Proposal for a Council Directive amending Directive 77/388/EEC on the common system of Value Added Tax (the Value Added Tax Committee)
Date: 1997-06-25
Institutions: European Commission
Subjects: VAT, application of EU law, approximation of laws, committee (EU), tax harmonisation

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels, 25.06.1997 
COM(97) 325  final 

97/0186  (CNS) 

Proposal  for  a 

COUNCIL  DIRECTIVE 

amending Directive 77/388/EEC 
on the common system of Value Added Tax 
(the Value Added Tax Committee) 

(presented  by the  Commission) 

EXPLANATORY  MEMORANDUM 

The  purpose  of  this  proposal  is  to  introduce  measures  which  will  ensure  the  Community-
wide uniform  application  of the  common  system  of value  added  tax. 

With  the  adoption  of  the  Sixth  VAT  Directive1,  as  amended  by  the 
transitional 
arrangements,  an  important  step  was  taken  towards  the  establishment  of  a  common 
system  of  VAT. 

The  present  transitional  system  of  VAT  has  contributed  to  the  completion  of  a  Single 
Market  by  removing  tax  barriers  in  the  area  of  indirect  taxes.  For  the  common  VAT 
system  to  meet  the  requirements  of  a  true  Single  Market,  it  is  however  essential  that 
neutrality  of  taxation  is  ensured  and  the  remaining  obstacles  to  the  free  movement  of 
goods  and  services between  Member  States  are  eliminated. 

In  this  respect,  experience  so  far,  particularly  with  the  operation  of  the  transitional 
arrangements  for  taxation  of  transactions  between  Member  States,  has  shown  that 
different  administrative  procedures  in  Member  States  impede  the  neutrality  of  the  VAT 
system  and  represent  major  obstacles  for  businesses  wanting  to  take  advantage  of  the 
Single  Market.  This  is the  result  of existing  differences  in  interpretation  and  application  of 
the  common  VAT  rules  between  Member  States. 

At  the  national  level,  the  normal  procedure  for  establishing  legal  rules  is,  that  the 
legislative  body  makes  the  political  choices  and  decides  the  general  rules.  The  detailed, 
technical  questions  of  practical  application  of the  legislation  are  typically  dealt  with  by  the 
executive  body  (the  administration),  which  issues  circular  notices  or  other  binding 
guidelines,  which  are  published. 

level, 

implementing  powers  have  similarly  been  conferred  on 

the 
At  Community 
Commission  in  most  areas  of  Community  legislation.  Council  has  adopted  a  Decision  on 
the  legal  form  under  which  these  implementing  powers  should  be  exercised2.  Due  to  the 
special  characteristics  of  Community  legislation,  this  exercise  of  implementing  powers  is 
usually  done  via  a  system  of  committees,  composed  of the  representatives  of the  Member 
States.  The  Commission  submits to  the  committee  a draft  of the measures  to  be  taken,  and 
if  it  agrees  a  decision  is  taken  by  the  Commission  on  the  proposed  measures.  If  the 
committee  does  not  agree  with  the  proposed  measures,  the  matter  may  be  referred  to  the 
Council.  At  present,  around  400  such  committees  assist  the  Commission  in  implementing 
Community  legislation. 

Sixth  Council  Directive 77/.188/HEC of  17 May  1977 on the harmonization  of (he laws of (he  Member 
Slates  relating  to  turnover  taxes  -  Common  system  of  value  added  tax:  uniform  basis  of  assessment 
(OJ  No L  145,  I 3.U. 1977. p.  I) as last  amended  by Directive  %/95/HC. 

Council  Decision  87/373/EEC  of  13  July  1987  laying  down  the  procedures  for  the  exercise  of 
implementing  powers conferred  on the Commission  (OJ No L  197,  18.7.1987, p. 3.3). 

1 

Concerning  VAT,  the  Sixth  Directive  constitutes  only  the  framework  of  the  common 
VAT  system.  Detailed  rules  for  its  uniform  application  have  not  been  adopted  at 
Community  level.  At  present  no  implementing  powers  are  conferred  on  the  Commission 
to  make  such  rules  other  than  as  a  proposal  to  Council.  Consequently,  differences  in 
application  of  the  common  VAT  system  have  evolved  between  Member  States,  which 
conflict  with  the  concept  of a Single  Market. 

To  achieve  completion  of  the  Single  Market,  appropriate  measures  have  to  be  taken  to 
ensure  the  uniform  application  of the  common  VAT  mechanism  provided  for  in  the  Sixth 
Directive. 

When  the  Sixth  Directive  was  adopted  such  measures  were  not  taken.  It  is  true  that  the 
VAT  Committee  was  established  with  the  purpose  of  facilitating  the  uniform  application 
of  the  provisions  of  the  Directive  and  enabling  closer  co-operation  between  the  Member 
States  and  the  Commission.  But,  in  pursuing  this  objective,  the  Committee  was  given  very 
limited  means. 

In  its  advisory  capacity  the  Committee,  chaired  by  the  Commission,  is  required  to  adopt 
guidelines  on  questions  raised  by  Member  States  or  the  Commission  and  to  examine 
points  on  which  the  Committee  according  to  the  Directive  must  be  consulted.  Frequently, 
questions  are  raised  in  the  Committee  on  issues  relating  to  the  distinction  between  or 
classification  of  goods  and  services.  When  such  decisions  are  taken  they  can  have 
repercussions  on  where  and  under  what  conditions  the  transaction  in  question  should  be 
taxed. 

The  guidelines  which  are  adopted  by  the  VAT  Committee  should  result  in  the  provisions 
of  the  Directive  being  applied  uniformly  throughout  the  Community.  However,  even 
where  the  Committee  agrees  unanimously  on  a  common  interpretation,  such  decisions  are 
not  necessarily  adhered  to  by all Member  States. 

Member  States  are  not  obliged  to  implement  guidelines  adopted  by  the  VAT  Committee, 
because  they  have  no  legal  status  and  are  not  published.  Moreover,  the  existing  guidelines 
do  not  constitute  any  part  of  the  accession  agreements  for  the  new  Member  States  In 
practice,  it  is  often  found  that  not  all  Members  States  adhere  to  a  given  guideline  A 
Member  State  may  itself decide  to  deviate  from  the  common  interpretation,  but  deviations 
may  also  be  the  result  of  court  decisions  which  disallow  practices  which  are  based  upon 
common  interpretations.  The  Committee's  guidelines,  having  no  legal  standing,  cannot  be 
relied  upon  by the  parties  involved  in a court  case. 

Thus,  the  objective  of  guidelines,  which  is  to  ensure  the  uniform  application  of  the 
common  VAT  system,  is  frustrated.  The  result  is  that  not  only  traders  but  also  Member 
States  are  left  without  legal  certainty  and,  with  cross-border  transactions,  exposed  to  the 
risk  of double taxation  or  non-taxation. 

At  present,  such  matters  may be  solved  through  Community  legislation  to  be  adopted  by 
Council. This is, however,  a very time consuming procedure  and thus not very suitable for 
dealing with questions arising e.g. from  rapid technical and economic developments. 

In  the  absence  of  common  implementing  rules,  taxpayers  often  resort  to  national  courts 
asking  them  to  determine  how  the  general  rules  of  the  Sixth  VAT  Directive  should  be 
implemented.  In  a  number  of  these  cases  national  courts  are  requesting  the  European 
Court  of  Justice  to  give  a  preliminary  ruling  on  these  specific  and  technical  questions. 
Thus,  the  lack  of an  appropriate  mechanism  to  establish  common  implementing  measures 
of  Community  VAT  legislation  leads  to  unnecessary  litigation,  which  is  expensive  and 
leads to uncertainty for businesses as well as for Member States' administrations. 

Instead,  a  change  in  the  role  of  the  VAT  Committee  could  be  instrumental  in  achieving 
significant  progress  towards  uniform  application  of  common  rules,  thus  creating  more 
harmonised  conditions  for  businesses  in  line  with  the  needs  for  completion -of the  Single 
Market.  To  address  the  difficulties  encountered  by  traders  due  to  this  lack  of  uniform 
application  and  to  provide  traders  and  Member  States  with  sufficient  legal  certainty,  the 
Committee should be changed into a regulatory  Committee. Its task  would  be to assist  the 
Commission  in  implementing  Community  legislation  on  VAT.  It  is  proposed  that  this 
should  be  done  in  accordance  with  the  procedure  provided  for  in  Article 2 III (a)  of 
Council  Decision  87/373/EEC.  Through  their  representatives  in the  Committee,  Member 
States  will  have  their  say  in  the  establishment  of  such  legally  binding  uniform 
interpretation  and  implementation  of  Council  legislation.  This  will  not  detract  from  the 
powers of Council since it does not deal with such matters today. 

While  it  is  not  anticipated  that  the  European  Parliament  should  play  a  part  in  a  legal 
context  in this  decision-making  process,  the  Commission  has every  intention  of living up 
to  its commitment  to  take  into  consideration  the views of the Parliament,  as stipulated  in 
the inter-institutional  arrangements in force. 

In  its  work  with  the  VAT  Committee,  the  Commission  will  establish  contacts  with 
businesses,  in  order  to  take  full  account  of  their  views  on  the  functioning  of  the 
Community  VAT  legislation.  The  Commission  is  currently  reviewing  the  role  and  the 
functioning  of  the  Advisory  Committee  on  Customs  and  Indirect  Taxation,  which  is 
established  as a forum  for  exchanges  of information  between  the business community  and 
the  Commission  on  customs  and  tax  matters.  This  committee  could  provide  an 
appropriate framework  for exchanges of views on a more regular basis, through  which the 
VAT Committee could  obtain useful  input  for its work from  the business side. 

The  proposal  would  achieve  immediate  improvement  of  the  functioning  of  the  present, 
the 
transitional  VAT  arrangements.  By  conferring 
Commission  and by changing the status of the VAT Committee, giving the decisions legal 
force  and  official  publication  it  would  ensure  that  rules  are  applied  on  a  uniform  basis 
throughout the Community. 

implementing  powers  upon 

At  the  same  time,  the  proposal  forms  part  of  phase  one  of  the  changeover  to  the  new 
common  system  of  VAT.  One  of  the  key  elements  in  the  design  of  the  new  common 
system  of  VAT,  for  which  the  Commission  presented  its  working  programme  in 
July  19963, is the achievement  of an overall  simplification  in comparison  with  the  present 
transitional  arrangements  and  hence  a  significant  reduction  of  compliance  costs  of 
businesses,  especially  SMEs.  However,  regardless  of the  simplifications  to  be  included  as 
part  of the  new  common  system,  there  will,  in  any  event,  be  a  need  to  ensure  common 
application  by the Member  States of the future  rules, to avoid  reproducing  the  difficulties 
existing today. 

The proposed  regulatory  role of the Commission  assisted  by the VAT Committee  should, 
above  all,  encompass  interpretation  of  concepts  in  the  Community  VAT  legislation  in 
areas where the absence of such common  interpretations  can lead to double taxation  or to 
non-taxation.  Furthermore  it  should  deal  with  the  regulation  of  matters  specifically 
delegated  to  it  by  Council.  Already,  in  its  present  form,  the  Committee  addresses 
questions  of interpretation  and  issues guidelines  on them.  The  proposal  implies  that  these 
guidelines, by means of which a common  application  of a specific  element  of the Directive 
is established,  shall become decisions of the Commission,  legally binding and  made public 
This  would  alleviate  the  obstacles  currently  faced  by  businesses  which  trade  across  the 
Community  and the problems  experienced  by the Member  States  owing  to  differences  of 
interpretation. 

Double taxation is detrimental  to businesses, whereas non-taxation can distort  competition 
between  businesses  and,  at  the  same  time,  represents  an  unacceptable  loss  to  Member 
States' treasuries and to the Community's VAT own resource. 

Double  taxation  could  arise,  for  example,  in  cases  where,  due  to  divergencies  in 
classification,  the rules on  place of supply  are applied  differently  by Member  States.  This 
could be the case in a situation  where services covered  by Article 9(1)  are  provided  by a 
supplier whose main place of business is in State A and who carries out  some activities in 
State B,  e.g.  leasing  of  passenger  cars.  If  State B considers  that  these  activities  create a 
fixed  establishment  from  which the supplies are made, whereas State A disagrees with this 
interpretation,  double  taxation  would  occur  which  could  not  be  rectified  under  existing 
Sixth Directive provisions. 

A Common  System of VAT, A programme  for the Single Market, COM(96)  328 final  of 22.7.1996 

An example of non-taxation  could be the transfer  of a footballer.  If State A regards such a 
service,  when  supplied  to  a  taxable  person,  as  being  covered  by  Article  9 (2) (e), 
according  to  which  the  place  of  supply  is  where  the  taxable  customer  has  his  place  of 
business (in  State B), this should  result  in the use of the reverse charge mechanism  (tax is 
accounted  for  by  the  customer  in  State B).  However,  if  State B  regards  the  transfer  as 
falling  under  Article  9 (1),  which  stipulates  the  place  of  supply  -  and  of taxation  - to  be 
where  the  supplier  of the  service  is established  (State A),  the  combined  result  would  be 
that no taxation would take place. 

Double  taxation  and  non-taxation  are  both  contrary  to  the  proper  functioning  of  the 
internal  market  and  Member  States  have  an  obvious  interest  in a body  which  can  deal in 
an efficient  manner with such situations. 

The  VAT  Committee  in its new  role would  also  assist  the  Commission  on  proposals  for 
technical  adjustments  to  the  common  VAT  system  to  deal  with  questions  arising  from 
rapid technological  or economic developments, where such questions  have been  explicitly 
delegated by Council. 

Recent  political  developments  have  changed  the  role  of NATO  and  there  have  also been 
changes  in  international  relations  which  have  altered  partnerships  in  international  co 
operation.  These developments  have not  been  accompanied  by the requisite  modifications 
to  the  scope  of  VAT  exemptions  granted  to  such  organisations.  To  rectify  these 
shortcomings,  the  Commission,  assisted  by  VAT  Committee  according  to  the  procedure 
of  the  so-called  regulatory  committee  should  be  empowered  to  adopt  the  necessary 
adjustments  to  Article  15 (10)  of  the  Sixth  VAT  Directive  under  which  exemption  is 
granted  to  diplomatic  and  consular  missions,  international  organisations  and  NATO 
forces.  One  of the  tasks  should  be  to  decide  the  details,  form  and  contents  of  the  VAT 
exemption  certificate,  which  serves  as  a  supporting  document  to  the  supplier  when 
exempted  supplies  of  goods  and  services  are  made  to  the  above  mentioned  entitled 
organisations.  Already,  with  the  adoption  of  the  Second  Simplification  Directive4,  the 
Council  has, in a statement  to  the  minutes,  authorised  the  Committee  to  establish  such a 
certificate.  However,  a specific  delegation  of powers  to  the  Commission,  assisted  by  the 
VAT Committee would  ensure the proper legal status and publication of that  certificate. 

1  Council  Directive  95/7/EC  of  10 April  1995  amending  Directive  77/388/EEC  and  introducing  new 
simplification  measures  with  regard  to  value  added  tax  -  scope  of  certain  exemptions  and  practical 
arrangements  for  implementing  them (OJ No L  102 of 5.5.  1995. p.  18). 

Clearly,  conferring  implementing  powers upon the Commission  and changing the  role of 
the  VAT  Committee  should  not  interfere  with  the  policy-making  competence  of  the 
Council.  For that  reason,  questions  relating  to  politically  sensitive  issues  should  not  be 
decided  upon  by  the  Commission  assisted  by  a technical  committee  but  should  remain 
with  the  Council  on  the  basis  of  a proposal  of  the  Commission.  Community  tax  policy 
should always be formulated by the Council. 

Taking this  into  consideration,  the  proposal  explicitly  excludes  from  the  new  procedure 
the  issue  of  VAT  rates which  is generally  considered  as  politically  sensitive  by Member 
States.  Furthermore,  the Committee would  only be authorised  to decide on issues which 
are regulated by the Sixth  Directive.  This  means that where general  rules have  not been 
decided upon by the Council  or where options have been left  open for Member States to 
apply  different  rules,  the  Commission  assisted  by  the  Committee  would  not  be  in  a 
position  to  deal  with  the  matter.  For example,  due to  the  lack  of  specific  rules,  certain 
elements  of  Article 22  would  fall  outside  the  scope  of  the  power  conferred  to  the 
Commission  assisted  by the  VAT  Committee.  The  same  applies  to  those  provisions  of 
Article  16  which,  according  to  their  wording,  may  be  applied  differently  by  Member 
States. The Committee may, however, still decide to deal with such matters in its advisory 
capacity. 

If the Intergovernmental  Conference  decided to introduce qualified  majority voting as the 
rule  for  adoption  of  Community  legislation  on  taxation,  some  of  the  problems  outlined 
above would be alleviated,  as legislation could be adopted through a less time-consuming 
process.  However,  there  would  still  be  need  to  adopt  implementing  measures  of  a 
technical  nature  in  a  quick  and  flexible  manner.  Member  States  would  in  any  case  be 
assured  of  having  a  proper  influence  on  the  result  through  their  representatives  in the 
Committee  and through the rules of proceedings  provided  in Article 2  III (a) of Council 
Decision 87/373/EEC. 

The new role of the VAT Committee opens the possibility for Council to delegate powers 
to the Commission assisted by the Committee to adopt adjustments of the common VAT 
system  where  these  are  necessitated  due  to  rapidly  changing  economic  or  technical 
conditions.  The procedure  of  the  VAT  "regulatory  committee"  would  give  the  Council 
room  to  manoeuvre  in the  sense  that,  where  it  is  considered  useful,  specific  issues  of a 
technical  nature can be delegated.  Use of this instrument  would  in each  case  require the 
Council explicitly to delegate the power to decide on these new issues to the Commission, 
assisted by  the  VAT  Committee.  Such  measures  could  be  seen  as  appropriate  by  the 
Council when, for example, with the introduction of the Single European Currency or the 
accession  of  new  Member  States,  technical  adaptations  need  to  be  introduced  at  short 
notice. 

Commentary  on the  Articles 

Article 1 

-  changing the legal status of the VAT Committee 

It  is  proposed  that  the  VAT  Committee  is  changed  from  an  advisory  Committee  to  a 
Committee  acting  in  the  framework  of  the  so-called  "regulatory  committee"  procedure, 
which,  on  the  basis  of  drafts  submitted  by  the  Commission,  delivers  its  opinions  by 
qualified  majority  voting. The establishment  of the Committee,  and its working  procedure 
is  proposed  according  to  the  provisions  of  III, variant (a),  set  out  in  Article 2  of  the 
Council  Decision  of  13 July  19875  laying  down  the  procedures  for  the  exercise  of 
implementing powers conferred  on the Commission. 

According  to  the  proposal,  the  Commission,  assisted  by the  Committee  can  decide  on a 
common application  of provisions in the Sixth Directive, particularly where the absence of 
uniform  application  can  lead  to  double  taxation  or  non-taxation.  Where  the  Sixth 
Directive  does  not  regulate  an  area,  or  where  Member  States  are  left  with  the  option  of 
applying  the  common  VAT  system  differently,  the  Commission,  assisted  by  the  VAT 
Committee will not be in a position to take implementing measures. 

Questions  of  VAT  rates,  including  transitional  rates,  are  explicitly  excluded  from  the 
scope of the proposed  procedure. 

In  addition  to  the  proposed  powers  in  the  framework  of  the  "regulatory  committee" 
procedure,  the  VAT  Committee  shall  continue  to  perform  its  functions  as  an  advisory 
Committee, i.e. examining points on which the Committee according to the Directive must 
be consulted,  and deciding on questions raised by the chairman or by a member. 

-  scope of the exemption granted under Article  15 (10) 

Article  15 (10)  provides  for  exemption  for  supplies  of  goods  and  services  to  diplomatic 
and consular missions, to international  organisations  and to NATO forces,  but  only when 
these forces participate in the common defence  effort. 

Council  Decision  87/373/EEC  of  13 July  1987  laying  down  the  procedures  for  the  exercise of 
implementing powers conferred on the Commission (OJ No L 197, 18.7.1987. p. 33). 

It  is  proposed  to  allow  the  Commission,  assisted  by  the  VAT  Committee  to  decide 
adjustments  of  the  scope  of  this  exemption  in  situations  where  this  is  required  by 
developments  in  international  relations.  With  the  exemption  being  applicable  throughout 
the  Community,  adoption  of  measures  adjusting  the  scope  should  be  limited  to  cases 
where  a  common  interest  in granting  the  exemption  can  be  established.  This  would,  for 
example, apply to NATO activities which fall  outside the common  defence  effort  as is the 
case where forces  of NATO  countries  and  forces  of  other  States  participate  in  activities 
under the Partnership for Peace Agreement. 

The exemption is subject to limitations laid down by the Member State hosting the entitled 
body.  In case  of  supplies  between  Member  States,  right  of  exemption  is  established by 
means  of  a  document.  In  establishing  the  form  and  contents  of  this  document  the 
Commission  should  be  assisted  by  the  VAT  Committee  as  is  done  by  the  Excise 
Committee in the excise area. 

Proposal for a 

COUNCIL  DIRECTIVE 

amending Directive 77/388/EEC 
on the common system of Value Added Tax 
(the Value Added Tax Committee) 

THE COUNCIL OF THE EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 99 thereof, 

Having regard to the proposal from  the Commission, 

Having regard to the opinion of the European  Parliament, 

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

Whereas experience with the operation  of the transitional  arrangements for  charging VAT 
in  intra-Community  trade  has  demonstrated  a  need  for  a  more  uniform  application  of 
Community legislation, in particular to avoid double taxation  or non-taxation, 

Whereas  the  Commission  in its  programme  for  introducing  the  new  Common  System  of 
VAT  has  included  changing  the  status  of  the  VAT  Committee  from  an  advisory  into  a 
regulatory Committee, 

Whereas the Council  in its decision of  13 July  19876 has laid down the procedures  for  the 
exercise of powers of implementation  conferred  on the Commission, 

HAS ADOPTED THIS DIRECTIVE: 

Council  Decision  87/373/EEC  of  13  July  1987  fciying  down  lhe  procedures  for  the  exercise  of 
implementing  powers conferred  on the Commission  (OJ  No L  197,  18.7.1987, p. 33). 

Article 1 

Directive 77/388/EEC is hereby amended  as follows: 

1.  Article 29 is replaced by the following: 

"Article 29 

1.  The measures required for the application of the provisions of this Directive, with 
the  exception  of  provisions  relating  to  VAT  rates,  shall  be  adopted  by  the 
Commission  in accordance  with  the  procedures  laid  down  in  paragraphs 2-4.  In 
addition,  the  Commission  shall,  under  the  same  procedure,  adopt  the  provisions 
necessary for the adjustment  of Article  15 (10). 

2.  The  Commission  shall  be  assisted  by  a  Committee  on  Value  Added  Tax, 
hereinafter  referred  to as "the Committee". The Committee  shall be composed  of 
the  representatives  of  the  Member  States  and  chaired  by  the  Commission 
representative. 

3.  The  Commission  representative  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.  The  opinion  shall  be  delivered  by 
in 
Article  148 (2)  of  the  Treaty  in  the  case  of  decisions  which  the  Council  is 
required  to  adopt  on  a  proposal  from  the  Commission.  The  votes  of  the 
representatives  of the Member  States  within  the  Committee  shall  be  weighed  in 
the manner set out in that Article. The chairman shall not vote. 

the  majority 

laid  down 

4. 

(a)  The  Commission  shall  adopt  the  measures  envisaged 

if  they  are  in 

accordance with the opinion of the Committee. 

(b)  If  the  measures  envisaged  are  not  in  accordance  with  the  opinion  of  the 
Committee,  or  if  no  opinion  is  delivered,  the  Commission  shall,  without 
delay, submit to the Council  a proposal  relating to the measures to  be taken. 
The Council shall act by qualified  majority. 

(c)  If,  on the expiry of a period  of three months from  the date  of referral  to  the 
Council, the Council  has not  acted,  the proposed  measures  shall be  adopted 
by the Commission. 

5. 

In  addition  to  the  measures  referred  to  in  paragraph  1,  the  Committee  shall 
examine the  points  subject  to  the  consultation  provided  for  under  this  Directive 
and the matters referred  to it by its chairman, either on his own  initiative or at  the 
request  of  the  representative  of  a  Member  State,  concerning  the  application  of 
Community provisions on value added  tax". 

10 

2. 

In Article  15 (10), the second paragraph  is replaced by the following: 

"The  scope  of  this  exemption  can  be  adjusted,  subject  to  conditions  established  in 
accordance with the procedure provided for in Article 29. 

This  exemption  shall  be  subject  to  limitations  laid  down  by  the  host  Member  State 
until  common  Community  tax  rules  are  adopted.  The information  necessary  to  carry 
out  this  exemption  shall  be  exchanged  by  means  of  a uniform  document.  The  form 
and  contents  of  this  document  shall  be  established  according  to  the  procedure 
provided for in Article 29". 

Article 2 

1.  Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  1  January  1998.  They  shall 
forthwith  inform  the Commission  thereof 

When  Member  States  adopt  these  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication.  The  methods  of making  such  a  reference  shall  be  laid  down  by the  Member 
States. 

2.  Member  States  shall  communicate  to  the  Commission  the  text  of  the  provisions  of 
domestic law which they adopt in the field  covered by this Directive. 

Article 3 

This Directive  shall enter  into force  on the day of its publication  in the Official  Journal  of 
the European Communities. 

Article 4 

This Directive is addressed  to the Member States. 

Done at Brussels, 

For the Council 

The President 

11 

Financial  statement 

The  proposed  change  in  the  legal  status  of  the  VAT  Committee  from  an  advisory  to  a 
regulatory  committee  leads  to  a  corresponding  change  in  the  budget  line,  to  which  its 
activities  are attributed  (from  A 2511  to  A 2510).  However,  the  proposal  does  not  imply 
any change in the frequency  of meetings of the Committee,  and the expenses  linked  to  its 
activities will therefore  remain unchanged. 

The  proposed  Directive,  when  adopted,  will  have  no  consequences  for  the  collection  of 
Community own resources. 

12 

ISSN 0254-1475 

COM(97) 325 final 

DOCUMENTS 

EN 

09 

Catalogue number  :  CB-C0-97-315-EN-C 

ISBN 92-78-21718-2 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg