinstructing theCommission topresentassoonaspos­
sibletotheCouncilproposalspreciselyinareaswheresimplifications are-
needed,suchasexemptions onimportation (Article .14),certainexemptions
ofexports(Article15)andspecialexemptions linkedtointernational goods
traffic(Article16).
4. TheSixthDirectiveis.alsotobeviewedinthecontextofthe'
objectivelaiddownbytheFirstVATDirectiveof11April1967^ifabolishing
taxfrontiers,i.e.abolishing theimpositionoftaxonimportation andthe
remissionoftaxonexportation intradebetweenMemberStates,whileensu­
ringneutralityoftaxationwithregardtothe,originofgoodsandservices,
so.thatacommonmarketisultimately achievedwithinwhichthereishealthy
competition andcharacteristics aresimilartothoseofadomesticmarket.
5.Becauseoftheconditions whichmustfirstbemet,inparticular
thatofasatisfactory alignmentofrates,definitiveabolitionofalltax
frontiersbothforundertakings subjecttoVATandfornon-taxable persons,,
suchasexempttradersandprivateindividuals,doesnotappearattainable
inthenearfuture.".Astartshould,however,bemadeasofnowandinpa­
rallelwiththeothermeasurestobetaken,particularly inrespectoftax
rates,onsimplifying theVATprocedures andformalities -applicableinintra-
Communitytrade.
(1)Doc.'C0M(75).391finalof23„7*1975,EBC„Bulletin No„9/1975
(2)0JL145of,13June1977
(3)ojof14April1967,p*1301

Althoughnodefinitivetimescalecanbeproposedsincethetime
neededwilldependonprogressinconstructing theCommunityingeneral,it
isevidentthatthetransitionfromthepresentsituationtothatenvisaged
canonlybegradual.OnthebasisOfexperiencegainedinimplementing sue-•..
cessivemeasurestorelax,simplifyorabolisharrangements,itwillbepos­
siblegraduallytogivesomepracticalshapetotheconceptofabolitionof
taxfrontiersandtothatofaninternalmarket,whileatthesametime
takingdueaccountoftheimperatives oftheattackontaxevasionand
avoidancewithintheCommunity.*
2.Thepolitical,psychological andeconomicimportanceofthemeasures •!
aimedatimprovingthefunctioningoftheinternalmarkethasbeenemphasized .!
timeandagainbothbytheEconomicandSocialCommitteeandbyParliament.
Parliamenthascalledfortheadoptionofanumberofpracticalmeasuresin
tworecentresolutions :oneonthedevelopment ofthecustomsunionandof
theinternalmarket1;theotheronthedifficulties encounteredattheCom­
munity'sinternalfrontiersinthetransportofpassengersandgoodsbyroad^.
TheEuropeanCouncilforitsparthasmorethanoncestressedthatit I
istheCommunity'sconstanttasktocontinuetoeliminateobstaclestotrade !
anddistortions ofcompetition *•'v
Withthesameaimsinmind,tradeassociations arecallingfora
Substantial reductioninthevariousformalities appliedinintra-Community
tradeandalso,asfarastaxationinparticularisconcerned,moreadvanced
harmonization *
7.TheCommissionisequallyawareoftheneedtosimplifyin'stages
ofvaryingdurationtheproceduresapplicableinintra-Community tradeand
eventuallytoabolishthemaltogether.Asfarastaxation,andmoreprecisely
Valueaddedtax,isconcerned,theCommissiontakestlieviewthatthetask,
givenitbytheSixthDirectiveofsubmittingattheearliestopportunity
proposalsdesignedtolaydownCommunitytaxrulesintheareaofinterna­
tionaltrademeansthatsuchrulesmustnotbeinadditiontoexisting
customsproceduresbut,onthecontrary,mustsupersedethelattertotheex­
tenttowhichtheyarenotiustifiedwithin-acustomsunionthusfacilitating
elimination ofbordercontrols*Quiteapartfromtheprogressalreadymadeunderthe-
SixthVATDirectiveandundersectoraldirectives andfromtheprogressthat I
mightbemade'inthescopeofadoptionbytheCouncilofotherproposals I
submittedtoit,theCommissionplanstogiveprioritytoanymeasure j
likelytorelaxorsimpjlifytaxproceduresor'formalities . .
Ή
OJC108of8May1978;Resolutionadoptedonthebasisofthereport i
drawnupbytheCommitteeonEconomicandMonetaryAffairsandpresented
byMrNyborg(doc.557/77) j
20JC140of5.6.1979;Resolutionadoptedon-thebasisofthereport ,
drawnup'bytheCommitteeonRegionalPolicy,Regional'Planningand j
TransportandpresentedbyMrSchyns(doc.678/78). 1

-3-
II.Generalbaclcffrc-ndtoaprogrammeforsimplifying VATprocedures and
formalities .
