Council Directive 98/80/EC of 12 October 1998 supplementing the common system of value added tax and amending Directive 77/388/EEC - Special scheme for investment gold
Date: 1998-10-12
Institutions: Council of the European Union
Subjects: VAT, gold, investment

17. 10. 98

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Official Journal of the European Communities

L 281/31

COUNCIL DIRECTIVE 98/80/EC

of 12 October 1998

supplementing the common system of value added tax and amending Directive
77/388/EEC — Special scheme for investment gold

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 (1),

Having regard to the opinion of the European Parlia-
ment (2),

Having regard to the opinion of the Economic and Social
Committee (3),

Whereas, under the sixth Council Directive 77/388/EEC
of 17 May 1977 on the harmonisation of the laws of the
Member States relating to turnover taxes — common
system of value added tax: uniform basis of assessment (4)
transactions concerning gold are in principle taxable
the transitional derogation
although, on the basis of
provided for in Article 28(3) in conjunction with point 26
of Annex F to the said Directive, Member States may
continue to exempt transactions concerning gold other
than gold for industrial use; whereas the application by
some Member States of that transitional derogation is the
cause of a certain distortion of competition;

Wheres gold does not only serve as an input for produc-
tion but is also acquired for investment purposes; whereas
the application of the normal tax rules constitutes a major
obstacle to its use for financial investment purposes and
therefore justifies the application of a specific tax scheme
for investment gold; whereas such a scheme should also
enhance
the
the
Community gold market;

competitiveness

international

of

Whereas supplies of gold for investments purposes are
investments often
similar in nature to other financial
exempted from tax under the current rules of the sixth
Directive, and therefore exemption from tax appears to be
the most appropriate tax treatment for supplies of invest-
ment gold;

Whereas the definition of investment gold should only
comprise forms and weights of gold of very high purity as
traded in the bullion markets and gold coins the value of
which primarily reflects its gold price; whereas, in the
case of gold coins, for reasons of transparency, a yearly list
of qualifying coins should be drawn up providing security

(1) OJ C 302, 19. 11. 1992, p. 9.
(2) OJ C 91, 28. 3. 1994, p. 91.
(3) OJ C 161, 14. 6. 1993, p. 25.
(4) OJ L 145, 13. 5. 1977, p. 1. Directive as last amended by

Directive 96/95/EC (OJ L 338, 28. 12. 1996, p. 89).

for the operators trading in such coins; whereas the legal
security of traders demands that coins included in this list
be deemed to fulfil the criteria for exemption of this
Directive for the whole year for which the list is valid;
whereas such list will be without prejudice to the exemp-
tion, on a case-by-case basis, of coins, including newly
minted coins which are not included in the list but which
meet the criteria laid down in this Directive;

Whereas since a tax exemption does, in principle, not
allow for the deduction of input tax while tax on the value
of the gold may be charged on previous operations, the
deduction of such input tax should be allowed in order to
guarantee the advantages of the special scheme and to
avoid distortions of competition with regard to imported
investment gold;

for normal

Whereas the possibility of using gold for both industrial
and investment purposes requires the possibility for oper-
ators to opt
taxation where their activity
consists either in the producing of investment gold or
transformation of any gold into investment gold, or in the
wholesale of such gold when they supply in their normal
trade gold for industrial purposes;

Whereas the dual use of gold may offer new opportunities
for tax fraud and tax evasion that will require effective
control measures to be taken by Member States; whereas a
common standard of minimum obligations in accounting
and documentation to be held by the operators is there-
fore desirable although, where this information does
already exist pursuant to other Community legislation, a
Member State may consider these requirements to be met;

Whereas experience has shown that, with regard to most
supplies of gold of more than a certain purity the applica-
tion of a reverse charge mechanism can help to prevent
tax fraud while at the same time alleviating the financing
charge for the operation; whereas it is justified to allow
Member States to use such mechanism; whereas for
importation of gold Article 23 of the Sixth Directive
the
that
allows,
moment of importation provided it is mentioned in the
declaration pursuant to Article 22(4) of that Directive;

tax is not paid at

in a similar way,

Whereas transactions carried out on a bullion market
regulated by a Member State require further simplifica-
tions in their tax treatment because of the huge number

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and the speed of such operations; whereas Member States
are allowed to disapply the special scheme, to suspend tax
collection and to dispense with recording requirements;

Whereas since the new tax scheme will replace existing
provisions under Article 12(3)(e) and point 26 of Annex F
of the Sixth Directive, these provisions should be deleted,

HAS ADOPTED THIS DIRECTIVE:

Article 1

The following Article 26b shall be added to Directive
77/388/EEC:

‘Article 26b

B. Special arrangements applicable to investment

gold transactions

Member States shall exempt from value added tax the
supply, intra-Community acquisition and importation
of investment gold, including investment gold repre-
sented by certificates for allocated or unallocated gold
or traded on gold accounts and including, in partic-
ular, gold loans and swaps, involving a right of owner-
ship or claim in respect of investment gold, as well as
transactions concerning investment gold involving
futures and forward contracts leading to a transfer of
right of ownership or claim in respect of investment
gold.

Member States shall also exempt services of agents
who act in the name and for the account of another
when they intervene in the supply of investment gold
for their principal.

Special scheme for investment gold

C. Option to tax

A. Definition

For the purposes of this Directive, and without preju-
“investment
dice to other Community provisions:
gold” shall mean:

(i) gold, in the form of a bar or a wafer of weights
accepted by the bullion markets, of a purity equal
to or greater than 995 thousandths, whether or not
represented by securities. Member States may
exclude from the scheme small bars or wafers of a
weight of 1 g or less;

(ii) gold coins which:

— are of a purity equal to or greater than 900

thousandths,

— are minted after 1800,

— are or have been legal tender in the country of

origin, and

— are normally sold at a price which does not
exceed the open market value of
the gold
contained in the coins by more than 80 %.

Such coins are not,
this
for
Directive, considered to be sold for numismatic
interest.

the purpose of

Each Member State shall inform the Commission
before 1 July each year, starting in 1999, of the
coins meeting these criteria which are traded in
that Member State. The Commission shall publish
a comprehensive list of these coins in the “C”
series of the Official Journal of the European
Communities before 1 December each year. Coins
included in the published list shall be deemed to
fulfil these criteria for the whole year for which
the list is published.

Member States
shall allow taxable persons who
produce investment gold or transform any gold into
investment gold as defined in A a right of option for
taxation of supplies of investment gold to another
taxable person which would otherwise be exempt
under B.

trade normally supply gold for

Member States may allow taxable persons, who in
their
industrial
purposes, a right of option for taxation of supplies of
investment gold as defined in A(i) to another taxable
person, which would otherwise be exempt under B.
Member States may restrict the scope of this option.

Where the supplier has exercised a right of option for
taxation pursuant to the first or second paragraph,
Member States shall allow a right of option for taxa-
tion for the agent in respect of the services mentioned
in the second paragraph of B.

Member States shall specify the details of the use of
these options, and shall inform the Commission of
the rules of application for the exercise of
these
options in that Member State.

D. Right of deduction

1. Taxable persons shall be entitled to deduct

(a) tax due or paid in respect of investment gold
supplied to them by a person who has exercised
the right of option under C or supplied to them
pursuant to the procedure laid down in G;

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(b) tax due or paid in respect of supply to them, or
intra-Community acquisition or importation by
them, of gold other than investment gold which
is subsequently transformed by them or on their
behalf into investment gold;

(c) tax due or paid in respect of services supplied to
them consisting of change of form, weight or
purity of gold including investment gold,

if their subsequent supply of this gold is exempt
under this Article.

2. Taxable persons who produce investment gold or
transform any gold into investment gold, shall be
entitled to deduct tax due or paid by them in
respect of supplies, or intra-Community acquisi-
tion or importation of goods or services linked to
the production or transformation of that gold as if
their subsequent supply of
the gold exempted
under this Article were taxable.

E. Special obligations for traders in investment gold

Member States shall, as a minimum, ensure that
in investment gold keep account of all
traders
substantial transactions in investment gold and keep
the documentation to allow identification of
the
customer in such transactions.

Traders shall keep this information for a period of at
least five years.

adopted

Member States may accept equivalent obligations
other
under measures
Community legislation, such as Council Directive 91/
308/EEC of 10 June 1991 on prevention of the use of
the financial system for the purpose of money laun-
dering (*), to meet the requirements of the first para-
graph.

pursuant

to

Member States may lay down stricter obligations, in
particular on special
special
accounting requirements.

record keeping or

F. Reverse charge procedure

as
By way of derogation from Article 21(1)(a),
amended by Article 28g, in the case of supplies of
gold material or semi-manufactured products of a
purity of 325 thousandths or greater, or supplies of
investment gold where an option referred to in C of
this Article has been exercised, Member States may
designate the purchaser as the person liable to pay the
tax, according to the procedures and conditions which
they shall lay down. When they exercise this option,
Member States shall take the measures necessary to
ensure that the person designated as liable for the tax
due fulfils the obligations to submit a statement and
to pay the tax in accordance with Article 22.

G. Procedure for transactions on a regulated gold

bullion market

1. A Member State may,

subject

to consultation
provided for under Article 29, disapply the exemp-
tion for
investment gold provided for by this
special scheme in respect of specific transactions,
other than intra-Community supplies or exports,
concerning investment gold taking place in that
Member State:

(a) between taxable persons who are members of a
bullion market regulated by the Member State
concerned, and

(b) where the transaction is between a member of a
bullion market regulated by the Member State
concerned and another taxable person who is
not a member of that market.

Under these circumstances, these transactions shall
be taxable and the following shall apply.

2.

(a) For transactions under 1(a), for the purpose of
simplification, the Member State shall authorise
suspension of the tax to be collected as well as
dispense with the recording requirements of
value added tax.

(b) For transactions under 1(b), the reverse charge
procedure under F shall be applicable. Where a
non-member of the bullion market would not,
other than for these transactions, be liable for
registration for VAT in the relevant Member
State, the member shall fulfil the fiscal obliga-
tions on behalf of the non-member, according
to the provisions of that Member State.

(*) OJ L 166, 28.6.1991, p. 77.'

Article 2

Article 12(3)(e) and point 26 of Annex F to Directive
77/388/EEC shall be deleted.

Article 3

1. Member States shall bring into force the laws, regu-
lations and administrative provisions necessary to comply
with this Directive on 1 January 2000. They shall forth-
with inform the Commission thereof.

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

2. Member States shall communicate to the Commis-
sion the text of the provisions of domestic law which they
adopt in the field governed by this Directive.

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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.

Article 5

Done at Luxembourg, 12 October 1998.

For the Council

The President

R. EDLINGER