ARCHIVESHISTORIQUES
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COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(76)610
Vol.1976/0187

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(76)610final.
Luxwiifccurt;,17Hovember1976.
GUIDELINES FORAFINANCIAL REGULATION GOVERNING THEESTABLISHMENT
AREMAKINGAVAILABLE TOTHECOMMUNITY OPOWNRESOURCES ACCRUING
FROMVAT
Workingpaper"byCommissiondepartments
\\\7 .>0Λ-3M 1.' r•'.»1vhjv v
Ρ1.\:i\'•r>J >"*\ iIw:.sc/^J
COI'(76)CIOfinal*

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Guidclinos for aFin?,ncinl Recala'tion .concerni ngtheestr.bllsh mentarA
making available by "the Convriun ity ofovrn resources accruing from VAT
Introduction
1.Atitsmeeting of21October 1976 ,theCouncil assigned theCommission
thetask ofpreparing amemorandum setting out thebasic features ofthe
financial regulation onthe levying ofownresources accruing from VAT .
2.Inexecuting this task theCommission would like tostress that the
aimofharmonizing theVAT systems should continue tobetheuniform basis
ofassessment ,i.e. ,therules common toall theMember States ,andthat
derogations should beconsidered asvery exceptional andtransitory .As
aresult ,thenormal system should apply tothemajority ofoperations
and thus there should not beany special problems with regard tothe
collection ofown resources .
Prom this standpoint ,theCommission isoftheopinion that thedecisions
already taken bythe Council cover thebasic features ofderogations from
thenormal arrangements likely topose any fundamental problems with regard
tothe -financial regulation .Ifonany given point the Council were
subsequently tocontemplate other derogations ,their effect onthefinancial
regulation would have tobeexamined .
Here ,theCommission would point outthat thewider thescope ofthecommon
rules becomes ,the less itwill benecessary tohave recourse to .decisions
which comprise assessments toensure that ownresources are collected ina
satisfactory -and fair manner .
3.This communication hasbeen drawn upinthe light ofthe contacts made
byCommission Xbpartments with thenational taxauthorities ,covered by .
tworeports submitted on22June 1976 and20September 1976 respectively
tothePermanent Representatives Committee ^.
4.Concerning aspecific point ,namely that ofknowing whether andunder
what circumstances acompensatory payment might bewaived incertain cases
ofoperations exempted atnational level andwhich might beconsidered
negligible from anownresources point ofview ,theinformation atthe
Commission 1sdisposal atpresent precludes anyassessment .
Doc.R/1551/76(PIN407)andR/2179/76(FIN567).

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5»Lastly ,theCommission considers that thefinancial regulation to
"beadopted inrespect ofownresources accruing from VATmust ,asfar
aspossible ,comply with thearrangements inforce regarding theown
resources already attheCommunities' disposal .
Furthermore ,theproposals putforward bytheCommission onthe
replacement ofthefinancial regulation ^andtherelevant amendments
toCouncil Regulation 2/71^areinaccordance with theguidelines put
fonward inthis document .
A. ESTABLISHMENT
1.Establ ishment ofown resources under normal VAT application
arrangements
6.Ownresources accruing from VATarecalculated onthebasis ofthe
difference between the sale price andpurchase price ;theoperation of
this technique maybesummarized asfollows :
(a)anytaxable person subject tonormal VATarrangements must show in
hisperiodic statement thetotal amount –atprices net ofVAT–of
deductible goods andservices (inputs )andthesales oftaxed goods and
services (outputs )which hehasmade during theperiod covered bythe
declaration ;
(b)onoethisdeclaration hasbeensubmitted ^,theownresources accruing
from VAT areconsidered asestablished .Forthis purpose ,the competent
national administration ,having collected allthedata stemming from the
declarations oftaxable persons ,calculates thedifference between the
overall outputs andoverall inputs declared bythepersons liable ;
(c)this difference (which constitutes thevalue added achieved during
theperiod considered byallthepersons liable )forms thebasis for
applying therate ofownresources accruing from VAT4
OJKoC171of26July 1976 .
OJNoC164of17July 1976 .
^Or,intheabsence ofadeclaration fromthetaxable persons ,after the
establishment ofthetaxdebt hasbeen automatically carried out .
4 »T . 1 _ • I1 A• « . « *«. « • . . . . .
.Anexample with figures showing howthis scheme applies isgiven inAnnex 1
ofthe -Commission working paper (SEC(76)1186 –incorporated bytheCouncil
Secretariat inDoc .R/828/76(FIN182))-, towhich reference should bemade ",
particularly pages 1to3,foramore detailed description ofthis method
ofcalculating thebasic taxable amount .

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2.Calculationofcompensatory payments and establishment ofov.'nresources
under arrangements which nero.--3.te from thenoma !system ofVATappl ic.-a.tion
7.Wherever possible theestablishment ofownresources istobemade ,in
accordance with thegeneral principle ,onthebasis oftheinformation
contained inthedeclarations submitted bythepersons liable .
Ifthis isnotpossible ,theMember States shall reconstruct thebases of
theoperations provisionally excluded from thenational assessment using the
most appropriate data .
(a)Lump-sum afT^cul tura_1arrangements
8.Theassessment ofown'resources relating tooperations performed by
.farmers entitled tothese arrangements shall bedetermined onthebasis of
overall economic data ,applying thecommon method ofcalculation laid down »
inAnnex Ctotheproposal foraSixth Directive .
(b)Zero_rate ;
9.Application ofthetechnique based onthedifference between sale price
andpurchase price ispossible provided theMember States undertake toask the
taxable person foradeclaration ofinformation needed tocalculate own
resources under the same conditions asapply with thenormal arrangements .If,
incertain marginal cases ,itproved necessary toforego such adeclaration ,the
compensatory payments could becalculated byother means considered suitable .
(c)Kat_ional__trans port ofpersons
10.AnyMember States wishing toderogate from Community taxation arrangements
will need toensure that compensatory payments areproperly calculated either on
thebasis ofthedeclarations –which could becompulsory inanumber ofcases -
orbyusing information obtained from theaccounts departments oftransport
undertakings inallother cases .Incertain marginal cases (e.g. small taxi
firms ),other methods ofcalculating thecompensatory payments could beemployed . .

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(d) Prop£rty_tranGact_iono
11.Theprinciples oftheCommunity Regulation onimmovable property
transactions adopted bythe Council provide for deferred taxation on
some transactions and deferred exemption onothers ;asatransitional
measure ,theMember States have theoption ofretaining their
respective national systems .For thepurposes ofthefinancial
regulation ,these exceptions could begoverned bythefollowing rules :
–the exemptions would beprovisionally retained :theKember States
would collect theappropriate ovmresources onthe basis ofthe
difference between sale price andpurchase price ,where the
requisite information isobtainable :ifitisnot ,compensatory
payments would becalculated byother approved means considered
;suitable ;
-thetaxation would beprovisionally retained :the inputs and
outputs for the transactions involved would beincluded inthe
assessment basis andthecorresponding ownresources would thus
beassigned totheCommunity .
*
12.The rule tobsapplied incases where taxation isretained
provisionally would also apply tocases where aMember State which
has asystem ofexemption allows taxable persons tooptinfavour
oftaxation .
(e) ndertaki n§
13*Kember States which apply :(a)asystem ofexemption with a
ceiling other than the limit below which VAT ownresources are not
collected ,hereinafter called the "ovmresources limit ",or(b)a
non-exeaption system ,must take steps :
toexclude from thebasis ofassessment ofovmresources all
information oninputs andoutputs forundertakings with turnovers
below theovmresources limit andwhich arenotentitled nationally
toanexemption ;
–toensure that inputs andoutputs forundertakings with turnovers
above theovmresources limit andwhich areentitled nationally
toexemption aredeclared inthesame wayasunder thenormal
system (using asimplified procedure ifappropriate ).

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Insomedoubtfulcases,compensatory paymentscouldbedetermined
onthebasisofotherapprovedinformation .
(f)Exemptions
14.AllowingforthedecisionstakenbytheCouncil,thesame
situationsarelikelytooccurhereasthosedescribedunder
"Immovablepropertytransactions".Thebreakdowngivenunder(d)
thusalsoappliestoexemptions.
AstheCouncilhasnotyettakenadecisiononalltheseproblems,
amoredetailedstudyisnotpossibleatthisstage.
(g.)Exclusion£f_c£rtai_n_e£rpraditure_frora th£right_^o_deduction
-15.IfthepolicytrendswhichemergedinCouncildiscussionsare
confirmed,theCommunityrulesondeductionswillbecomebinding
onlyafteraperiodofthreeyearsstartingfromthedateonwhich
theSixthDirectivecameintoforce..Untilthen,thedifferent
nationalsystemswillcontinuetobeapplicable.Thequestionmay
arisethereforeastowhetherthoseMemberStateswhichapplyamore
liberaldeductionsystemthanthatadoptedbytheCommunitywould
have,topaypositivecompensation totheConi'Tninityandwhetherthose
whichapplyamorerestrictive systemwouldsimilarlybeentitledto
anadjustmentofownresources.

B.ENTTfINTOACCOUNTSAKDKMCIKGAVAILABLE
16.Underthenormalsystem,theMemberStateswouldgather
information ontaxablepersonstoenableVATownresourcestobe
established ,andaftercentralisingthisinformation ,wouldmake
alump-summonthlypaymentbyapplyingtheCommunityVATrate
adoptedinthebudgetaryprocedureforthatparticularfinancial
yeartothevalueaddedbyalltaxablepersonsduringthatmonthly
period.
Therearetwoexceptions :
–caseswhereownresourcesaredeterminedaccordingtodeclarations
madebythetaxablepersons-hereagaintheprinciplesdescribed
abovewouldboapplicable ;
–caseswherecompensatory paymentsaredetermined onthebasisof
otherinformation :thesettlements shouldbemadeassoonas
thecorresponding amountsareestablished andinanycasebefore
theendofthefinancialyear.
17•TheMemberStateskeepaccountsoftheinformationreferredto•
inpoint16.TheyentertheamountofVATownresources–theamount
ofthelump-sumpayment-inthespecialaccountkeptbythenational
TreasurysothatVATresourcescanbemadeavailabletotheCommunities
bythe15thofthesecondmonthaftertheestablishment atthelatest.
18.Likewise,bythesamedeadline,eachMemberStatesendsthe
Commissionamonthlystatementofthetotalamountofownresources
paidoverinagivenmonth.Thisstatementmustitemizeresources
resultingfromtheapplication oftheratetothebasisofassessment
determinedunderthenormalsystemandthoseresultingfromthe
differentexemptionsystems.
AVATheadingshouldbeaddedinthesummaryaccountwhichisdrawn
upyearlybyeachMemberStateregardingtheestablishment ofown

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C.FREQUENCE OFPAYMENTS
19.Theyield from total monthly settlements made intheMember States
depends essentially onthefrequency with which taxreturns aresubmitted .
Inview ofthedifferent solutions adopted atnational level foreach branch
oftheeconomy with regard tothesubmission ofreturns ,thefrequency nay
also differ from onebranch toanother (monthly ,quarterly oreven yearly ).
Each Member State isrequired irrespective oftheabove topay into the
Commission 'saccounts each month thetotal amount oftheresources which it
hasestablished asaccruing toitfrom VAT .
This amount might well fluctuate appreciably from onemonth toanother and
from oneMember State toanother .Ifexpenditure were not tomove inline
with such fluctuations inanygiven period ,this might give rise tocash
shortages .
Toensure that nosuch problem impairs thesound financial management of
Community resources ,Member States could effect payments onaccount which
would beregularized intheensuing months provided that they formed part of
oneandthe same budgetary year .
20.Inthefirst year ,application oftheSixth Directive will produce a
situation inwhich thefinancing ofexpenditure inthe first fewmonths ,when
noownresources accruing from VATwill bepaid in,will prove difficult .
This problem will need toberesolved within thecontext oftheprinciples
governing themanagement oftheCommission 'scash position .

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D.INSPECTION 01?OV.'NÏÏES0UHCE3 '
21Member States 'will beresponsible formonitoring theestablishment and
making available ofVATownresources .TheCommission will ,where itso
requests ,beinvited totakepartinthismonitoring procedure .
These inspections willbedesigned primarily tocheck theconformity and
regular nature oftheoperations forestablishing andmaking available VAiowrTresoutces ,andinparticular operations relating tothecentralization
ofthetaxbase .
Thirinr these inspections ,theCommission will ensure thattheexemption
arrangements areproperly applied soastoguarantee allMenber States equality
oftreatment asregards establishment ofthereconstituted bases inconnection
with compensatory payments .
22AllMember States willbenotified ofthereports drawn upbytheCommission
following joint inspections oncetheMember State concerned hasmadeknown its
views onthem . /
E.CONMITTEE PROCEDURE
21Since *ownresources accrue totheCommunity upon their establishment ,the
Commission isresponsible formanaging themwithin thecontext oftheimplementation
oftheCommunities' budget .
Aspartofthisresponsibility ,andinviewofthecomplex technical nature of
theproblems toberesolved inaccordance withtheprinciples which willbelaiddown inthefinancial regulation ontheestablishment andmaking available by
theCommunity ofVATownresources ,theCommission considers itessential ta
committee should besetuptoassist itinmonitoring theapplication ofthis
regulation and,moreparticularly ,insolving theproblems arising asaresu ttheexistence ofexemption arrangements (e.g./definition oftheright sort of
data ).
Inview oftheir direct budgetary impact ,therelevant decisions should betaken
swiftly ,butshould alsobeprepared inconjunction withtheMember States .
TheCommission points outthat thesetting upofsuchaCommittee would not,of
course ,affect thecreation oftheVATCommittee provided forintneSixth
Directive andwhich would deal solely with problems relating toapplication of
thecommon VAT system .

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•24.Thodecision-making procedurewouldbebasedonthefollowing
principles:
(a)inallcasesitwouldbefortheCommissiontodecide;
(b)beforetakingadecision,anaafterhavingconsultedtheMemberState
concernedwherenecessary,theCommissionwouldconsultthecommittee,
whichcontainsrepresentatives ofalltheMemberStates.
25.ThemainreasonsforwhichtheCommissionhasfounditnecessary
toproposethisformulaareasfollows:
*
(a)theproblemsrequiringsolutionariseonlyatadministration level
andnotatregulationlevel;
(b)itisessentialtomaintainthebalancebetweenthetwoinstitutions
constituting thebudgetaryauthority,namelytheEuropeanParliament
andtheCouncil,andtoavoidintroducing aformulawhichwouldput
thelatterinaprivilegedposition;
(c)aseachMemberStateismaderesponsibleforproposingappropriate
m&thoasforfixingthebasestobeusedincalculating thecompensatory
payments,andastheCommissionisresponsibletothejointbudgetary
authorityforitsadministration ofthebudget,itisreasonablethat
theCommissionshouldbethearbiterofwhatisasuitablemethod;
(d)theproceduredescribedin24(a)aboveisnotaninnovationsinceit
isalreadyinuseunderthetransitional solutionforusingtheGDP
scale.