Proposal for a European Parliament and Council Decision establishing a programme of Community action to reinforce the functioning of the indirect taxation systems of the internal market (Fiscalis programme)
Date: 1997-04-23
Institutions: European Commission
Subjects: EU programme, VAT, action programme, single market, tax system

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  23.04.1997 
COM(97)  175  final 

97/0128 (COD) 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL  DECISION 

establishing a programme of Community action to reinforce the  functioning 
of the indirect taxation systems of the internal  market 
(FISCALIS  programme) 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

1.  SUMMARY 

The  FISCALIS  programme  has  as  its  aim  the  reinforcement  of  the  functioning  of  the 
indirect  taxation  systems  of  the  internal  market.  The  programme  is  the  first  step  in  the 
establishment of the new common system of VAT, part  of Phase One of the Commission's 
work  programme1  published  in  1996. Further  proposals  to  establish  the  new  system  will 
appear in due course, according to the rhythm of the Commission's work programme. 

The  FISCALIS  programme  will  provide  both  the  Community  infrastructure  and  the 
stimulus  without  which  the  Member  States  acting  alone  will  not  be  able  to  assure  the 
smooth  functioning  of the  new  VAT  system.  This  infrastructure  and  stimulus  will  bring 
about  important  improvements  to  the  functioning  of  the  indirect  taxation  systems 
(the efficacy  with  which  Member  States  cooperate,  for  example).  They  will  be 
indispensable for the smooth functioning  of the new VAT system. 

The programme  is being  proposed  now,  at  the beginning  of the  road  to  the  new  system, 
because  it  will  require  some  years  of  implementation  before  it  has  brought  about  the 
improvements  necessary  to  enable  that  new  system  to  function  smoothly  when  it  enters 
into  force.  The programme  is therefore  scheduled  to  begin  four  years  before  the  earliest 
possible entry into force of the new VAT system. 

The improvements that the programme will bring about will also benefit  the functioning  of 
the present  VAT  system and the Excise  system.  The benefits  to the  current  VAT  system, 
will  not  however  remedy  its  inherent  weaknesses.  These  can  only  be  tackled  through 
thorough reform of the system as set out in the Commission's work programme. 

2. 

INTRODUCTION 

The  establishment  on  1  January  1993  of  the  current  VAT  and  Excise  systems  was 
accompanied  by  efforts  to  reinforce  their  functioning.  New  Community  legislation2 
reinforced  the  existing  legal  framework3  and,  in  particular,  administrative  cooperation 
among the Member States and between them and the Commission. 

COM(96) 328  final. 
Council Regulation  (EEC) No 218/92 of 27 January  1992 on administrative cooperation in the field 
of indirect taxation (VAT). OJ No L 24, 1.2.1992, p. 1. 
Council Directive 92/12/EEC of 25 February  1992 on general  arrangements  for  products  subject  to 
excise duty. OJ No L 76, 23.3.1992, p. 1. 
Council  Directive 79/1070/EEC of 6 December  1979 amending  Directive  77/799/EEC  concerning 
mutual assistance. OJ No L 331, 27.12.1979, p. 8. 
Council  Directive  79/1071/EEC  amending  Directive  76/308/EEC  on  mutual  assistance  for  the 
recovery of claims. OJ No L 331, 27.12.1979, p. 10. 

In  addition,  the Matthaeus-Tax  programme4  was  adopted  to  reinforce  the  functioning  of 
the  VAT  and  Excise  systems  through  vocational  training  for  indirect  tax  officials.  A 
number  of  other  initiatives  have  also  been  taken  under  the  existing  legal  framework  to 
improve  administrative  cooperation  and  mutual  assistance,  notably  the  establishment  of 
the  VAT  Information  Exchange  System  (VIES),  Fiscal  SCENT5,  the  System  for  the 
Exchange  of  Excise  Data  (SEED),  the  Excise  Movements  Verification  system  (EMVS) 
and  several  pilot  multilateral  control  exercises,  carried  out jointly  by the  Member  States. 
This  combination  of  legislation  and  initiatives  has  proved  its  usefulness  in  meeting  the 
challenges of the abolition of frontier  controls. 

In parallel,  the  Commission  has  in the  last  three years  examined  in  a  general  context  the 
requirements  and means for  the better  functioning  of the internal  market which flow from 
the  Treaty.  This  examination6  demonstrated 
the  need  for  stronger  administrative 
cooperation,  the development  of administration to take account  of new circumstances and 
the  coherent  and  consistent  application  of  Community  law.  The  Council  agreed7  on  the 
need  for  continuing  effort  to  reinforce  cooperation  to  these  ends  and  undertook  to 
consider  Commission  proposals to  that  effect.  The present  proposal  should  be  considered 
within this framework. 

Notwithstanding the efforts  undertaken  already, there is now  a need for fresh Community 
action.  The  catalyst  for  this  Community  action  is  the  establishment  of  a  new  common 
system  of VAT.  As outlined  by the  Commission's  work  programme,  the  new  system will 
entail fundamental  change in the functioning  of the VAT  system. In particular,  the  change 
to  a  single  place  of  VAT  registration  will  require  a  level  of  administrative  cooperation 
among  administrations,  at  least  equivalent  to  that  currently  achieved  within  each 
Member State.  The  greater  relative  body  of  Community  law  and  the  increasing 
interdependence  of administrations will also  require  a greater  uniformity  of application  of 
Community law. 

Meeting  these  challenges  requires  a range  of action  by the  Community,  as  set  out  in  the 
Commission's  work  programme.  The  immediate  priority  is  however  to  put  in  place  the 
Community  infrastructure  and  stimulus needed to  prepare the ground  for  the new system. 
This is because the programme will require time for  its implementation to  bring about  the 
general  improvements  necessary  to  enable  the  new  system  to  function  smoothly  upon 
entry  into  force.  For  example,  improvements  to  linguistic  skills,  the  development  of  the 
necessary technology and the cultivation of a habit  of cooperation  do not  occur  overnight. 
Because of their general nature, these improvements, while being essential  preparation  for 
the new VAT system, will at the same time bring benefits to the existing VAT system. The 
necessity of bringing about these improvements was underlined in the Commission's report 

4  Council  Decision  of  29  October  1993  on the  adoption  of a  programme  of  Community  action  on  the 
subject  of  the  vocational  training  of  indirect  taxation  officials  (Matthaeus-Tax).  OJ  No  L  280, 
13.11.1993, p. 27. 
System for a Customs Enforcement  Network 

5 
6  Communication  from  the  Commission  to  the  Council  "Making  the  most  of  the  internal  market: 

strategic programme", 22 December  1993, COM(93) 632  final. 
Communication  from  the  Commission  to the  European  Parliament  and  Council  on  the  development 
of  administrative  cooperation  in  the  implementation  and  enforcement  of  Community  legislation  in 
the internal market",  16 February  1994, COM(94) 29  final. 

7  Council  Resolution  No  94/C  179/01,  OJ  No  C  179,  1.7.1994,  p  1.  Council  Resolution 

No 96/C 224/02, OJ No C 224,  1.8.1996, p. 3. 

on the operation of administrative cooperation  in  1994-958. Also, because of their general 
nature,  it  is  right  that  the  Excise  system,  which  poses  a  similar  set  of  challenges  to  the 
Community, benefit from equivalent Community action. 

A further  catalyst for fresh Community action is the eventual  accession to the  Community 
of the associated  countries of Central  and Eastern Europe and Cyprus.  The  Commission's 
White Paper on the preparation  of the associated  countries for  integration into the internal 
market9  (endorsed  by  the  European  Council10)  commits  the  Community  to  opening 
existing indirect tax programmes for the internal market to the associated countries. 