8.For"bothtrade "betweenMemberStatesandtradebetweenthemand
non-membercountries,thecommonVATsystemis,ingeneral,basedonthe
"countryofdestination "principle. ->-
Generallyspeaking,thisprinciple,.whichreflectsexisting -
international .practices,governstherulesforterritorialapplication of
taxprovisionsandthusentailsremissionoftaxongoodsexportedoutside
thenationaltaxterritoryandimpositionoftaxongoodsimported*
WithintheCommunity,asatinternational level*tax-relatedtransactions
introducedatfrontiersasaresultofapplication ofthe"countryof
destination"principleconstitutewhatarecustomarily knownas"tax "
frontiers".
WhileapplicationofthecommonVATsystemhasnotledto
abandonmentofthisprinciplewithintheCommunity,ithasmadefor ■
extensivesimplification ofthewayitisimplemented.Itmightbe
usefultotakealookatthehistorical record. ■
Situationpriortoapplication ofthecommonVATsystem,
9.In1958anduntilthecommonVATsystemwasappliedinall
MemberStates,theessentialdifficultylayincalculatingthe
countervailing charges,i-.e.theamountoftherefundonexportsandthe-
amountofthetaxonimports.
Thisdifficultyarosebecauseunderthecascadetaxsystems
operatedatthetimebymostMemberStatesitwasimpossible,atthetime.
ofexportation,todetermineaccuratelythetaxburdenbornebyproducts
sincethisdependedonthenumberoftransactions thathadtakenplace -
previously.
Toresolvethesedifficulties ,averagestandardrates,fixedina
stricterfashioninsomecountriesthaninothers,wereappliedbothto
importsandexports. - '
Thesepalliatives ,however,posedathreattotheconditionsof
.competition andmade'applicationofArticles95and$6ofthe
TreatyofRomeadelicatematter.
Thecommonmethodforcalculatingaveragerateslaiddownby'.
CouncilDirective^wasappliedforonlyalimitedperiod-sincethecommon
systemofVATwasintroducedatthesametime.
A ■ ' ' ' -■
CouncilDirective68/221/EECof30April1968,OJL'1.15of18May1968,p„14

-4-
(2)ThecommonVATSystem
10*Introduction ofthecommonVATsystemintheCommunityeliminated
theproblemspreviouslyposedbycalculationofcountervailing charges,both
inintra-Community tradeandintradebetweenMemberStatesandnon-member
countries;sincevalueaddedtaxisataxonconsumptionexactlyproportional
tothepriceofproducts,allthathastobedonetodeterminetheamountof
taxateachstageofproduction anddistribution istoapplytherelevantVAT
ratetothenetpriceoftheproductinquestion*
11*,'Thissimplification astosubstancehasnotbeenmatchedbysimi­
larlyextensivesimplification oftheprocedures andformalitiesapplicable
inrespectoftheimportation andexportation ofgoods*Frontierformalities
inintra-Community tradestillreflectalltoofrequentlythesituationthat
obtainedpriortoestablishment not'onlyofthecommonVATsystembutalsoof
thecustomsunion* -'
Theideaofimplementing newgroundrulesbyapplyingformalrules
which.intrinsicallyreflectatimegonebyisparadoxical,showingclearly ^
thattheseformalrulesarenolongersuitabletoday*Thismaladjustment is
keenlyfeltbothbyeconomictradersandindividuals *
12*HowevertheCommissionfullyrealizesthatconsiderableifpartial
progresshasbeenmadeasregardsboththerules"governingbusinesstransac­
tionsandthoseapplicabletotransadtions carriedoutbyprivateindividuals
-theformerincluding : v
*theCommunitytransitprocedureinthecontextoftherealization ofthe
customsunion; .
