NoC 176/22 Official Journal of the European Communities 4. 7. 83 
ping research, involving the interested parties, and 
ensuring that findings are put to good use. Existing 
Community bodies, notably the Ispra Centre, could 
be used more efficiently. 
VII. COLLABORATION 
2.19. Action 19 
To coordinate the research carried out in the various 
Done at Brussels, 28 April 1983. 
The full 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. specialist institutes, each body must evince a level 
of scientific competence which transcends its spe­
cific interests. 
2.20. Action 20 
Point 2.19. is also applicable here. 
The Chairman 
of the Economic and Social Committee 
Francois CEYRAC 
Having regard to the Council's request of 30 July 
1982 for an opinion on the proposal for a 13th 
Council Directive on the harmonization of the laws 
of the Member States relating to turnover taxes — 
Arrangements for the refund of value added tax to 
taxable persons not established in Community terri­
tory ('), 
(') OJNoC223, 27. 8. 1982, p. 5. Opinion on the proposal for a 13th Council Directive on the harmonization of the laws of 
the Member States relating to turnover taxes — Arrangements for the refund of value 
added tax to taxable persons not established in Community territory 
The text referred to the Committee has been published in Official Journal of the Euro­
pean Communities No C 223 of 27 August 1982, page 5. 
A. LEGAL BASIS FOR THE OPINION 
On 30 July 1982 the Council referred the abovementioned proposal to the Economic 
and Social Committee in accordance with Articles 99, 100 and 198 of the Treaty estab­
lishing the European Economic Community. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 
207th plenary session held in Brussels on 27 and 28 April 1983. 
4. 7. 83 Official Journal of the European Communities NoC 176/23 
Having regard to the Committee chairman's deci­
sion of 16 August 1982 as endorsed by the Bureau's 
decision on 13 October 1982 instructing the Section 
for Economic and Financial Questions to draft an 
opinion and a report on the matter, 
Having regard to the report made by Mr Broicher, 
the rapporteur, 
Having regard to the discussions at the 76th Section 
meeting held on 19 April 1983; 
Having regard to the discussions on 28 April 1983 
during the 207th plenary session held on 27 and 
28 April 1983, 
HAS ADOPTED THE FOLLOWING OPINION: 
by 75 votes to 7 with 25 abstentions: 
1. General comments 
The Committee endorses the Commission proposal 
subject to the specific comments set out below. The 
Committee regrets, however, that circumstances cur­
tail the scope for introducing a standardized proce­
dure. 
2. Specific comments 
2.1. Article 3 (1) requires applicants to produce evi­
dence that they have not engaged in any trans-
Done at Brussels, 28 April 1983. actions which do not fulfil the conditions laid down 
in Article 1 (1). Such negative proof is impossible to 
obtain in practice. Therefore an appropriate declara­
tion by the applicant should suffice, unless proof to 
the contrary is produced. 
2.2. Article 3 (3), second sentence, does not spell 
out the difference in the procedures used: (a) where 
reciprocal arrangements exist; (b) where there are no 
reciprocal arrangements. 
2.2.1. The Committee feels that Article 3 should 
state categorically that where a third country has 
reciprocal arrangements with the Community, Mem­
ber States shall be obliged to refund VAT to taxable 
persons from that third country. 
2.2.2. The Committee deplores the fact that Mem­
ber States have absolute discretion in deciding 
whether or not to grant VAT refunds to taxable per­
sons from countries which do not operate reciprocal 
arrangements with the Ten. It must however be 
conceded that only the respective Member States 
can decide whether existing bilateral agreements, for 
example double taxation agreements or other fac­
tors, make it mandatory or advisable to implement 
the refunds procedure. 
2.2.3. At any rate, the Directive should urge the 
Commission and all Member States to insist, in the 
interests of further harmonization, that reciprocal 
arrangements be incorporated in future interna­
tional agreements with third countries which do not 
operate such arrangements with the Community. 
