Proposal for a COUNCIL DECISION authorizing the French Republic to apply measures derogating from Article 17 and Article 22 (3), (4) and (5) of the sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes
Date: 1992-06-10
Institutions: European Commission
Subjects: France, VAT, basis of tax assessment, copyright, tax relief

COMMISSION  OF  THE  EUROPEAN  COMVIUNITIES 

C0M(92) 233 final 

Brussels,10  June  1992 

Proposal  for a 

COUNCIL  PECISIQN 

authorizing the French Republic to apply measures derogating 
from Article 17 and Article 22(3),  (4) and  (5) of the sixth 
Council Directive  (77/388/EEC) of 17 May 1977 on 
the harmonization of the laws of the 
Member States relating to turnover taxes 

(presented by the Commission) 

- 2 -

EXPLANATORY MEMORANDUM 

1.  Until 1 October 1991, France exercised the option provided  for in 

Article 28(3)(b) to continue to exempt services supplied by authors, 
artists and performers  (Annex F, point 2 ). 

Since that date, services supplied by authors and performing  artists 
have been subject to VAT. 

2.  In a letter received by the Secretariat-General of the Commission on 
12 March 1992, the French Government applied for authorization to 
introduce a measure under Article 27 of the sixth Council Directive of 
17 May 1977 on the common system of value added tax,  to simplify the 
procedure for charging the tax. 

In accordance with Article 27(3) of the sixth Directive, the other 
Member States were informed by letter dated  10 April  1992. 

3.  The measures introduced by France involve the following: 

(a) VAT payable by authors is withheld at source, irrespective of the 

turnover of the author concerned; 

(b) the input tax which authors are entitled to deduct is calculated at a 

flat rate of 0.80% of royalty payments; the amount of deductible input 
tax determined in this way is exclusive of any other deduction; 

(c) authors may opt for taxation under the normal scheme. 

4.  In support of its application, the French Government points out that 

the introduction of straightforward taxation of the services of authors 
and performing artists, bringing legislation into line with the 
provisions of the sixth Directive, was strongly resisted by the persons 
concerned.  The new arrangements relieving them of  administrative 
obligations will forestall any negative impact on public opinion as 
regards acceptance both of the tax and of the constraints associated 
with the building of the Community. 

OJ L 145, 13.6.1977, p.l. 

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The French Government  stresses that the arrangements do not affect the 
amount of tax collected at the final consumption  stage. 

5.  The Commission  agrees that the purpose of these measures derogating 

from the provisions of Article 17 and Article  22(3),  (4) and  (5) of the 
sixth Directive is to simplify the procedure  for charging VAT in 
accordance with Article 27 of the Directive. 

Consequently, the Commission  considers that France should be authorized 
to introduce the special measures described  above. However, it takes 
the view that the authorization should be granted  for a limited period, 
running from 1 January 1992 to 31 December  1996. 

Proposal for a Council Decision 

authorizing the French Republic to apply measures derogating 
from Article 17 and Article  22(3),  (4) and  (5) of the sixth 
Council Directive  (77/388/EEC) of 17 May 1977 on 
the harmonization of the laws of the 
Member States relating to turnover taxec 

(presented by the Commission) 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing the European Economic Community, 

Having regard to the sixth Council Directive 77/388/EEC of 17 May 1977 on 
the harmonization of the laws of the Member States relating to turnover 
taxes - Common system of value added tax: uniform basis of assessment,  and 
in particular Article 27 thereof, 

Having regard to the proposal from the Commission, 

Whereas, under Article 27(1) of the aforementioned Directive, the Council, 
acting unanimously on a proposal from the Commission, may authorize any 
Member State to introduce special measures for derogation  from that 
Directive in order to simplify the procedure for charging the tax or to 
prevent certain types of tax evasion or avoidance; 

Whereas the French Republic, by letter received on 12 March 1992, applied 
for authorization to introduce arrangements for the tax payable by authors 
to be withheld at source, with deductible input tax calculated on a flat-
rate basis, and an option for authors to waive expressly their inclusion in 
this scheme; 

Whereas these arrangements constitute a derogation  from Article 17 
concerning the origin and scope of the right to deduct and from 
Article 22(3),  (4) and  (5) concerning the obligations of persons liable for 
payment; 

Whereas the other Member States were informed of the French Republic's 
application on 10 April 1992; 

OJ L 145, 13.6.1977, p.l. 

*t 

-  5 -

Whereas the proposed simplification of the arrangements  for charging the 
tax will make it easier for authors to accept the status of taxable person; 

Whereas the application may be granted on certain conditions; 

Whereas the authorization should be temporary,  so that the effects of 
application of the arrangements can be assessed; 

Whereas the Commission will submit a report to the Council by 
31 December  1996 on the application of the derogations, accompanied, where 
appropriate, by a proposal for a Decision to extend the authorization; 

Whereas this derogation should have no effect on the European Communities' 
own resources accruing from value added tax, 

HAS ADOPTED THIS DECISION: 

-  6 -

Article  1 

By way  of  derogation  from Article  17 and Article  22(3),  (4) and  (5) of  the 
sixth Directive  77/388/EEC, the French Republic  is hereby  authorized  from 
1  January  1992 until  31 December  1996: 

- 

- 

to  introduce  arrangements  for withholding  at  source  the  tax  payable  by 
authors  where  the  royalties they  receive  are  paid  by  publishers, 
royalty  collection  and  distribution  companies  or  producers; 

to  calculate  author's  deductible  input tax  by  applying  a  flat  rate  of 
0.80%  to  their  royalties.  The  amount  determined  in this  way  shall  be 
exclusive  of  any other  deduction. 

Article  2 

In the  light  of  a report  from the Commission  on the  application  of  the 
authorization  referred  to  in Article  1, accompanied,  where  appropriate,  by 
a proposal  for  a Decision  extending  the  said  authorization,  the  Council, 
acting  on  the basis  of that  proposal,  shall  decide  before  31 December  1996 
whether  the  said  authorization  is to be  extended. 

This Decision  is addressed  to the French  Republic. 

Article  3 

Done  at  Brussels, 

For  the  Council 
The  President 

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