thedetermination oftheplaceoftaxationforsuppliesofservicesin
accordancewithexactrules,thusavoidingbothdoubletaxationandnon-
taxationi'ntheCommunity;
y
*theusewitheffectfrom1January1981ofacommonformforrefundsof
taxborneinaMemberStatebytaxablepersonsestabl.ished inanother
MemberState;..■'
*theremovaloftherequirement tohaveataxrepresentative inorderto
requesttherefundsmentionedinthepreviouspoint;
*theadoptionofnewrulesfordetermining thetaxableamountonimpoi–
-tation;
-andthelatterincluding :,
*thetax-freeallowancesfortravellers movingbetweenMemberStatesand
forsmallconsignments ofanon-commercial character; "•
*theexemptionformovabletangiblepropertyre-imported bytheperson
whoexportedit,wherethepropertyhasundergoneworkwhichhasbeen
taxedwithout,therighttodeductionorrefund;thisprovisionallows,,
forexample,thetax-freere-importation ofanindividual'smotorve­
hiclewhichhadtoundergorepairswhenabroadinanotherMemberState*

5-
(3)Simplifying therulesensuringcollectionofVATinintra-Community trade
13*Clearly,simplification ofthese-ruleshastobeviewedinthecontext
oftheabolitionoftaxfrontiers,whichasearlyas1967waslaiddowninthe
FirstVATDirectiveastheobjectiveoffullapplication ofthecommonsystem
ofVATandwhichhassincebeenincorporated intheSixthDirective *
However,thisprogrammeisconcernedatthepresentmomentnotwith
abolishingtaxfrontiers -altogetherbut"withreducingtaxformalities soasto
minimizethedrawbacksandeconomiccosttheyentail,.
Thesedrawbacksandtheeconomiccostinvolved,whichdifferwidely
accordingtotheNationalLegislation inquestion,imposeaburdenwhichis
feltinquitedifferingwaysdependingonafirm'ssizeandthedegreeo-forga­
nizationofitsadministrative ,commercial andfinancialwork*Theymayalso
detersmallfirmsfromengaginginintra-Communitytrade,therebydepriving-
themofthedirectbenefitsoftheCommunity's"existence * '
14*Whereprivateindividuals areconcerned,thesimplifications tobe-
introducedwithaviewtotakingexisting'measuresastepfurthermustaimat
cuttingdownsubstantially ontheamountofadministrative inconvenience indi­
vidualshavetoputupwithineverydaylifewhenevertheycrosstheCommunity's
internalfrontiersorstaytemporarily inaMemberStateotherthan.thatin•
whichtheyusuallyreside*Thesesimplifications areintendednotonlytomake
CommunitycitizensawareoftheexistenceoftheCommonMarketbutalsoto
enablethemtobenefitfromEuropeanintegration *
,(4)Theimperatives oftheattackontaxevasionandavoidance
15*The.extent'to"whichtaxformalities'withintheCommunityshouCdbe
simplifiedcannotbedeterminedwithout 'bearing.,inmindtheimperativesofthe
attackontaxevasionandavoidance *
Theseimperatives placeautomaticlimitsonthesimplifications to
becarriedout*Foritwouldbea'seriousmatterfor-theCommunity,particu­
larlyinaperiodofeconomiccrisis,ifmoves"tosimplifyformalities and.
proceduresresultedinthespreadofcertaintypesoftaxevasionandavoi­
dancedetrimental both-totheconditionsofcompetition betweenfirmsandto
thebudgetaryresources'oftheMemberStatesandtheCommunity *;
Experience hasshown,however,thatthecombination ofcomplexna--
tion&lrulesandregulations,eachoperatingwithinaclosedcircuit,isnot
alwaysaguaranteeagainst "evasion*.TheCommissionfeelsthattheattackon
taxevasionmaybemademoreeffectivebyestablishing ,simplified Community ,
procedures,sincethe,implementation oftheseproceduresrequiresclosecoo­
perationbetweennationaladministrations *
TheCourrcilDirectivesof6December1979,inforcesince1january
19b1,formtheframeworkforthiscooperation : ^ •,
-mutualassistancebetweenthecompetentauthorities inthefieldofVAT(15
willenablethenationaladministrations todetect -anyfraudulentpractices
inintra-Community tradethroughtheexchangeofvarioustypesofinformation *
/
(1)Directive79/1070/EEC,amendingDirective77/799/EEC;OJL331of27De­
cember1979,p„8*

-β-
1-mutual assistance fortherecovery ofVATclaims will equip the
administrations with thenecessary legal means topursue the recovery of
taxdebts beyond their national frontiers *
Tobefully effective and sopermit simplification ,these Directives may
have to "besupplemented "byspecific measures insectors inwhich the risk of
evasion isparticularly strong * ~
III .The content ofthe simplification programme •
1. Action resulting from the Sixth Counfcil Directive
. i i.»
16*Theaction to "becontemplated inthis field follows logically from
theSixth -Council Directive of17May 1977 *
/
Moreover ,this Directive calls onseveral occasions forcontinuation ofthe
work onharmonization : ■»
■–either expressly inrespect ofcertain specific provisions ,such asthose
ofArticles 14,15and 16concerning exemptions onimportation and'
exportation ; »
–or,"bymore general reference ,asinArticles 28and35,tothe
objective ofabolishing imposition oftaxonimportation andremission of
tax onexportation .
17„ TheCommission takes theview that theharmonization envisaged by
theCouncil 'must beguided byadesire tosimplify arrangements :rather
than resulting inaproliferation oflegal rules itshould make for
relaxation ,reduction andeven abolition ofsuch rules .TheEighth
Council Directive of6December 1979^onarrangements fortherefund of
value added tax totaxable persons not established iritheterritory ofthe
country meets this need initsparticular field ,.notably bysubstituting a
Community form forthevarious national forms .
18„ Inorder toguarantee healthy conditions ofcompetition between
transactions carried outunder theintra-Community system andthose
carried outwithin asingle Member State ,theobjective ofasubstantial
simplification oftheprocedures andformalities applicable totrade
within theCommon Market must bepursued inharmony with andparallel to
further work ontheharmonization ofthe internal value added tax system#
This latter harmonization should itself open theway tosimplification
measures inintra –Community trade . • .
'
19„ Thesimplification oftaxformalities also depends'on progress made
inother fields ,notably inthe customs union field ,which should serve to
support certain measures included inthepresent programme *
Directive 79/107l/SEC,amending Directive 7^/308/EEC,OJ'L331of27.12 .79»
p.10.
^Directive 79/l072/EEC;OJ.L 331of27.12.79 ,P.11.

A*Proposalsalreadytransmittedto'theCouncil
A*1*ProposalforaDirectiveontheCommunitytaxprocedureappli-.
.cabletothestoresofvessels.,aircraftandinternational
trains
Doc*C0MC79)794final*
SubmittedtotheCouncilon23*1*1980,OJn°C31,-8*2*1980,
p»10»1'.
OpinionoftheEuropeanParliamentdeliveredon23*5*1980 *
OpinionoftheEconomicandSocialCommitteedeliveredon.
29*5*1980 *
20*On23January1980,theCommissiontransmitted totheCouncila
proposalforaDirectivelayingdowncommonrulesforimplementing thetax
exemptionbasedontheprinciples .alreadysetout,whereVATisconcerned,
intheSixthDirectiveof17May1977* -,"
Admittedlythisprocedure,whichisthetaxcounterpartofthecus-,
tomsprovisionslaiddowninanotherCommissionproposal (1),isnot,strictly
speaking,asimplification measure ™However,itissoframedastosimplify
asfaraspossibleapplication oftheseprovisionsespeciallyinrespectof
intra-Community trade*
A*2*ProposalforaDirectiveontaxreliefsapplicable onthefinal
importation ofcertaingoods -
Doc*COM(80)258final/2*
SubmittedtoCouncilon13*6*1980,OJn°C171of11*7*1980,
^ p«8„ *
,OpinionoftheEuropeanParliament,deliveredon13*2*1981*
OpinionoftheEconomicandSocialCommittee,deliveredon
24*9*1980 *
21*Asthecounterparttothe-proposalpresentedinthecustomsfield(2),
theCommissionsubmittedtotheCouncilaproposalcoveringthetaxaspectof
theimportswhicharereferred,toinArticle14CI)Cd>oftheSixthDirective
andwhichrelatetovariousspecificsituationsinvolvingbothundertakings
andnon-taxable persons*
Besidestheharmonization provisionsitincludes,thisproposalaims
tosimplify .frontiercontrols*Therelevantprovisionsrelateinparticular
toexemptions oncertainimportsbystudents,importsoffuelsandlubricants
containedinthenormaltanksofvehicles,goodsimportedbyundertakings ..
transferring theiractivities,importsofminimalimportanceandgoods ,impor­
tedforthepromotionoftrade*
(1)TransmittedtotheCouncilon8*3*1978,OJC73of23*3*78,p*4,
(2)Transmitted totheCouncilon12*3*1979 *

-8-
B*Futureaction
B*1*Proposalforasimplified procedureforthetemporary usein
.MemberStatesofgoodssentfromanotherMemberState
22*Thisproposalisdesignedtoensure-the freemovementofgoodspur­
chased-inaccordance withthegeneraltaxarrangements applicable onaMember
State'sdomesticmarketandusedtemporarily inoneormoreotherMemberStates,
byreplacingthepresentprocedures (temporaryexportation ,transit,temporary
admission,re-exportation ,transit,re-importation)•byaCommunityprocedure
designedtoreduceformalities andtherebyimprovefreedomtosupplyof
serviceswithintheCommunity,,..
B„2„Collection ofvalueaddedtaxonimports
23*TheCommission takestheviewthatthearrangements forcollecting
value-added taxonimportscanbesimplified agreatdealinintra-Comm'un.ity
trace* ' .
TheSixthDirectiveindicates apossiblesolutiontothisproblem
inArticle23underwhichMemberStatesmayprovidethatvalueaddedtaxpayable
onimportation ofgoodsbytaxablepersonsorpersons'liabletotax,orcertain
categories ofthesetwo,ispaidatthetime.ofimportation providedthatthe
taxinquestionismentioned assuchinthetaxreturn*
24*Ananalysisofnationallegislation shows,moreover,thatdeferred
paymentoftaxonimportation isappliedbymostMemberStatesandthatthe
^principleofpaymentoftaxatthetimeofimportation,embodiedinlegisla­
tion"intheothercountries,ismodified,albeittovaryingdegrees,byvarious
simplified proceduresthatmaybeusedbycertaincategoriesof-taxablepersons*
Asregar-dsconditions' ofcompetition ,itshouldbenotedthatundei–
takingsrequiredtopaythetaxatthetimeofimportation sufferadisadvan­
tage,incashflowterms,comparedwiththoseauthorizedtodeferpayment*-
TheCommissionthereforefeelsthat,inordertosimplifyarrange­
mentsandtoeliminatedistorsions ofcompetition ,application oftheprinciple
ofdeferredpaymentofthetaxdueonimportsfromMemberStateson-thebasis
oftaxablepersons 1returnsshouldundercertainconditions,begeneralized at
Communitylevel*
25*-Harmonization wouldhavetocoverboththearrangements fordefer­
mentofpaymentandtheconditions tobefulfilled bytaxablepersonsinorder
toavailofthismethodofpayment*
f
Theseconditions must':
–besufficiently cleartoallowrealharmonization throughout theCommunity;
i
-preventtheoccurrence offraud;
excludeanyrequirement forafinancialguarantee *
B*3*Documents usedinintra-Community trade
26*Theachievement ofaCommunityactiononthispointisclosely
linkedtotheactionenvisaged underthepreviousheading*Defermentofpay­
mentwouldnotfullyachieveitssimplification objectiveunlessaccompanied
bysomemeasureofsimplification inrespectofthedocumentsrequiredfor
cross-border trade*TheultimateCommunitygoalshouldbetoarriveata
situation whereitispossibleforgoodstobesentacrossnationalfrontiers
withouttherebeinganeedtocomplywith-formalities^orecumbersome than
thoseonadomesticmarket*Basically,thesedomesticformalities merely

-9-
involvet+ieissueofaninvoicebythesupplierand,insomeMemberStates,
documentswhichmustaccompanythegoodsduringtransportation *
ThislatterformalitymustclearlybetheprincipleininT.a-Commu-
nitytrade*Howeverthequestionarisesastowhetherthesituationcouldbe,
significantly simplifiedbyusingcommercialdocumentsinsteadofthepresent
documents,ontheunderstanding thatthenecessitytoretainmeansofcontroland
datacollection'in international tradebekeptinmind*Commercialdocuments
wouldthenbeusedas/accompanying documentsforgoodsforthepurposesof
exportation,transitandimportation aswellasfortheaccountsofsupplier
andcustomer *
Aspartofthisapproach,itwillhavetobeestablished whetherthe
documentsinquestionshouldfirstberationalized atvCommunitylevel*If
thisrationalization .shouldprovenecessary,theinternational standardsgo­
verningthedrawingupofdocumentsusedininternational trade,established
bytheUnitedNationsEconomicCommissionforEurope,wouldconstitutethe-
basisforareforminthisfield*v
B*4*-Taxableamount , ''
27*TheSixthDirectiveattemptedtoestablish acloseparallelism
betweenthetaxableamountundertheinternalsystemandthatforimports,.
whileatthesametimemaintaining,forpracticaladministrative reasons,the
rightofMemberStatestobasethemselves onthevalueforcustomspurposes,
aslaiddownbyRegulation (EEC)n°803/68*
Followingthemultilateral tradenegotiations in1979,theCouncil
adoptedaproposalfromtheCommissionforanewregulationrelatingtovalua*-
ti.onofgoodsforcustomspurposes(1)*
EventhoughtheprovisionsofthisRegulationareclosetothose
specifically setoutintheSixth ,Directive (Article11B(1)),theCommission
opinionisthatitshouldnotbenecessarytoresorttocustomsvaluationin
intra-Community trade*Besidesthefact.thatitappearspsychologically as
alegacyfromtheperiodprecedingthecustomsunion,thispracticecangive
risetodistortionintaxtreatmentofimportsvis-a-vishome,suppliesof
goods*Consequently theCommissionwillproposetoCounciltheabolitionof
theoptionforMemberStatestousethecustomsvaluationregulationtovalue
goodsimportedfromaMemberState* -
•B*5*Mail-ordersales
28*AsitemphasisedinitsCommunication senttotheCouncilon30July
1975,theCommissioni-akestheviewthatthecross-frontie'rdevelopment ofthis
typeofsaletonon-taxable persons,whichhastheundeniableadvantageofwi­
deningthechoiceavailabletoconsumersandconsequently helpingtokeepdown
prices,encountersserioustaxandotherobstacles * •
TheCommission'sstaff,togetherwiththetradeorganizations con­
cerned,hasbeenconductingstudiesonthissubjectforanumberofyears*1
Thesestudiesneedtobetakenfurtherinordertogetaclearerpicture .of
theneedsofsmallandmedium-sized firmsinthisfield*
(1)Regulationof28/5/1980(EEC)n°1224/80,0Jn°L'134_of31*5*1980,p*1*

-10-
B„6*Taxationofpassengertransp6rt
29*Thetaxationofinternational passengertransportonthebasisof
thedistancescoveredontheterritoryofeachMemberState/1naccordance
withArticle9(2)(b>oftheSixthDirective,requirescontrolsandformali­
tiesatfrontierswhichappear ,unjustified toeconomicoperatorsinthecase
ofintra-Community traffic*Parliamenthasraisedanumberofcomplaints
madeinthisfield"(1)*
TheSixthDirective,Article28(5)ofwhichstipulatesthatatthe
endofthetransitional periodpassengertransportistobetaxedinthecoun­
tryofdepartureforthatpartofthejourneytakingplacewithintheCommu­
nity,showsthattheCouncilitselfisawareofthepracticaldifficulties in
thissector*
TheCommissionwillcarryoutthestudiesnecessarytodeterminethe
mostappropriate procedureforimplementing theprinciplelaiddowninArticle
28(5)-aprinciplewhichislikelytobripgaboutsubstantialsimplifications
atinternalfrontiers *
B*7*Temporaryimportation -ofcommercial meansoftransport
30*Thismatter^includinginrelationintra-Community traffic,is
currentlyregulatedbyinternational conventionsinterpreted invariousways
bytheMemberStates* -
Insofarasprivatevehiclesareusedforbusinesspurposes,particu­
larprovisionsarealreadycontainedintheproposal'foradirectivementioned
under2*A*1*below*
B*8*Formalitiesrelatingtotemporaryimportation andre-importa-■
tionofmovabletangibleproperty ,
31*Asismentionedabovethere-importation ofmovabletangiblepro­
pertywhichhasundergoneworkinanotherMemberStateandwhichhasbeentaxed
therewithoutrighttodeductionorrefundisexemptfromtaxinaccordance
withArticle14(1)(f)oftheSixthDirective * -.
TheCommissionconsiderstheimplementation ofthisprovisionimpor­
tantasitinvolvesataxexemptionwithintheCommunityoperatinginfavour
ofindividuals *Ifapplication ofimplementing provisionsintheMember
Statesappealstoocomplicated inthecontextoffreecirculationofgoods,the
Commissionwill,therefore,proposeasimplified commonprocedurewhichtakes
accountofthevarietyofgoodsliabletobenefitfromthetaxexemption *
(1)Notablyonpage31ofthepreviouslymentionedreportdrawnupbythe
CommitteeonRegionalPlanningandTransport *

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2,Actionbenefittingprivateindividuals ''',' "
•A,ProposalalreadysubmittedtoCouncil
A,1,ProposalforaCouncilDirectiveontaxexemptionsforcei–
tainmeansoftransporttemporarily intooneMemberState
fromanother
Doc,COM(75)527final
SubmittedtotheCounciIon30,10,75
OpinionofParliament :deliveredon13,2,76
OpinionoftheEconomicandSocialCommittee :deliveredon
31,3,76 •- . '■■ ■
AmendmentsubmittedtotheCouncilon30,6,76(doc,SG(76)
D/6997), -
A,2,ProposalforaCouncilDirectiveontaxexemptionsapplicable
-"topersonalpropertyofindividuals onpermanentimportation
fromanotherMemberState
Doc,C0M(75)528final
SubmittedtotheCouncilon30,10,75
OpinionofParliament :deliveredon13,2,76 .;
\'''OpinionoftheEconomicandSocialCommittee :deliveredon..
•31,3,76 -•.
AmendmentsubmittedtotheCouncilon30,6,76(doc,SG(76)
•D/6998), ;
32,Theseproposalswhichhavebeenexaminedindetailwithinthe
Council'scompetentworkingparty,werediscussedatthe-Council'meetingof
27October1980withoutagreementbeingreached.
Byintroducing newtaxexemptions andbyproviding astrictdefi-.
nitionoftheconceptofnormalresidence,theadoptionofthesedirectives
willmakeitpossibletoputanendtomostoftheinconveniences encountered ,
byindividuals inconnectionwiththefinalimportation ofpersonalproperty.
withintheCommunityandthetemporary ,importation ofmeansoftransport.
Theseinconveniences havegivenrisetoagoodmanycomplaints andcontinue
todoso,; \-•
A,3,Travellers'tax-freeallowanceswithintheCommunity
Doc,C0M(79:694final
SubmittedtoCouncilon30,11,1979,0Jn°C318of19,12,1979,
Ρ,5;·
OpinionoftheEuropeanParliament :deliveredon18,4,1980
OpinionoftheEconomicandSocialCommittee :deliveredon
30,1,1980, "
AmendmentsubmittedtoCouncilon10,6,1980,doc,C0M(80)
308final.
33,TheCommissionhassubmittedtotheCouncilaproposalforadirec­
tiveconcerningtax-freeallowancesgrantedtotravellerswithintheCommu­
nity,Theaimofthisproposalistoincreasetheintra-Community allowance
from.180Ecusto210Ecus,tosimilarly-increasetheyoungpersons'allowance
andtheunit-valuelimitsforthederogations grantedtoDenmarkandIreland,

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FollowingParliament'sopiniontheCommission amendeditsoriginal
proposal,inparticular,byincorporating aprogramme,coveringthenextfew
years,ofincreasesinintra-Community allowances *Howevertheprincipleof
suchaprogrammewasnotendorsedduringtherelevant ,discussions atvarious
levelsintheCouncil*
Consequently,theCommissionwillpressforadoptionofitspro-*
posalintheoriginalformsothatanincreaseinallowanceswithinthe'Com­
munitycanbeachievedduring1981*
B*Futureaction
3*1*Tax-freeallowancesgranted .withintheCommunitytotravellers
andinrespectofsmallconsignments ofnocommercial .volume
34*TheamountsofCommunitytax-freeallowancesarefixedinEuropean
.unitsofaccountinaccordancewiththeprocedurelaiddownintheDirectives
adoptedon19December1978C1)*Thismeansthat,ifanycurrencyappreciates
againsttheEcu,theseamountswill.havetobereviewedsincetheMemberStates
haveagreedtoavoidanyreductioninthevalueofintra-Community allowances
intermsofnationalcurrencies *Theseadjustments,whichareamechanical
exercise,shouldintheCommission'sopinionbecarried'outbytheCommunity
institutions employing asimplifieddecision-making procedure *
35*FurthermoretheCommissionwillpursue-itseffortstoguarantee
harmoniousdevelopment oftax-freeallowances *
36*Whilethetax'reliefprocedure'laiddownbytheabovementioned
Directivesforgoodswhicharecarriedby.travellers andwhoseunitvalue
isgreaterthantheamountofthetaxreliefis.satisfactoryinprinciple,
sinceitaimstoeliminatecertaincasesofdoubletaxat.ionintheCommunity,
practicalapplication bytaxablepersonsdoesnotalwaysworksmoothly*The
information attheCommission'sdisposalshowsthat,whilethisproceduredoes
notgiverisetodifficulties withtaxablepersonswhospecializeinexport
salesorwhoarewell-informed (suchasdepartmentstores),thesamedoes
notapplytoothercategoriesofretailers-whoareeithernotawareofthe
existenceoftheprocedureordonothavetheformswhichcertainMember
Statesdemandinadditiontothecommercialinvoice*Inordertoremedythis
situation,itisnecessary,intheinterestsofbothconsumersandtaxable
persons,toexamirlecloselythepracticalproblemsposedbyremissionoftax
andtoestablish,inparticular whetherthereisreallyaneedfortheforms
requiredbysomeMemberStatesinadditiontotheinvoice*Itisalsoneces­
sarytoprovideadequateinformation fortaxablepersons .implementing thetax
remissionprocedure * .
.B*2*FormalitiesapplicableinMemberStatestoremovals -,
37*Theproposalmentionedatpoint2*A*2(andtheinstrumentawaiting
approvalbytheCouncil)isdesignedtodeterminethefieldofapplication of
taxexemptions *-Undertheproposal,MemberStatesarefreetorequirecomple­
tionofformalities forthetransactions inquestiononthebasisofacustoms
declaration *
Thevariousformalities currentlyrequiredinrespectofthosatran­
sactionswhichbenefitfromataxexemptionwithintheCommunityareobviously
toocumbersome andprovisionshouldbemadetosubstantially reducethemor
eventoabolishthemtogether*
(1)OJL366of28*12*78*.
(

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B.3 *Sales of "books ,reviews ornewspapers involving dispatch to
-individuals residing inaMember State other than that inwhich
the consignor isestablished
38* Sales toindividuals ofbooks ,reviews ornewspapers involving
dispatch from oneMember State toanother areinprinciple subject to
general VATrules asregards both importation andexportation .
Application ofthese rules "totransactions which' more often than ,
notinvolve only small amounts isregarded asbeing particularly onerous
both bybuyers inth'ecase ofimports andsellers inthecase ofexports .
Information available to -the Commission shows that firms sometimes consider
itexpedient either not toremit taxongoods ,thereby exposing thebuyer
todouble taxation ,ortodisregard orders placed with them ,andthis amounts
~toarefusal tosell ,which ,onadomestic market ,isliable toprosecution
under private lawandoccasionally under criminal law . .
This situation isall themore -open tocriticism since ,itplaces
cultural exchanges within theCommunity injeopardy .
Onthetheother hand ,taxrelief isgranted insome Member States
inrespect oftheimportation of .thegoods inquestion ,both from non-member
countries andfrom Member States ,under conditions likely "tocreate
distortions ofcompetition tothedetriment ofeconomic operators established
within the country * * N
39* TheCommission feels that greater consistency should beachieved :
-byexcluding taxrelief inrespect -ofimports from non–member
countries . .This solution,' motivated .,,bythedesire toeliminate thedangers .
ofdistortion ofcompetition due toabsence oftaxation inthecountry of .
consignment ,hasalready been proposed by -theCommission intheabovement ion-
nedproposal relating tofinal importation ofcertain goods ;
•-byintroducing taxrelief inrespect ofthe importation of
books ,reviews ornewspapers addressed byataxable person established in
aMember State toanindividual inanother >Member State provided that tax
hasbeen paid onthegoods inthecountry ofconsignment and–possibly – •
thevalue ofthegoods does not exceed anamount fixed atsuch alevel so •
astoavert any serious risk ofdistortions ofcompetition arising outof
differences inVAT rates between Member States . This risk would seem to
be small however ,since thegoods inquestion arenormally subject to
alowrate oftaxinMember States ,since postage offsets thedifferences
intaxrates andsince thegoods sent arenotalways available from .
taxable persons inthecountry ofimportation .
B.4 *Taxation ofindividuals importing used goods purchased inanother
Member Stats
40* Adoption oftheproposal .for a7th Directive .(1)onthe common system
ofvalued added taxtobeapplied toworks ofart ,,collectors' items ,antiques
•andused goods ,which isdesigned toeliminate asfar aspossible the
cumulative taxation that occurs when used goods already inthepossession
ofafinal consumer arereintroduced into thecommercial circuit ,will
resolve anyproblems individuals might encounter inintra-Community trade
with regard togoods acquired from taxable persons .
(1)Submitted bytheCommission totheCouncil on11*1*1978 ,OJn°C26of
'1*2*1978 *Amendments submitted on16*5*1979 ,OJn°C136of31*5*1979 ,
p*■8*

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41„When.thisproposalfora7thDirectiveisadoptedtheproblemcf
theLegalsituationgoverningexportandimport-transactions carriedoutby
.individuals andinvolving -goodsacquiredfromotherindividuals willrequire
reexamination *Thecurrentsituationcannotberegarded .assatisfactory in
*sofaras,itgivesrisetodoubletaxationwhenevertherulesgoverningtax
reliefdonotapply„ '
',TheCommissionconsidersitnecessarytodeviseforintra-Commu­
nitytradeamechanismwhichwillresolvetheproblemsinquestion*
Conclusion ,v i
42*Asmentionedabove,thisprogrammeconsists,forthemajorpart,in
theimplementation of,measuresrequiredbytheCommissionofthe.Council -in'
the.contextoftheSixthDirectiveonthecommonsystemofvalueaddedtax™
The.programmecannotbesuccessfully realizedexceptinconjunction withother
actiontobecompleted :harmonization ofrulesgoverningtradewiththird
countriesinparallel^ithcustomsprovisions,harmonization oftaxsystems
appliedintheMemberStates*
43*InpresentingthisprogrammetheCommissionintendstocontribute
totherealization,overthecomingyears,ofthetaxconditionsofatruly
integrated economyandto.prepareforthefuturesuppression oftaxfrontiers
withintheCommunity *. '
Ithopestoseeasignificant debatedevelopontwothemes:oneto
putintoconcreteformthepracticalconditionsofapplication ofthemeasures
hereinandthesecondtocomplete ,asnecessarythe;programmebythe-addition -
offurtherinitiatives *
σ
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