The Chairman 
of the Economic and Social Committee 
Francis CEYRAC 
No C 176/24 Official Journal of the European Communities 4. 7. 83 
APPENDIX 
to the opinion of the Economic and Social Committee 
Rejected amendment 
The following amendment introduced in accordance with the Rules of Procedure was defeated 
by the Committee during plenary session discussions: 
'After paragraph 2.2.3 add the following paragraphs: 
'2.3. The Committee believes that the second subparagraph of Article 4 should be 
deleted. 
2.3.1. Pending the introduction of general Community arrangements, the draft Direc­
tive seeks to restrict input VAT refunds for taxable persons established in third coun­
tries. The Committee feels that such action would be in breach of the non-discrimina­
tion clauses laid down in GATT and in double taxation agreements. The Commission is 
currently working on a 12th Directive harmonizing the rules for input VAT refunds. This 
will provide the opportunity to examine and decide which types of expenditure should 
be disbarred from input VAT refunds in the Community. This area will of course have 
to be discussed in depth with the Member States. The Committee therefore feels that it 
is inappropriate to make special arrangements for the small number of cases involving 
taxable persons from third countries, thereby placing an unwarranted burden on the 
13th Directive. 
2.3.2. In the Explanatory Memorandum the Commission expresses the fear that it 
would be difficult to check up on the type of expenditure referred to in the second para­
graph of Article 4. In doing so it overlooks the fact that Article 3 requires every Member 
State to impose on applicants such obligations as are necessary to determine whether 
the application is justified and to prevent fraud." ' 
Reason: 
The practical scope of the 13th Directive is extremely narrow; it will enable enterprises outside 
the Community but not within it to recover VAT paid to a Community country. A typical exam­
ple would be an American company that incurred VAT in Germany through exhibiting at a trade 
fair there. 
Unfortunately the Directive contains the following list of expenditure on which refunds must not 
be made-
cars cars , ,. , , „ purchase, hire, pleasure boats r . . . . c„ ) running expenses, private aircraft . B .*' 
r _ , repair, maintenance motor cvcles I r motor cycles 
business travel 
accommodation 
food 
drink including expenses 
when travelling on 
business 
entertainment and hospitality 
amusements and luxuries. 
There is good reason to think that this provision is a forerunner to forbidding refunds on the 
same kinds of expenditure to Community traders, on whom the impact would be extremely sev­
ere; and in fact recently a draft 12th Directive has been published with just that purpose. 
4. 7. 83 Official Journal of the European Communities NoC 176/25 
The Commission's reasoning in both Directives is that expenditure of the kinds concerned may 
include private as opposed to business spending. Unfortunately both Directives lay down blanket 
exclusions, without any attempt to confine them to any private element. 
Adverse international repercussions are stated in the paragraphs we wish to restore. In addition, 
the Directive could oblige a Member State to dishonour its commitments under an agreement 
with the country outside the Community (the 'third country'). Agreements to make refunds of the 
same kind as that covered by the Directive exist between some Community countries and some 
third countries. The Directive would forbid Member States to make refunds on the expenditure 
listed in Article 4, and this would almost certainly involve the Member State in breaking its 
agreement. 
The only circumstance in which the exclusions in Article 4 do not apply is where the third coun­
try has agreements with all 10 Community countries. 
Furthermore, with regard to refunds to other Community countries, it may be asked why the 
Directive is confined to countries outside the Community — why does it not also provide for 
refunds to enterprises in a different Member State? The answer is that such refunds are provided 
for by the eighth Directive, which is already in operation. 
The eighth Directive does not contain exclusions of the kind in Article 4 of the 13th Directive, 
and there is no reason to think that this has led to abuse of the eighth Directive; in fact at a 
seminar in Brussels in December 1982, members of the tax departments of the Member States 
said it was working satisfactorily and that they had no reason to suspect abuse. 
It should also be explained why VAT is refunded to enterprises. The tax is intended as a tax on 
'consumer spending' but this proved to be difficult to identify with sufficient accuracy, and the 
system therefore operates by charging the tax on all sales by enterprises and then refunding the 
tax if the customer also is an enterprise and the spending is for a business purpose. The system 
has other advantages; for example the cost of carrying business stocks is not increased by VAT, 
and exports can be relieved of the tax easily and accurately. 
Voting: 
For: 40. Against: 51. Abstentions: 15.