Finally  the  present  proposal  responds  to  the  call  by  the  President  of  the  European 
Parliament11  for  a "broad-based joint  training  and  exchange  programme"  for  tax  officials 
"with a view to bringing about lasting improvements in cooperation at all levels". 

3. 

OBJECTIVES 

Responsibility for the functioning  of the internal market,  and the VAT and Excise  systems 
in particular,  falls  to  the  Community,  in partnership  with  the  Member  States.  Whilst  the 
Member  States  play the  major  part,  at  least  in terms  of  resources,  a  significant  role  also 
exists  for  the  Community  in  ensuring  that  the  VAT  and  Excise  systems  function 
effectively,  uniformly  and efficiently.  There are three main elements to this  functioning: 

the  protection  of  national  and  Community  financial  interests  through  the 
combating of tax avoidance and evasion; 

the  avoidance  of  distortions  of competition  in the  effectiveness  of the  application 
of Community law; and 

the  continuing  reduction  of  compliance  burdens  on  administrations  and 
taxpayers alike. 

For  each  of these  elements,  Member  States  and  the  Community  have  a role  to  play.  To 
fulfil  this role, three Community objectives can be  identified: 

(1) 

(2) 

(3) 

the  achievement  of a high  common  standard  of understanding  of Community  law 
(and of its implementation by the Member  States) among indirect taxation  officials; 

the  securing  of  efficient,  effective  and  extensive  cooperation  among 
Member  States and between them and the Commission; and 

the 

the assurance of the continuing improvement  of administrative procedures to take 
account of the needs of administrations and taxpayers alike. 

8  COM(96) 681  final. 
9  The White Paper  on the preparation  of the associated  countries of Central  and  Eastern  Europe for 

integration into the internal market of the Union, COM(95) 163 final. 

10  Cannes European Council, 27-28 June 1995. 
H  "Ten  practical  proposals  to  improve  the  fight  against  fraud"  -  speech  to  the  Inter-parliamentary 

Conference, Brussels, 23-24 April 1996. 

Whilst these are Community objectives,  their achievement  rests largely in the hands of the 
Member  States.  Community  action  to  achieve  these  objectives  will  therefore  be  to 
reinforce  the  efforts  of  the  Member  States,  through  providing  an  infrastructure  and  the 
necessary stimulus. 

3.1 

Objective  1 (Article 3a) 

In  achieving  this  objective,  the  efforts  of  the  Member  States  to  train  their  officials  are 
clearly  vital.  However  a  Community  training  initiative  is  needed  to  coordinate  these 
efforts  to  ensure  that  they  lead  to  Community  law  being  applied  with  uniform 
effectiveness  and  efficiency. 

3.2 

Objective 2 (Article 3b) 

Effective  cooperation  requires  a  Community  legal  framework  to  set  out  the  rules  of 
cooperation.  The Commission will propose changes to the existing framework to meet the 
demands of the new common  system of VAT. In addition this programme fulfils  the need 
for two further  actions: 

An  infrastructure  to  enable  Member  States  to  communicate  and  exchange 
information.  The better the infrastructure,  the better the quality of cooperation  and 
the more opportunity  costs  of cooperation  are reduced.  The  establishment  of and 
assuring  the  ability  to  function  of  this  infrastructure  is  largely  a  task  for  the 
Community, because of the coordination  involved. 

The  development  of  a  habit  of  cooperation  between  the  officials  involved.  This 
habit  can only be based on a profound  mutual understanding and  confidence.  This 
in  turn  requires  overcoming  linguistic  arid  practical  obstacles  to  cooperation. 
Whilst  the  efforts  of  Member  States  in  recruiting,  training  and  managing  their 
officials  are  clearly  crucial  to  achieving  this,  supplementary  Community  action  to 
stimulate  this  development,  through  bringing  officials  from  different  national 
administrations together in work activities, is appropriate. 

3.3  Objective 3 (Article 3c) 

Ensuring  the  continuing  improvement  of  administrative  procedures  to  meet  changing 
circumstances  (and the needs of administrations  and taxpayers)  is clearly one of the  most 
important  tasks  for  the  Member  States'  management  of  their  administrations.  However 
there  is  a  Community  role  in  the  development  and  dissemination  of  best  administrative 
in 
practice  throughout 
administering  the  VAT  and  Excise  systems  and  there  is  a  coordination  role  for  the 
Community in maximizing the return from the efforts  of Member States. 

the  Community.  Member  States  face  common  problems 

4. 

THE ACTIVITIES OF THE  PROGRAMME 

The  areas  of  action  to  meet  these  objectives  draw  heavily  on  the  experience  to  date  in 
reinforcing the functioning  of the VAT and Excise systems. 

4.1  Communication and information exchange systems, manuals and guides 

(Article 4) 

4.1.1  Communication and information exchange systems 

Communication  and  information  exchange  infrastructure  has  a  vital  part  to  play  in 
reinforcing  the VAT and Excise systems, and in particular guaranteeing the  effectiveness 
and efficiency  of its administration. The most significant  evidence of this is the confirmed 
success of the VTES. 

The  VTES  is  a  system  for  telematic  exchange  of  data  between  administrations  via  a 
Community  network.  As  well  as  proving  to  be  a  critical  tool  in  the  control  of 
intra-Community  transactions,  not  least  through  its  deterrent  effect,  the  VTES  has 
permitted  enormous  efficiency  gains  in the  practice  of  administrative  cooperation.  This 
has in turn  lowered  the  opportunity  cost  of cooperation  and  has  stimulated  a level and 
diversity  of  cooperation  between  the  Member  States  hitherto  unknown.  The  VTES 
represents  a  significant  breakthrough  in  demonstrating  that  information  technology 
can bridge  the  gap  between  the  desire  for  revenue  security  and  a  reduction  in  costly 
physical controls. 

The  fiscal  SCENT  is  a  communication  system  for  the  exchange  of  information  on 
suspected cases of tax evasion in relation to VAT and Excise duties. To date its use has 
been limited.  The Commission  and the Member  States  are  currently  discussing  ways to 
maximize its use. 

The  SEED  system  provides  for  the  exchange  of  registration  data  between  Excise 
administrations to enable administrations and traders to check the status of the recipients 
of  intra-Community  movements  of  excisable  goods.  The  EMVS  is  a  recent  fax-based 
system  which  is  becoming  increasingly  useful  for  the  verification  of  intra-Community 
movements of excisable goods. 

The proposal provides a new legal and budgetary basis for the VTES, SEED and EMVS. 
Until  now,  they  have  been  part  of  the  Interchange  of  Data  between  Administrations 
(IDA) programme.  From  1998,  the  operational  costs  of  these  systems  will  be  funded 
solely  by  FISCALIS,  although  they  will  continue  to  benefit  from  generic  services 
developed  under  EDA.  The  services  of  the  Commission  responsible  for  IDA  and 
FISCALIS will continue to coordinate closely to ensure the technical inter-operability of 
the Community telematic systems and to maximize economies in their development. Also, 
any  future  Community  decision  of  general  application  to  trans-European  telematic 
networks for  administrations will apply to the communication  and information  exchange 
systems of the FISCALIS programme. 

In addition to information  exchange  systems, communication  systems are a vital part of 
the  infrastructure  of  successful  cooperation.  Electronic  communication  has  significant 
advantages over letter or fax communication: it is more secure, quick and reliable and also 
offers  the  possibility  of  translation.  By  providing  a  range  of  pre-translated  standard 
messages to suit all possible needs, an effective communication and translation system can 
be created.  This will both make providing  assistance easier and  overcome reluctance to 
ask for  cooperation.  A generic  communication  system for  all indirect  tax purposes with 
different  applications depending on the type of communication (whether an enquiry on a 
suspected  tax  evasion  or  a request  for  mutual  assistance  on  recovery,  for  example)  is 

envisaged.  In  the  meantime,  the  proposal  provides  a  new  legal  and  budgetary  base  for 
fiscal SCENT. 

Development  of these information  exchange  and  communication  systems will  enormously 
improve  the  effectiveness,  efficiency  and  extent  of  cooperation  and  communication 
between  Member  States.  Their  development  will  also  need  to  take  into  account  new 
challenges and, in particular, the needs of the new VAT system. 

4.1.2  Manuals and guides 

Under  the  existing  indirect  taxation  systems,  the  Commission  has  produced  manuals  for 
the  benefit  of  business  and  administrations.  Experience  of  the  operation  of  the 
arrangements  for  administrative  cooperation  have  shown  a  need  for  manuals  for 
administrations,  particularly  in  areas  where  national  differences  affect  cooperation,  for 
example the use of mutual assistance on recovery. 

4.2 

Exchanges, Seminars and multilateral control exercises (Article 5) 

The  experience  of  the  Matthaeus-Tax  programme12  has  shown  that  one  of  the  most 
effective  ways of pursuing the FISCALIS objectives has been through  structured  contacts, 
bringing officials from different  national administrations together in work activities. 

4.2.1  Exchanges (Article 5(1)) 

The  most  successful  exchanges  have  proved  to  be  those  which  enable  the  exchange 
official  to carry out practical tasks on behalf of the administration visited. Exchanges have 
also been  effective  in the dissemination  of best  administrative  practice,  particularly  in the 
use of targeted exchanges to study particular administrative practices. 

4.2.2  Seminars (Article 5(2)) 

The  use  of  seminars  in  the  Matthaeus-Tax  programme  has  proved  to  be  effective  in 
pursuing all of the objectives  of the programme. They provide a forum  for the experts in a 
particular field of administration to meet each other and discuss common problems. This is 
useful  for  developing  and  disseminating  best  administrative  practice  but  also  for 
stimulating and developing cooperation  or simply as pedagogical tools. Representatives  of 
business  and  taxpayers  have  been  invited  to  attend  in  the  past.  This  will  be  continued 
where appropriate. 

4.2.3  Multilateral  control exercises (Article 5(3)) 

The most  effective  structured  contact  has proved,  naturally,  to  be based  on real  working 
together  on control projects.  Pilot  multilateral  control  exercises  have been  conducted  for 
VAT  and  have  been  successful  both  in  achieving  real  (financial)  results,  fostering 
cooperation  between  the  administrations  involved  and  in  identifying  the  obstacles 
(practical and legislative) to successful  cooperation. 

12  Commission annual reports on the programme: COM(95) 663 and COM(96) 543. 

4.3 

Common training initiative (Article 6) 

Until  now,  although  Community  action  on  training  has  been  part  of  the  Matthaeus-Tax 
programme,  this  element  of the  Community's  role  has  been  under-developed.  There  is a 
need to give a fresh impetus to  this role through  a greater  coordination  and  deepening  of 
the extensive  efforts  of the Member  States to  train their  officials  in the  same  Community 
law and its implementation throughout the Community. 

To provide this fresh impetus, the common training initiative is drawn up to bring together 
all aspects  of training:  professional  and  language  programmes  and  training  and  linguistic 
tools.  This  will  permit  their  better  coordination  and  development.  Also  to  give  a fresh 
impetus,  the  Commission  will  involve  training  experts  from  the  Member  States  to  a  far 
greater  degree  than  in  the  past  in  implementing  the  initiative.  A  significantly  greater 
proportion  of  the  management  resources  of  the  programme  will  also  be  devoted  to  the 
training initiative. 

In  time,  the  Commission  believes  that  responsibility  for  managing  the  training  initiative 
could be devolved  to a new Community body,  devoted  to tax training.  The timing  of this 
would  depend  on  the  Community  having  demonstrated  that  it  has  the  necessary 
experience  and  capacity.  Such  a  body  would  also  only  be  justified  by  the  greater 
importance of Community legislation entailed by the new VAT system. 

4.3.1  Common training programmes  (Article 6(1)) 

In  the  context  of  the  Matthaeus-Tax  programme,  a  common  training  programme  for 
indirect  taxation  officials13  has  already  been  adopted.  The  programme  sets  out  a  list  of 
subjects  to  be  taught  in  national  training  schools,  as  part  of  the  initial  and  continual 
training of all indirect taxation  officials.  The FISCALIS  programme provides for  this and 
further  programmes to be developed, in particular for associated countries. 

4.3.2  Language training (Article 6(2)) 

Lacking  a  sufficient  standard  of  linguistic  competence  has  consistently  proved  to  be  the 
greatest  barrier  to  cooperation.  It  inhibits  requests  for  cooperation  and  reduces  the 
chances  of successful  cooperation.  It  is also  increasingly  necessary  for  the  completion  of 
administrative  tasks,  especially  as  European  companies  may  work  in  several  languages. 
Recognizing  this,  all  the  Member  States  provide  language  training  to  those  of  their 
officials  who they consider need it. 

A further  impetus  to  language  training  at  Community  level,  both  to  take  account  of  the 
efforts  already  being  made  and  to  meet  the  challenges  of  the  future  is  needed.  The 
intensity of cooperation required under the new common  system of VAT will entail a real 
ability  to  communicate  between  a  much  broader  range  of  officials  than  at  present.  In 
principle, all indirect taxation officials  will need to have the linguistic skills to cooperate. 

The  Commission  therefore  proposes  that  the  Member  States  formalize  their  existing 
commitment  to  language  training  by  agreeing  to  provide  the  necessary  training  to  their 

13  Commission Decision of  12 July  1995. OJ No L  172 ,22.7.1995, p. 24. 

officials  to  ensure  that  they  attain  a  sufficient  standard  of  linguistic  competence.  What 
constitutes a sufficient  standard  will be defined  on a multi-annual basis, to take account  of 
existing  competences  in  the  Community  and  needs.  A  long  term  plan,  setting  out 
appropriate  targets  for  administrations,  should  be  drawn  up  and  adopted  by  the 
Commission  and  the Member  States  to  fulfil  this commitment.  The  achievement  of these 
targets should be reviewed regularly. Entering into a similar commitment will be requested 
of the associated countries. 

4.3.3  Community tools for  indirect taxation training and linguistic  training 

(Article 6(3) 

The  Matthaeus-Tax  programme  has  demonstrated  that  there  is  a  need  for  Community 
tools  for  indirect  taxation  training  to  supplement  the  efforts  of  the  Member  States.  The 
most pressing need is for flexible linguistic tax terminology tools. 

5. 

FINANCING AND MANAGEMENT  OF THE  PROGRAMME 

One  of the  prime  aims of this  proposal  is to  provide  a single,  comprehensive  framework 
for  all  Community  action  and  expenditure  on  the  VAT  and  Excise  systems,  where 
previously  it  has  been  dispersed.  This  should  greatly  contribute  to  the  transparency  and 
coherence  of  the  Community's  efforts.  This  will  in  turn  permit  a  more  rigorous  and 
thorough  evaluation  of  the  Community's  efforts,  against  verifiable  objective  indicators, 
than  has  been  possible  until  now.  This  greater  transparency  and  renewed  emphasis  on 
evaluation will be essential in maximizing value for money for the Community. 

Achievement of the objectives of the programme will bring about long term benefits to the 
Community  as a whole  and  to  the  participants.  It  is therefore  desirable  that  the  costs  of 
the  programme  should  be  shared.  It  is  desirable  that  the  division  of  this  financial 
responsibility should be along similar lines to the existing activities and reflect  the principle 
of subsidiarity.  The division of costs between the Community and the associated  countries 
shall  be  determined  according  to  the  Additional  Protocols  of  the  relevant  agreements 
concerning their participation in Community programmes. 

There is also  a strong  case for  rationalising the  management  of the  Community  action  to 
ensure  its coherence  with the  development  of Community  policy.  Rather  than  creating  a 
new  advisory  committee,  the  Commission  therefore  proposes  mandating  the  Standing 
Committee  on Administrative  Cooperation  (SCAC),  in an advisory  capacity,  to  assist  the 
Commission in executing the programme. 

The  SCAC  is  currently  competent  to  deal  with  administrative  cooperation  for  both 
VAT and  Excise,  although  the  Committee  on  Excise  duties  has  taken  the  lead  in  the 
Excise  area  until  now.  To  ensure  a  coherent  approach,  both  in  the  management  of  the 
programme and between the programme and wider Community policy on VAT and excise 
duties,  it  is  intended  that  the  SCAC  will  in  future  take  greater  responsibility  for 
administrative  cooperation  in the  Excise  area.  This will  entail  considerable  change  in  the 
current  working  of  the  SCAC.  Currently  it  meets  in  only  one  manifestation,  to  discuss 
VAT  questions.  In  the  future,  the  chairmanship  and  membership  of  the  Committee  will 
vary to reflect  whether  VAT questions, Excise questions or matters of joint  interest  under 
the FISCALIS  programme  are  under  discussion.  This  will  have  two  benefits:  as  well  as 
integrating  the  management  of  the  programme  effectively  with  the  wider  objectives  for 

Community  VAT  and  Excise  policy,  it  will  also  provide  for  a  transparent  and  coherent 
management  and  will maximize  the  synergies  between  the  VAT  and  Excise  activities  of 
the programme. 

10 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL DECISION 

establishing a programme of Community action to reinforce the  functioning 
of the indirect taxation systems of the internal  market 
(FISCALIS  programme) 

THE 
EUROPEAN 
EUROPEAN UNION, 

PARLIAMENT  AND 

THE  COUNCIL  OF 

THE 

Having  regard  to  the  Treaty  instituting  the  European  Community,  and  in  particular 
Article  100a thereof, 

Having regard to the proposal from the Commission14, 

Having regard to the opinion of the Economic and Social Committee15, 

Acting in accordance with the procedure laid down in Article  189b of the Treaty16, 

1. 

2. 

3. 

4. 

Whereas  in  an  internal  market,  the  effective,  uniform  and  efficient  application  of 
Community  law is essential for  the functioning  of the indirect  taxation  systems, in 
particular for the protection  of national  and  Community financial interests  through 
the  combating  of  tax  avoidance  and  tax  evasion,  the  avoidance  of  distortion  of 
competition  and 
reduction  of  compliance  burdens  on 
administrations and taxpayers; 

the  continuing 

Whereas  achieving  this  effective,  uniform  and  efficient  application 
is  the 
responsibility  of the  Community  in partnership  with  the  Member  States; whereas, 
although the Member  States carry the greater  responsibility  in terms  of resources, 
there  is  a significant  role  for  the  Community  to  provide  an  infrastructure  and  the 
necessary stimulus; 

Whereas  a  high  common  standard  of  understanding  of  Community  law  (and  its 
implementation  in the  Member  States)  by indirect  taxation  officials  is essential  to 
its uniform  application; whereas  this can  only be achieved  through  effective  initial 
the  Member  States;  whereas  supplementary 
and  continuous 
Community action is needed to coordinate and stimulate this training; 

training  by 

Whereas  efficient,  effective  and  extensive  cooperation  among  the  Member  States 
and  between  them  and  the  Commission  is  essential  to  the  functioning  of  the 
indirect 
internal  market;  whereas  a  Community 
infrastructure  for  communication  and  information  exchange  is  indispensable  to 

taxation  systems  of  the 

14  OJNoC 
15  OJNoC 
16  OJNoC 

11 

5. 

6. 

7. 

8. 

9. 

achieve this; whereas without  a Community  stimulus, sufficient  cooperation would 
not be achieved; 

Whereas  the  continuing  improvement  of  administrative  procedures  is  essential  to 
the  functioning  of  the  indirect  taxation  systems  of  the  internal  market;  whereas, 
although  the  primary  responsibility  for  achieving  this  rests  with  the  Member 
States,  supplementary  Community  action  is  needed  to  coordinate  and  stimulate 
this continuing improvement; 

Whereas,  therefore,  in  accordance  with  the  principles  of  subsidiarity  and  of 
proportionality  set  out  in Article  3b of the  Treaty,  the  objectives  of the  measures 
laid  down  in this  Decision  cannot  be  adequately  achieved  by  the  Member  States 
and  can  therefore  be  better  achieved  by  the  Community;  whereas  this  Decision 
confines  itself to the minimum required  and does not  go beyond what  is necessary 
for this purpose; 

Whereas  the  experience  of  the  operation  of  the  VAT  Information  Exchange 
System  (VIES)  established  by Council Regulation  (EEC) No  218/9217  has  shown 
the  value  of  information  technology  in  protecting  revenue  whilst  minimizing 
administrative  burdens;  whereas  it  has  proved  itself  to  be  an  essential  tool  of 
cooperation that has also stimulated wider cooperation among Member States; 

Whereas  communication  and  information  exchange  systems  should  be  established 
and  have  their  functioning  assured  as  the  needs  of  the  indirect  taxation  systems 
evolve to secure further  cooperation; 

Whereas  the  experience  gained  by  the  Community  from  the  Matthaeus-Tax 
programme  established  by  Council  Decision  93/588/EEC18  and  from  the 
organization  of multilateral  control  exercises  has  shown that  exchanges,  seminars 
and  multilateral  control  exercises  can,  by  bringing  officials  from  different 
in  work  activities,  achieve  the  objectives  of  the 
administrations  together 
programme; whereas those activities should therefore  be extended and continued; 

10.  Whereas the experience gained from the Matthaeus-Tax  programme  has  indicated 
that  the  coordinated  development  and  implementation  of  a  common  training 
programme  established  by  Commission  Decision  95/279/EC19  can  achieve  the 
objectives  of this programme, in particular  in achieving a higher  common  standard 
of  understanding  of  Community  law;  whereas  such  programmes  should  be 
developed  further;  whereas the Member  States  should  therefore  ensure that  all of 
their  officials  receive the initial training  and  regular  continuous  training  envisaged 
by the common training programmes; 

11.  Whereas  a  sufficient  standard  of  linguistic  competence  on  the  part  of  indirect 
taxation  officials  has  proved  to  be  essential  to  facilitate  cooperation;  whereas 
the Member  States  should  therefore  provide  the  necessary  language  training  for 
their  officials; 

17  OJNoL24,  1.2.1992, p. 1. 
18  OJ No L 280,  13.11.1993, p. 27. 
19  OJNoL172,  22.7.1995, p. 24. 

12 

12.  Whereas  the  programme  should  be  open  to  the  participation  of  the  associated 
countries  of  central  and  eastern  Europe;  whereas  the  programme  should  also  be 
open to the participation  of Cyprus; 

13.  Whereas  the  financing  of  the  programme  should  be  shared  between  the 
Community  and  the  Member  States,  and  the  Community  contribution  should 
appear in the budget of the Commission; 

14.  Whereas  this  Decision  lays  down,  for  the  entire  duration  of  the  programme,  a 
financial  framework  constituting  the  principal  point  of  reference,  within  the 
meaning  of  point  1 of  the  Declaration  of  the  European  Parliament,  the  Council 
and the Commission  of 6 March  1995 on the incorporation  of financial provisions 
the  annual 
and 
budgetary procedure; 

the  budgetary  authority  during 

legislative  acts20, 

for 

HAVE ADOPTED THIS DECISION: 

Article 1 
FISCALIS  programme 

A  multiannual  Community  action  programme  (FISCALIS  programme),  hereinafter 
referred  to  as  "the  programme",  is  hereby  estabUshed  for  the  period  1 January  1998  to 
31 December  2002  to  reinforce  the  functioning  of  the  indirect  taxation  systems  of  the 
internal market. 

It shall comprise the areas of action referred  to in Articles 4, 5 and 6. 

Article 2 
Definitions 

For the purpose of this Decision: 

(a) 

(b) 

(c) 

(d) 

"indirect  taxation"  shall  mean  those  indirect  taxes  which  are  the  subject  of 
Community legislation; 

"administration"  shall mean the public authorities in the Member  States responsible 
for indirect taxation, and the Commission; 

"official"  shall  mean  an  official  responsible  for  the  application  of  Community  or 
national law, regulations or procedures relating to indirect taxation; 

"exchange" shall mean  a work-based  visit  in the  Community  interest  of an  official 
from one administration to another, organized under the programme; 

20  OJNoC  102, 4.4.1996, p. 4. 

13 

(e) 

(f) 

"bilateral  and  multilateral  control  exercises"  shall  mean  joint  collaboration  of 
two or  more  administrations  to  integrate  their  controls  of taxable  persons  having 
indirect  tax  obligations  in  each  of  the  Member  States  concerned,  within  the 
Community legal framework for cooperation; 

"the  Community  legal  framework  for  cooperation"  shall  mean  the  body  of 
Community  legislation  which  provides  for  mutual  assistance  and  administrative 
cooperation between Member States on indirect taxation. 

Article 3 
Objectives 

The  objectives  of  the  programme  shall  be  to  reinforce,  through  Community  action,  the 
efforts  of the Member States: 

(a) 

(b) 

(c) 

1. 

2. 

3. 

to achieve a high common  standard  of understanding  of Community  law and of its 
implementation in the Member States among  officials; 

to  secure  efficient,  effective  and  extensive  cooperation  among the Member  States 
and between them and the Commission; 

to  ensure  the  continuing  improvement  of  administrative  procedures  to  take 
account  of  the  needs  of  administrations  and  taxpayers  through  the  development 
and dissemination of administrative best practice. 

Article 4 
Communication  and information  exchange systems, manuals and guides 

The  Commission  and  the  Member  States  shall  establish  and  ensure  the 
functioning  of  necessary  communication  and  information  exchange  systems, 
manuals and guides. 

The Community  elements of the communication  and  information  exchange  system 
shall  be  the  equipment,  software  and  network  links  between  Member  States, 
required  to  be  common  to  all  Member  States  in  order  to  ensure  the  overall 
interconnection and interoperability of the systems, whether they be installed in the 
premises of the Commission  (or a designated  sub-contractor)  or in the premises of 
the Member States (or a designated  sub-contractor). 

The  non-Community  elements  of  the  communication  and  information  exchange 
systems  shall include national  databases forming  a part  of these  systems,  network 
links  between  the  Community  and  non-Community  elements  and  such  software 
and  hardware  applications  as  each  Memer  States  shall  deem  appropriate  for  the 
full  exploitation of these systems throughout their  administration. 

14 

Article 5 
Exchanges, seminars and multilateral control  exercises 

1. 

The Commission and the Member  States shall organize exchanges. The exchanges 
shall  vary  in  length,  as  appropriate,  but  shall  not  be  longer  than  one  year.  Each 
exchange  shall  be  targeted- on  a  particular  work  activity  and  shall  be  sufficiently 
prepared beforehand,  and evaluated afterwards,  by the officials  concerned. 

Member  States  shall take  the  necessary  steps to  enable  exchange  officials  to  play 
an effective  part in the host administration's activities, and to this end such  officials 
shall be  authorized  to  carry  out  the tasks  relating to  the  duties  entrusted  to  them 
by the host administration in accordance with its legal system. 

During  the  exchange,  the  civil  liability  of  the  official  in  the  performance  of 
his duties  shall  be  treated 
in  the  same  way  as  that  of  officials  of  the 
host  administration. 

Exchange  officials  shall  be  bound  by  the  same  rules  of  professional  secrecy  as 
national  officials. 

Seminars shall be organized by the Commission and the Member States. 

The  Commission  and  the  Member  States  shall  organize,  on  a  pilot  basis, 
bilateral and multilateral  control  exercises  within the  Community  legal framework 
for  cooperation. 

Article 6 
Common training  initiative 

The Commission  and the Member  States  shall  develop  existing  and  new  common 
training  programmes  to  provide  a  common  core  of  training  for  officials. 
Member States  shall  ensure  that  their  officials  receive  initial training  as  set  out  in 
the  common  training  programmes;  that  all  these  officials  shall  receive  regular 
continuous training as set out in the common training programmes. 

Member  States  shall provide  the  necessary  language  training  for  their  officials  to 
ensure that they attain a sufficient  standard of linguistic competence. 

The  Commission  and  the  Member  States  shall  develop  the  Community  tools  for 
indirect taxation training, including linguistic training tools. 

Article 7 
Participation  of the associated  countries 

2. 

3. 

1. 

2. 

3. 

The  programme  shall  be  open  to  the  participation  of  the  associated  countries  of  central 
and eastern Europe in accordance with the conditions laid down in Europe Agreements or 
their  Additional  Protocols  relating  to  their  participation  in  Community  programmes  and 
in so far  as Community  law on indirect  taxation  so permits.  The programme  shall also be 

15 

open  to  the  participation  of  Cvprus  in  accordance  with  the  Common  Resolution  on  the 
establishment  of  a  structured  dialogue  between  the  EU  and  Cyprus  and  in  so  far  as 
Community law on indirect taxation so permits. 

Article 8 
Expenditure 

1. 

The  expenditure  necessary  for  the  implementation  of  the  programme  shall  be 
shared  between  the  Community  and  the  Member  States  as  provided  for  in 
paragraphs 2 and 3. 

2. 

The Community shall pay the following: 

(a) 

(b) 

(c) 

the  travel  and  subsistence  expenses  for  officials  participating  in  another 
Member  State in the activities provided  for  in Article 5 as well as the  costs 
relating to the organization of the seminars provided for in Article 5(2); 

the  cost  of  the  development  of  the  Community  indirect  taxation  training 
tools  provided  under  Article  6(3)  and  the  manuals  and  guides  provided 
under Article 4(1); 

the  cost  of  the  development,  purchase,  installation  and  maintenance 
necessary  of  the  Community  elements  of  the  communication  and 
information  exchange  systems  defined  in  Article  4(2)  and  the  cost  of  the 
day-to-day  operation  of the  Community  elements  installed  in the  premises 
of the Commission (or a designated  sub-contractor). 

3. 

Member States shall pay the following: 

(a) 

(b) 

the  costs  relating  to  the  initial  and  continuing  training  of  their  officials 
as provided for in Article 6(1) and to the language training of their  officials 
as provided  for  in Article 6(2). Member  States  shall pay the  costs  relating 
to  the  participation  of  their  officials  in  any  extra  activities  organized 
within the  framework  of  Article  5,  in  addition  to  those  paid  for  by 
the Community; 

to 

relating 

the  establishment  and 

the 
the  costs 
non-Community  elements of the communication  and  information  exchange 
systems defined  in Article 4(3) and the cost  of the day-to-day  operation  of 
the  Community  elements  of  these  systems  installed  in  their  premises 
(or those of a designated  sub-contractor). 

functioning  of 

Article 9 
Financial  framemwork 

The financial framework for  the implementation  of the  present  programme  for  the period 
1  January  1998  to  31  December  2002  is  hereby  set  at  ECU 45  million.  The  annual 
appropriations  shall  be  authorized  by  the  budgetary  authority  within  the  limits  of  the 
financial  perspective. 

16 

Article 10 
Implementation 

The  rules  necessary  for  the  implementation  of  this  Decision  shall  be  determined  by  the 
Commission in accordance with the procedure laid down in Article  11. 

Article 11 
Committee 

1. 

2. 

its 

tasks, 

the 
the  Commission 
In  carrying  out 
Standing Committee 
field  of 
on  Administrative  Cooperation 
Indirect Taxation  established  by  Article  10  of  Regulation  (EEC)  No  218/92, 
acting in ah advisory capacity. 

shall  be  assisted  by 

the 

in 

The representative  of the Commission  shall submit to the Committee a draft  of the 
measures to be taken. The Committee shall deliver its opinion on the draft  within a 
time-limit  which  the  chairman  may  lay  down  according  to  the  urgency  of  the 
matter, if necessary by taking a vote. 

The opinion  shall be recorded  in the minutes; in addition,  each Member  State shall 
have the right to ask to have its position recorded in the minutes. 

The  Commission  shall  take  the  utmost  account  of  the  opinion  delivered  by  the 
Committee.  It  shall inform  the Committee  of the  manner  in which its opinion  has 
been taken into account. 

Article 12 
Evaluation 

1. 

This  programme  shall  be  subject  to  continuous  evaluation,  carried  out  in 
partnership  between the Commission  and the Member  States.  The evaluation  shall 
be pursued by means of the reports referred  to in paragraphs 2 and 3. 

2. 

Member States shall forward  to the Commission: 

(a) 

by 30 June 2000 at the latest, an interim report, and 

(b) 

by 31 December 2002 at the latest, a final report 

on the implementation and the impact of this programme. 

3. 

The Commission shall submit to the European Parliament and to the Council: 

(a) 

by  30  June  2001  at  the  latest,  a  communication,  on  the  basis  of  the 
Member  States'  interim  reports,  on  the  desirability  of  continuing  this 
programme, accompanied,  if necessary, by a suitable proposal; 

(b) 

by  30  June  2003  at  the  latest,  a  final  report  on  the  implementation  of 
this programme. 

17 

The reports shall also be forwarded  to the Economic and  Social Committee and to 
the Committee of the Regions for  information. 

Article 13 
Entry into force 

This Decision shall enter into force on the twentieth day following that of its publication in 
the OfficialJournal of the European Communities. 

It shall apply from 1  January  1998. 

Article 14 
Addressees 

This Decision is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

18 

FINANCIAL  STATEMENT 

1. 

TITLE OF ACTION 

A programme  of  Community  action  to  reinforce  the  functioning  of  the  indirect  taxation 
systems of the internal market (FISCALIS  programme) 

2. 

BUDGET LINES  CONCERNED 

B5-305, a new line for FISCALIS. 

3. 

LEGAL BASIS 

Article  100a 
Proposal for a European Parliament and Council Decision 

OJ No C XX, XX.XX. 1997, page X. . 

4. 

DESCRIPTION OF THE ACTION 

General objective of the action 

4.1 
To  reinforce  the  effective,  uniform  and  efficient  functioning  of  the  VAT  and  Excise 
systems through: the protection of national and Community financial interests through the 
effective  combating  of  tax  avoidance  and  tax  evasion;  the  avoidance  of  distortions  of 
competition  in the effectiveness  of the application  of Community  law; and the  continuing 
reduction of compliance burdens on administrations and taxpayers. 

The  achievement  of  these  general  objectives  is  a  matter  for  the  Community  and  for  the 
Member  States.  The  specific  objectives  of  this  Community  action  are  to  reinforce  the 
efforts  of  the  Member  States  in:  the  achievement  of  a  high  common  standard  of 
understanding  of  Community  law  (and  its  implementation  in  the  Member  States)  by 
indirect  taxation  officials;  the  securing  of  efficient,  effective  and  extensive  cooperation 
among  Member  States  and  between  them  and  the  Commission;  and  the  assurance  of  the 
continuing  improvement  of  administrative  procedures  to  take  account  of  the  needs  of 
administrations and taxpayers. 

4.2 

Period covered by the action and arrangements foreseen for  its renewal 

the 
1  January  1998  to  31  December  2002.  The  Commission  will  submit 
European Parliament  and  the  Council  before  30  June  2001  a  communication  on  the 
desirability  of  continuing 
if  necessary,  by  a 
suitable proposal. 

this  programme,  accompanied, 

to 

5. 

CLASSIFICATION  OF EXPENDITURE 

5.1 

Non-obligatory  expenditure 

5.2 

Disassociated  credits 

6. 

TYPE OF EXPENDITURE 

100% subsidy of the following  activities: 

Travel  and  subsistence costs of indirect taxation  officials  of the Member  States related  to 
their  participation  in  exchanges,  seminars  or  pilot  multilateral  control  exercises  outside 
their country or Member State. 

Costs relating to the organization  of seminars, including the travel and subsistence costs of 
representatives  of  external  organizations  participating  in  the  seminars.  Costs  relating  to 
establishing and assuring the ability to function  of indirect  taxation training tools, manuals 
and  guides  and  the  Community  elements  of  communication  and  information. exchange 
systems (central processors and links between Member States). 

The  financing  of  the  participation  of  the  associated  countries  in  the  programme  will  be 
determined  according  to  the  relevant  agreements  relating  to  their  participation  in 
Community programmes. 

7. 

FINANCIAL  IMPACT 

7.1  Method  of  calculation  of  total  cost  of  the  action  (link  between  individual  and 

total costs) 

All  travel  and  subsistence  costs  (for  the  exchanges,  seminars  and  multilateral  control 
exercises)  are  calculated  on  the  basis  of  the  travelling  expense  and  daily  allowances 
currently enforced  by the Commission for its own  officials. 

Exchanges 

Given an average daily allowance of ECU  146 per day (average of Commission daily rates 
for all Member States) and an average travel cost of ECU 500, the breakdown of costs are 
as follows: 

436 x  1 month exchanges @ ECU 4 588 = ECU 2 000 368 

In  1997  over  300  two-week  exchanges  will  take  place  under  the  Matthaeus-Tax 
programme.  The  increased  cost  for  FISCALIS  is  therefore  largely  attributable  to  the 
development  of longer exchanges. This responds to  a demand from the exchange  officials 
for  a more profound  exchange which permits real working cooperation.  This is also more 
in line with the practice of the Matthaeus and Karolus programmes. The overall number of 
exchanges  also  needs  to  remain  comparable  with  the  Matthaeus-Tax  programme,  to 
maintain the penetration  of the programme in national administrations.  436 exchanges is a 
tiny proportion of national indirect taxation  officials21. 

21  The second Commission  report on VAT Procedures (COM(95) 354 final)  indicated that there were 
about  450 000  VAT officials  in the  then twelve Member  States. The  new Member  States  and  the 
national Excise administrations should be added to this. 

20 

Seminars 

The average cost per seminar, based on the experience of the Matthaeus-Tax programme 
is approximately  ECU 50 000.  This permits  about  8  seminars  a year,  down from 13 in 
1995 and 8 in  1996. The funds  for  seminars are shown growing slightly: it is envisaged 
that pedagogical seminars for  large groups of national officials  will tour the Community, 
teaching  particular  subjects  (e.g.  control  methodology).  These  will  be  part  of  the 
training initiative  and  will  be  cheaper,  covering  only  the  cost  of  the  speakers'  travel 
and subsistence 

Multilateral control exercises 

The multilateral VAT controls of nine companies which took place in 1995 and  1996 cost 
approximately  ECU 340 000.  At  an  average  of  ECU 40 000  per  company  control, 
15 companies will be provided for in 1998. This increase is merited for two reasons. 

The  nine  controls  that  have taken  place  to  date  is  a  tiny  proportion  of  the  potentially 
suitable 400 000 intra-Community  taxable persons.  The  Commission's  recent  report  on 
the operation of administrative cooperation22 underlined the important Community role in 
pioneering  these  controls  and  the  importance  of  Member  States  funding  their  own 
additional controls. Second, Excise duties, hitherto excluded from these exercises, will be 
covered in future. 

Communication and information systems 

The estimates for  1998-2002 are based on the allocated funds  for these systems in 1997 
with a limited  growth.  This growth  rate is to take into  account  the development  of the 
new communication system and development of the existing VAT and Excise information 
systems as the needs of the VAT and Excise arrangements develop. 

Language tools, manuals, guides 

The  costings  for  the  project  are  partly  based  on  the  VISAFIN  programme.  This  is a 
linguistic training tool developed by three Member States (F, UK, E) and part-funded  by 
the Commission though the LEONARDO programme. In linguistic terms, the project has 
been a success and offers an excellent IT basis to be exploited. 

The  ECU 1.7  million  total  cost  of  the  language  tool  compares  to  ECU 540.000,  over 
two years,  for  the  VISAFIN  project.  The  language  tool  would  cover  20  languages,  as 
compared to 3 for VISAFIN. A straight extrapolation was not made because it is intended 
that a considerable proportion of the software  developed  for  VISAFIN can be exploited 
by the new system. 

22  COM(96) 681  final. 

21 

7.2 Breakdown of the action, by element 

Element 
Exchanges 
Seminars 
Multilateral  control 
Communication 
information  systems 
Language 
guides 
Total (B5-305) 

Commitments in Million Ecu (1997 value) 

1998 
2 000 
0 400 
0 600 
4 300 

1999 
2  100 
0 500 
0 900 
5 300 

2000 
2  100 
0 500 
0 900 
5 400 

2001 
2  100 
0 500 
1000 
5 500 

2002 
2 200 
0 500 
1000 
5 500 

Total 
10 500 
2 400 
4 400 
26 000 

and 

tools,  manuals, 

0  100 

0 400 

0 400 

0 400 

0 400 

1 700 

7 400 

9 200 

9 300 

9 500 

9 600 

45 000 

7.3 Timetable of  commitments/payments 

1998 
7 400 

1999 
9 200 

2000 
9 300 

in Million Ecu 
2002 
9 600 

2001 
9 500 

Total 
45 000 

3 600 
2 400 
1 100 

4 000 
4 000 
1 200 

7  100 

9 200 

4 000 
4 000 
1400 
9 400 

. 

4 000 
4 000 
8 000 

4 000 
4 000 

3 600 
6 400 
9  100 
.9 200 
9 400 
37 700 

Commitments 
Payments 
1997 
1998 
1999 
2000 
2001 
2002 
Total 

8. 

ANTI-FRAUD PROVISIONS  ENVISAGED 

The  payment  of  travel  expenses  and  subsistence  allowances  to  officials  from  the 
Member States will be made by the Member  States themselves according to  agreed  rules. 
The  sums  necessary  will  be  advanced  to  the  Member  States  during  the  year,  taking 
account  of  execution.  The  Member  States  will  submit  detailed  justification  of  their 
expenditure  and will retain all necessary  documents for  inspection.  The payment  of travel 
expenses to  officials  from  other  countries or representatives  of external organizations  and 
costs  relating  to  the  organization  of  seminars  will  be  made  either  directly  by  the 
Commission  services  or  through  a  contracted  agency.  Anti-fraud  provisions  (controls, 
etc.) will be included in any such contracts. 

Subsidies  related  to  other  activities  of  the  programme  will  be  submitted  to  the  usual 
procedure  of verification  by the  Commission  services  before  payment,  taking  account  of 
contractual  obligations  and  good financial or  overall  management.  Anti-Fraud  measures 
(controls  and  reports,  etc.)  are  included  in  all  such  contracts  between  the  Commission 
and  beneficiaries. 

22 

9. 

COST-EFFECTIVENESS  ANALYSIS 

9.1 

Specific quantifiable  objectives, population concerned 

(a) 

(b) 

(c) 

to  achieve  a  high  common  standard  of  understanding  of  Community  law 
(and  of its  implementation  in the Member  States)  among  indirect  taxation 
officials; 

to  secure efficient,  effective  and  extensive cooperation  among the Member 
States and between them and the Commission; 

to ensure the continuing improvement  of administrative procedures to take 
account  of  the  needs  of  administrations  and  taxpayers  through  the 
development and dissemination of administrative best practice; 

The population  concerned  are the indirect  taxation  administrations  of the Member  States 
and the associated  countries, indirect taxpayers and professional  groups. 

9.2 

Justification  of the action 

Whilst the functioning  of the VAT  and Excise  systems is primarily  a responsibility  of the 
Member  States'  through  their  management  of  the  indirect  tax  administrations,  there  is a 
role for  the  Community.  The Community  has to  provide  the  necessary  infrastructure  and 
stimulus to reinforce the efforts  of the Member States. 

As the functioning  of the VAT and Excise systems is largely the responsibility  of national 
administrations,  it  is  their  officials  which  are  the  main  target  of  Community  action. 
The actions  chosen  are  therefore  all  designed  to  improve  their  ability  to  do  their  job, 
either through  training  or  through  communicating  and  cooperating  better  with  their 
colleagues  from  other  Member  States  or  through  developing  and  disseminating  best 
administrative practices. 

Effective,  efficient  and  extensive  cooperation  requires  communication  and  information 
exchange  systems  which  can  really  make  a  difference  to  the  work  of  indirect  taxation 
officials.  The VTES has become an indispensable VAT control tool.  The Commission  and 
the Member  States  are  currently  discussing  ways to  maximize the  use  of fiscal SCENT. 
SEED  and  the  EMVS  have,  even  at  an  early  stage,  proved 
their  usefulness. 
Communication is also a key part  of cooperation.  An effective  communication  system that 
is secure, fast,  reliable and offers  the possibility of translation  is essential  for  cooperation, 
both  in  making  it  a  success  and  in  lowering  the  considerable  barriers  to  requests  for 
cooperation.  Again,  the  experience  of  the  VIES  has  shown  that  communication  and 
information  exchange systems not only meet the needs of existing cooperation but  are also 
very  effective  in  stimulating  new  cooperation  (new  subjects,  methods  and  individuals) 
Lastly  language  tools,  indirect  taxation  training  tools,  manuals  and  guides  are  also 
important in overcoming linguistic and practical barriers. 

The  exchanges,  seminars  and  pilot  multilateral  control  exercises  are  all  based  on  past 
experience,  notably  in  the  Matthaeus-Tax  and  Matthaeus  (Customs)  programmes.  The 
benefit  of  the  exchanges  (travel  and  subsistence)  is  multiplied  by  extensive  preparation, 
targeting  the  objectives  of  the  exchange  and  through  evaluation  and  follow-up 
23 

(reports and  seminars).  The  experience  gained  may  fulfil  all  of  the  objectives  of  the 
programme  and  through  good  follow-up,  this  is  extended,  potentially,  to  all the  national 
administration.  In  a  similar  way  the  benefit  of  the  seminars  is  maximized  through 
preparation, work in small groups and evaluation  and follow  up (national  and  Community 
reports  and  follow-up).  Seminars  are  also  fertile  ground  for  suggestions  for  legislative 
change.  The  benefits  of  pilot  multilateral  control  exercises  are  multiplied  through  tax 
evasion  detected  and  through  the  seeds  of  future  cooperation  working  methods  that  are 
sown.  The  benefits  can  also  be  maximized  through  further  exercises  funded  by  the 
Member States themselves. 

All the above methods, given that they also involve a cost to the Member  States, in terms 
of their officials'  time, represent  good value as catalysts for  achieving the objectives  of the 
programme, which are then developed further  by the Member States. 

Co-financing  is  not  appropriate  for  these  activities,  because  the  implementation  of  the 
whole  programme  will  directly  entail  costs  for  the  Member  State  (training  of  staff, 
national  exploitation  of  communication  and  information  exchange  systems,  etc.).  100% 
Community  funding  of  the  Community  elements  of  the  information  and  communication 
systems is appropriate because of the necessity of guaranteeing uninterrupted  operation  of 
these systems 

9.3 

Follow-up and evaluation of the action 

Indicators of performance 

The best general indicators of the success of the programme are the figures for use of the 
existing  instruments  of  cooperation.  These  will  give  an  accurate  picture  of  the 
achievement  of  the  programme  in  making  cooperation  more  effective,  efficient  and 
extensive.  The number  of requests  for  cooperation  communicated  and  demands  made  of 
information  exchange systems, the nature and  speed  of responses and the results achieved 
will give an effective  overall picture of this vital aspect of the functioning  of the VAT and 
Excise  systems.  The  general  achievement  of  the  other  objectives  is  less  objectively 
quantifiable  overall.  Nevertheless 
the 
Commission  will  gain  a  strong  sample  impression  of  the  standard  of  understanding  of 
Community  law  and  the  continuing  improvement  of  administrative  procedures.  Whether 
quantifiable  (for  cooperation)  or  not,  all  of  these  general  indicators  can  be  evaluated 
against the current base position. 

its  contact  with  administrations, 

through 

For each of the areas of action, the specific  indicators will be: 

Communication  and  information  exchange  systems:  Indicators  of  the  impact  of  these 
instruments will be principally through the  evaluation  of the general  indicators,  especially 
in the  use  made  of them  as  instruments  of  cooperation.  In  addition  specific  questions  in 
questionnaires  for  exchanges  and  seminars  and,  especially  multilateral  control  exercises, 
will also be used to assess their impact. 

24 

Exchanges: At an individual level, questionnaires will be completed by exchange and the 
appropriate  host  officials  at  the  end  of  each  exchange.  At  a  Member  State  level, 
six months  later,  the  line  managers  of  each  exchange  official  will  complete  a  similar 
questionnaire, to  cross-reference  the impressions of the official  and to  assess the longer 
term impact of the exchange in meeting the objectives for the administration as whole. At 
a Community level, the results of these questionnaires will be evaluated globally,  and by 
sending  and  receiving Member  State,  on their  success  in meeting  the  objectives  of the 
programme.  These  evaluation  methods  have  already  been  used  in  the  Matthaeus-Tax 
programme, which offers  experience to be drawn on and a comparative base position. A 
similar plan of evaluation will be put in place for the seminars. 

Pilot multilateral control exercises: At a Member State level, a full report of the results of 
each  exercise  will  be  submitted,  which  will  assess  the  effectiveness  of  the  exercise  in 
meeting the specific objectives of the exercise and the objectives of the programme. At a 
Community  level,  reports  of  the  exercises  will  be  evaluated  to  assess  their  success in 
developing methods of cooperation, taking account of the number of exercises organized 
by the Member States without Community funding and any other follow-up activity. 

Common  training  programmes,  language  training.  Community  indirect  taxation  training 
tools, manuals and guides: Indicators of the impact of these actions will primarily show up 
in  their  impact  on  the  general  indicators,  especially  the  use  made  of  the  cooperation 
instruments,  and  on  the  evaluation  of  exchanges,  seminars  and  multilateral  control 
exercises. For the latter, specific questions in questionnaires will be foreseen to assess the 
level of their use. In addition, for language training, as part  of a rolling plan of training, 
the skills of officials  in each administration will also be monitored. As indicators of input, 
the  levels  of  language  training  and  under  the  common  training  programme  will  als^ 
be measured. 

Arrangements for and frequency of evaluation 

The programme will be constantly monitored by the Commission and the Member States 
working in the SCAC. The Commission will also submit a final report on the programme, 
drawing on interim and final reports from the Member States. 

10.  ADMINISTRATIVE EXPENDITURE (PART A OF THE BUDGET) 

The  provision  of  the  required  administrative  resources  is  dependant  upon  the  annual 
decision  of 
taking 
particular account  of  the  extra  personnel  and financial resources  made  available  by the 
budget authority. 

the  allocation  of  resources, 

the  Commission  concerning 

25 

10.1  Effect  on staff resources 

Type of post 

Officials  or 
temporary  staff 

A 
B 
C 

Other resources 
Total 

Staff to be assigned to 
managing the operation 
Temporary 
Permanent 
Posts 
Posts 
6 
4 
3 

Source 

Duration 

Existing 
resources 
4 
2 
3 

Additional 
resources 
2 
2 

13 

9 

4 

10.2  Overall financial consequences of supplementary human resources 

Officials  or 
temporary  staff 

Total 

Amount ecu 
424 000 

Method of Calculation 
106 000 * 4 

Duration 
5 
5 
2  120 000 

Cost of existing 9 posts in DG = ECU 954 000 per year (ECU  106 000/year/person) 

10.3 

Increase in other administrative expenditure as a result of the operation 

Budget Heading 
A-130 
A-2510 
Total 

(1) Missions  A-130 

Amounts 
45 000 
83 000 
1  128 000 

Method of calculation 
see below (1) 
see below (2) 
| 

These credits will be found within the re-deployment  of existing resources. 
ECU  30 000 
30 missions to Member States @ ECU  1 000 

10 missions to the associated  countries 
@ ECU  1 500 

ECU  15 000 

(2) Meetings  A-2510 

SCAC (this group of experts already exists 
and does not represent extra expenditure) 
4 meetings a year (two experts per Member  State) 
@ 30 x 4 x ECU 695 

Total for Part A of the Budget 

ECU  83 000 

ECU128 000 

26 

ISSN 0254-1475 

COM(97) 175  final 

DOCUMENTS 

EN 

09  10 

Catalogue  number  :  CB-CO-97-174-EN-C 

ISBN  92-78-19014-4 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

27