EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 22.10.2004 
COM(2004) 692 final 
  
Proposal for a 
COUNCIL DECISION 
amending Council Decision 2000/746/EC auth orising the French Republic to apply 
a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on 
the harmonisation of the laws of the Mem ber States relating to turnover taxes 
 
(presented by the Commission) 
 
EN 2   EN EXPLANATORY MEMORANDUM  
1. Pursuant to Article 27(1) of the Si xth Council Directive of 17 May 1977 on the 
harmonisation of the laws of the Member States relating to turnover taxes – Common 
System of valued added tax:  uniform basis of assessment1-, the Council, acting 
unanimously on a proposal from the Comm ission, may authorise any Member State 
to introduce or extend special measures for de rogation from that Directive in order to 
simplify the procedure for charging the tax or  to prevent certain types of tax evasion 
or avoidance. 
2. As a rule such authorisations are given on a temporary basis, so that an assessment 
can be made after a few years as to whethe r the special measures are appropriate and 
effective.  
3. Council Decision 2000/746/EC2 authorised the French Republic, by way of 
derogation from Article 11(A)(1 )(a), to include in the taxable amount of a supply of 
goods or a supply of services, the valu e of any gold used by the supplier and 
provided by the recipient in th e case where the supply of the gold to the recipient was 
exempt in accordance with the provisions in Directive 98/80/EC3. 
4. This derogation has enabled France to c ounter a reduction in the taxable amount in 
certain transactions in the jewellery sect or in which the clie nt will provide the 
jeweller with gold which he has acquired "for investment purposes" and thus VAT- 
exempt in order for the jeweller to  supply a good (e.g. supply a gold-mounted 
diamond jewel) or a service (e.g. by smelting the gold into a ring). 
5. By letter registered with the Secretar iat-General of the Commission on 6 July 2004, 
the French Government requested th e extension of Decision 2000/746/EC 
authorising France to apply special tax measures regard ing the taxable amount of 
certain supplies of goods and servic es involving the working of gold. 
6. In accordance with Article 27(2) of the Sixth Directive, the Commission informed 
the other Member States by letter on August 10th of the request made by France and the French Republic that it had all the information it considered necessary for appraisal of the request.  
7. The Commission accepts that this deroga tion counters abuse in the VAT system. It 
also notes that two other Member States  have obtained similar derogations. The 
Commission has already starte d its work towards the rationalisation of Article 27 
derogations and these derogati ons may be included in that  exercise. Therefore, the 
present request for an extens ion of the derogation should be  granted until the date of 
entry into force of a Directive rationa lising the Article 27 derogations which 
currently counter these types of VAT avoidance linked to the exemption for 
investment gold but no later than the 31
st December 2009. 
                                                 
1 OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/7/EC (OJ L 30.1.2004, p. 44). 
2 OJ L 302, 1.12.2000, p. 61. 
3 OJ L 281, 17.10.1998, p. 31. 
 
EN 3   EN Proposal for a 
COUNCIL DECISION 
amending Council Decision 2000/746/EC auth orising the French Republic to apply 
a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on 
the harmonisation of the laws of the Mem ber States relating to turnover taxes 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty esta blishing the European Community,  
Having regard to the Sixth Council Dir ective (77/388/EEC) of 17 May 1977 on the 
harmonisation of the laws of the Member Stat es relating to turnover taxes –Common system 
of value added tax: unif orm basis of assessment4, and in particular Ar ticle 27(1) thereof, 
Having regard to the proposal from the Commission5, 
Whereas: (1) By Decision 2000/746/EC the Council auth orised the French Republic, by way of 
derogation from Article 11(A)(1 )(a) of Directive 77/388/EEC to include in the taxable 
amount of a supply of goods or a supply of services, the value of any gold used by the 
supplier and provided by the recipient in th e case where the supply of the gold to the 
recipient was exempt in accordance with  Article 26b of Directive 77/388/EEC. 
(2) The aim of that derogation was to avoid abuse of the exemption for investment gold 
and thus to prevent certain type s of tax evasion or avoidance. 
(3) By letter registered with the Secretar iat-General of the Co mmission on 6 July 2004, 
the French Government requested an extension of Decision 2000/746/EC
6 which 
expires on 31st December 2004.  
(4) In accordance with Article 27(2) of the Si xth Directive, the Commission informed the 
other Member States by letter dated August 10th of the request made by the French 
Republic and notified the French Republic that  it had all the information it considered 
necessary for appraisal of the request. 
(5) According to the French authorities,  the derogation authorised by Decision 
2000/746/EC has been effective in ac hieving the aims stated above.  
                                                 
4 OJ L 145, 13.6.1977, p.1. Directive last amended by Directive 2004/7/EC (OJ L 30.1.2004, p. 44). 
5 JO C  du , p. . 
6 OJ L 302, 1.12.2000, p. 61. 
 
EN 4   EN (6) The derogations pursuant to Article 27 of Directive 77/388/EEC which counter VAT 
avoidance linked to the exemption for inve stment gold may be included in a future 
proposal for a directive rationa lising some of the derogations  pursuant to that article. 
(7) It is therefore necessary to extend the validity of the derogation granted under 
Decision 2000/746/EC until the entry into force of a directiv e rationalising the 
derogations pursuant to Article 27 of  Directive 77/388/EEC which covers the 
avoidance of value added tax linked to the exemption for investment gold or until 31st 
December 2009, whichever is the earlier. 
(8) The derogation will have no negative impact on the European Communities own 
resources provided from value added tax. 
HAS ADOPTED THIS DECISION:  
Article 1 
Article 2 of Decision 2000/746/EC is replaced by the following: 
"Article 2 The authorisation granted under Article 1 shall e xpire on the date of entry into force of a 
directive rationalising the der ogations pursuant to Article 27  of Directive 77/388/EEC which 
counter avoidance of value added tax linked to the exemption for investment gold or on the 31 
December 2009 whichever is the earlier." 
Article 2 
This Decision is addressed to the French Republic. 
Done at Brussels,  
 For the Council 
 The President