13. 11. 78 Official  Journal  of the European  Communities No C 269/51 
Opinion  on the proposal  for an Eighth  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 the territory  of the country 
The text  referred  to the Committee  has been  published  in Official  Journal  of the European 
Communities  No  C 26 of 1 February  1978,  page  5. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 18 January  1978,  the Council  referred  the abovementioned  proposal  to the Economic  and 
Social  Committee  in accordance  with  Article  99, 100,  198  of the Treaty  establishing  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 159th 
plenary  session,  held  in Brussels  on 31 May  and  1 June  1978. 
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, 
Having  regard  to the request  made  by the Council  of the 
European  Communities  on 20 January  1978  for  an 
opinion, 
Having  regard  to the decision  taken  by the Bureau  of the 
Economic  and  Social  Committee  on 31 January  1978, 
entrusting  the preparation  of an opinion  on the matter  to 
the Section  for Economic  and Financial  Questions, 
Having  regard  to the  oral  report  made  by  Mr 
Peyromaure-Debord-Broca,  the  rapporteur,  and  the 
Section's  discussions  at its meeting  on 16 May  1978, 
Having  regard  to the discussions  at its 159th  plenary 
session  held  on 31 May  and  1 June  1978  (meeting  of 
1 June  1978), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 38 votes  to 0, with  19 abstentions: 
1. Introduction 
1.1. By  virtue  of Article  17 (4) of the Sixth  Directive  on 
the harmonization  of the laws  of the Member  States 
relating  to turnover  taxes,  common  system  of value  added 
tax - uniform  basis  of assessment,  the Commission  has 
framed  a proposal  on arrangements  for the refund  of value  added  tax to taxable  persons  not established  in the 
territory  of the  country  where  the  service  has  been 
provided  or the goods  delivered. 
1.2. In  the interests  of equity,  it is essential  that  taxable 
persons  should  qualify  for VAT  refunds  in respect  of 
services  or goods  which  they  purchase,  in the course  of 
their  business,  in Member  States  where  they  are not 
established. 
1.3. To  obtain  a refund  from  a country  where  he is not 
established,  the person  concerned  must: 
— be considered,  for taxation  purposes,  to be established 
outside  the Member  States  where  the transaction  (in 
respect  of which  tax may  be refundable)  takes  place, 
— provide  the invoice  or the import  documents  for the 
goods  or services  in respect  of which  refund  is 
claimed, 
— produce  official  evidence  that  he is registered  for 
VAT  in the State  where  he carries  on his business, 
— certify  that he has not engaged  in any business  activity 
in the Member  States  where  he has received  the goods 
and services  in respect  of which  a VAT  refund  is 
claimed. 
2. General  discussion 
2.1. The  question  arose  as to whether  there  were 
enough  instances  to warrant  a Directive. 
No C 269/52 Official  Journal  of the European  Communities 13. 11. 78 
2.2. It  was  established  that  the Directive  would  cover 
all business  activities  (congresses,  trade  fairs,  travel,  etc.) 
of taxable  persons  in Member  States  where  they  are not 
established.  It would,  for instance,  cover  carriage  of 
persons  or goods,  hotel  expenses,  petrol  bills,  vehicle 
repair  bills,  etc.). 
2.3. The  issue  of fictitious  invoices  was  raised. 
2.4. This  issue  is not, however,  peculiar  to the matter  in 
hand;  fictitious  invoices  also  pose  a problem  at national 
level. 
2.5. The  scale  cost  of the formalities  involved  was 
raised.  It was suggested  that  taxable  persons  should  have 
the right  to VAT  deductions  in the country  where  they 
were  registered  for VAT. 
2.6. But,  such  a right  could  not  be granted  auto-
matically.  The  country  where  the taxable  person  was 
registered  for VAT  would  have  to check  with  the country 
where  the refundable  VAT  was  paid.  The  parties  and 
authorities  in both  countries  would  thus  have  to 
participate  in the deduction  procedure.  In other  words 
such deduction  arrangements  would  entail  real  but 
apparently  inevitable  costs  for  the  parties  and 
Government  departments  concerned. 
2.7. In  any  case  does  the Sixth  Directive  allow  such 
arrangements? 
2.8. Article  17 (4) of the Sixth  Directive,  in fact,  only 
covers  refunds,  and the Commission's  hands  are therefore 
tied. 2.9. Even  if the deduction  arrangements  were  operated 
solely  by the States  concerned  without  the taxable  person 
having  to take  any action,  there  is still the problem  of the 
differences  in VAT  rates.  To what  extent  and at what  cost 
is clearing  possible,  in view  of the fact  that  VAT  rates 
differ? 
2.10.  In  so far  as VAT  rates  have  not  been 
standardized,  care  must  be taken  to avoid  exacerbating 
the existing  disparities. 
2.11.  The  draft  Directive  is apparently  designed  to 
establish  transitional  arrangements  in the interests  of 
fiscal  justice  and pending  implementation  of the general 
principle  of the abolition  of tax  frontiers  within  the 
Community. 
2.12.  The  Committee  endorses  the draft  Directive 
subject  to the above  general  comments  and the following 
specific  comments. 
3. Specific  comments 
3.1. Article  7 
The Committee  wonders  why  the second  paragraph  of 
Article  7 specifies  25 and  50 units  of account  as the 
minimum  sums  for which  refunds  may  be claimed.  The 
Section  notes  the Commission  statement  that  a higher 
threshold  would  not be in the interest  of the taxable 
persons  concerned  but  that  a lower  one  would  be 
conceivable,  although  the threshold  of 50 units  of account 
for one year  was  already  generous. 
Done  at Brussels,  1 June  1978. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI