Proposal for a Council Directive amending Directive 77/388/EEC on the common system of Value Added Tax (level of the standard rate)

(96/C 73/10)

COM(95) 731 final - 95/0362(CNS)

(Submitted by the Commission on 20 December 1995)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 99 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Economic and Social Committee,

Whereas Article 12 (3) (a) of Directive 77/388/EEC (1), as last amended by Directive 95/7/EC (2), lays down that on the basis of the report on the operation of the transitional arrangements and proposals on the definitive arrangements to be submitted by the Commission pursuant to Article 28l, the Council shall decide unanimously before 31 December 1995 on the level of the minimum rate to be applied after 31 December 1996 with regard to the standard rate; whereas the standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be same for the supply of goods and the supply of services; whereas from 1 January 1993 until 31 December 1996, this percentage may not be less than 15 %.

Whereas experience has shown that under the current taxation system, the standard rates of value added tax presently in force in the various Member States in combination with the safeguards built in in that tax system, have ensured that the transitional system of value added tax has functioned satisfactorily; whereas widening discrepancies between the standard rates of value added tax in the various Member States would create a structural imbalance in various business sectors; whereas the existing range of standard rates of value added tax applied in the various Member States leaves a wide margin for Member States to fix the level of the standard rate; whereas, consequently, a further adjustment to the range of the possible standard rates of value added tax at a later stage could be economically desirable;

Whereas the transitional arrangements of the common system of value added tax shall not jeopardize the subsequent definitive arrangements; whereas any change to the transitional arrangements has, therefore, to serve for the preparation of the definitive system; whereas the introduction of the definitive system which is to be based on the principle of taxation in the country of origin will in any event require approximation of the standard rates of value added tax in the various Member States,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Article 12 (3) (a) of Directive 77/388/EEC is hereby amended as follows:

'(a) The standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. From 1 January 1997 until 31 December 1998, this percentage may not be less than 15 % and not be higher than 25 %.

On the basis of a proposal by the Commission and after consultation of the European Parliament the Council shall decide unanimously on the level of the standard rates to be applied after 31 December 1998.

Member States may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount which may not be less than 5 % and shall apply only to supplies of the categories of goods and services specified in Annex H.`

Article 2

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 1 January 1997 at the latest. They shall forthwith inform the Commission thereof.

When Member States adopt these provisions, these shall contain a reference to this Directive or shall be accompanied by such reference at the time of their official publication. The procedure for such reference shall be adopted by Member States.

2. Member States shall communicate to the Commission the text of the provisions of domestic law which they adopt in the field covered by this Directive.

Article 3

This Directive shall enter into force on the day of its publication in the Official Journal of the European Communities.

Article 4

This Directive is addressed to the Member States.

(1) OJ No L 145, 13. 6. 1977, p. 1.

(2) OJ No L 102, 5. 5. 1995, p. 18.