Proposal for a Council directive amending Directive 77/388/EEC as regards the determination of the person liable for payment of value added tax
Date: 1998-11-27
Institutions: European Commission
Subjects: VAT, basis of tax assessment, distributive trades, provision of services, tax exemption

C  409/10

EN

Official  Journal  of  the  European  Communities

30.12.98

Proposal  for  a  Council  Directive  amending  Directive  77/388/EEC  as  regards  the  determination
of  the  person  liable  for  payment  of  value  added  tax

(98/C  409/08)

COM(1998)  660  final  -  98/0312(CNS)

(Submitted  by  the  Commission  on  27  November  1998)

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,

(3)(cid:217)Whereas  the  Member  States  have  not  implemented
to  a  sufficient  extent  the  recommendations  made  by
the  Commission  in  its  report  to  the  Council  and  the
European  Parliament  on  arrangements  for  taxing
transactions  carried  out  by  non(cid:220)established  taxable
persons(cid:216)((cid:210)),  the  aim  of  which  was  to  reduce  the
obligations  incumbent  on  traders  as  regards  the
determination  of  the  person  liable  for  payment  of
the  tax;

Having 
Parliament,

regard 

to 

the  opinion  of 

the  European

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

(1)(cid:217)Whereas  the  present  rules  laid  down  by  Article  21
of  the  Sixth  Council  Directive  77/388/EEC  of  17
May  1977  on  the  harmonisation  of  the  laws  of  the
Member  States  relating 
taxes  -
Common  system  of  value  added  tax:  uniform  basis
of  assessment(cid:216)(˛),  as 
last  amended  by  Directive
98/80/EC(cid:216)(ˇ),  as  regards  the  determination  of  the
person  liable  for  payment  of  the  tax,  create  serious
problems  for  business  and 
in  particular  for  the
smallest  businesses;

turnover 

to 

(2)(cid:217)Whereas  Council  Directive  76/308/EEC  of  15
March  1976  on  mutual  assistance  for  the  recovery
of  claims  resulting  from  operations  forming  part  of
the  system  of  financing  the  European  Agricultural
Guidance  and  Guarantee  Fund,  and  of  the  agri(cid:220)
cultural  levies  and  customs  duties(cid:216)(—),  and  Council
Directive  77/799/EEC  of  19  December  1977
concerning  mutual  assistance  by 
the  competent
authorities  of  the  Member  States  in  the  field  of
direct  taxation(cid:216)((cid:209)),  both  of  which  were  last  amended
by  the  Act  of  Accession  of  Austria,  Finland  and
Sweden,  organise  mutual  assistance  between  the
Member  States  as  regards  the  correct  establishment
of  VAT  and  its  recovery;

(4)(cid:217)Whereas  it  emerges  from  the  report’s  conclusions
that  replacement  of  the  tax  representation  system
by  the  reverse  charge  system  (designation  of  the
recipient  as  the  person  liable  for  payment  of  the
tax)  cannot  be  a  solution  to  the  problems  created
since  this  system  would  run  counter  to  the  principle
of  fractioned  payments  which  lies  at  the  heart  of
the  common  system  of  value  added  tax;

(5)(cid:217)Whereas  the  Commission  report  on  the  second
phase  of  the  SLIM  (Simpler  Legislation  for  the
Internal  Market)  project  recommends  a  study  of
the  possibilities  and  different  ways  of  reforming  the
tax  representation  system  laid  down  by  Article  21
of  Directive  77/388/EEC;

(6)(cid:217)Whereas 

in 

fact
the  only  change  which  can 
substantially  simplify  the  common  system  of  VAT
in  general,  and  the  determination  of  the  person
liable  for  payment  of  the  tax  in  particular,  is  to  rule
out  any  option  in  how  to  determine  that  person  and
to  state  clearly  the  general  principle  that  the  taxable
person  (whether  or  not  he  is  established)  is  the
person  liable  for  payment  of  the  value  added  tax
and  the  only  person  responsible  for 
its  actual
payment;

(7)(cid:217)Whereas,  when  a  taxable  person  (whether  or  not  he
is  established)  appoints  an  agent  to  fulfil  the  obli(cid:220)
in  Article  22  of  Directive
gations 
inform  the
77/388/EEC 
administration  of  the  agent’s  name,  since  he 
is
responsible  for  the  agent’s  actions;

in  his  place,  he  must 

set  out 

(˛)(cid:217)OJ  L  145,  13.6.1977,  p.  1.
(ˇ)(cid:217)OJ  L  281,  17.10.1998,  p.  31.
(—)(cid:217)OJ  L  73,  19.3.1976,  p.  18.
((cid:209))(cid:217)OJ  L  336,  27.12.1977,  p.  15.

((cid:210))(cid:217)COM(94)  471  final,  3.11.1994.

30.12.98

EN

Official  Journal  of  the  European  Communities

C  409/11

(8)(cid:217)Whereas, 

lastly,  where  non(cid:220)established 

taxable
persons  are  nationals  of  countries  with  which  no
instrument  exists  which  organises  mutual
legal 
assistance  similar  to  that 
laid  down  within  the
Community,  it  will  be  possible  for  the  Member
States  to  continue  to  require  such  non(cid:220)established
taxable  persons  to  designate  a  tax  representative  to
be  the  person  liable  for  payment  of  the  tax  in  their
stead;

(9)(cid:217)Whereas,  however,  the  latter  option  cannot  exist  in
cases  where 
taxable  person
the  non(cid:220)established 
carries  out  only  the  exempt  activities  referred  to  in
Articles  13  and  15  of  Directive  77/388/EEC;

(10)(cid:217)Whereas  Member  States  will  continue  to  be  entirely
free  to  designate  the  person  liable  for  payment  of
the  tax  on  importation;

(11)(cid:217)Whereas  Member  States  may  continue  to  provide
liable  for
that  someone  other  than  the  person 
payment  of  the  tax  shall  be  held 
jointly  and
severally  liable  for  payment  of  the  tax,  provided
that  this  does  not  give  rise  to  any  discrimination
against  non(cid:220)established  taxable  persons;

(12)(cid:217)Whereas  Article  10  of  Directive  77/388/EEC
should  be  clarified  in  order  to  prevent  certain  cases
of  tax  avoidance  in  the  case  of  continuous  supplies
which  do  not  give  rise  to  pre(cid:220)established  successive
statements  of  account  or  payments;

(13)(cid:217)Whereas  Directive  77/388/EEC  should  therefore

be  amended  accordingly,

HAS  ADOPTED  THIS  DIRECTIVE:

Article  1

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

1.(cid:217)In  the  first  subparagraph  of  Article  10(2),  after  the
second  sentence,  the  following  sentence  is  inserted:

of 

the 

absence 

successive
"In 
statements  of  account  and  payments,  the  tax  shall  in
any  event  become  chargeable  at  intervals  of  at  least
one  year.’

pre(cid:220)established 

2.(cid:217)In  the  fifth  indent  of  Article  28c(E)(3),  the  words
"Article  21(1)(a)’  are  replaced  by  "Article  21(1)(c)’.

3.(cid:217)In  Article  28g,  Article  21  is  replaced  by  the  following:

"Article  21

Persons  liable  to  pay  tax  to  the  authorities

1.(cid:217)Under  the  internal  system,  the  following  shall  be

liable  to  pay  value  added  tax:

(a)(cid:217)the  taxable  person  carrying  out  the  taxable
supply  of  goods  or  of  services,  except  for  the
cases  referred  to  in  (b)  and  (c);

(b) persons  to  whom  services  covered  by  Article
9(2)(e)  are  supplied,  or  persons,  identified  for
value  added  tax  purposes  within  the  territory
of  the  country,  to  whom  services  referred  to  in
Article  28b(C),  (D),  (E)  or  (F)  are  supplied,
when  the  service  is  carried  out  by  a  taxable
person  not  established  within  the  territory  of
the  country;

(c) the  person  to  whom  the  supply  of  goods  is
made  when  the  following  conditions  are  met:

-(cid:217)the  taxable  operation  is  a  supply  of  goods
made  under  the  conditions  laid  down  in
Article  28c(E)(3),

is  another 

-(cid:217)the  person  to  whom  the  supply  of  goods  is
made 
taxable  person  or  a
non(cid:220)taxable  legal  person  identified  for  the
purposes  of  value  added  tax  within  the
territory  of  the  country,

-(cid:217)the  invoice  issued  by  the  taxable  person  not
the

established  within 
country  conforms  to  Article  22(3);

territory  of 

the 

(d) any  person  who  mentions  the  value  added  tax
on  an  invoice  or  other  document  serving  as
invoice;

(e) any  person  effecting  a 

taxable 

intra(cid:220)Com(cid:220)

munity  acquisition  of  goods.

Where  the  person  liable  for  payment  of  the  tax  has
appointed  an  agent  responsible  for  fulfilling  the
obligations  laid  down  in  Article  22,  he  shall  inform
the  administration  of  the  agent’s  name.  The  person
liable  to  pay  tax  shall  be  responsible  to  the  admin(cid:220)
istration  for  the  actions  carried  out  by  the  agent  on
his  behalf.

is
Where  the  supply  of  goods  or  of  services 
effected  by  a  taxable  person  who  is  not  established
within  the  territory  of  the  country  and  no  legal
instrument  exists,  with  the  country  in  which  that

C  409/12

EN

Official  Journal  of  the  European  Communities

30.12.98

to 

that 

similar 

is  established,  which  organises
taxable  person 
mutual  assistance 
laid  down
by  Directives  76/308/EEC  and  77/799/EEC,
Member  States  may  take  steps  to  provide  that  the
person  liable  for  payment  of  the  tax  shall  be  a  tax
representative  designated  by  the  non(cid:220)established
taxable  person.  However,  designation  of  a  tax
representative  as  person  liable  for  payment  of  the
tax  may  not  take  place  where  the  non(cid:220)established
taxable  person  carries  out  only  supplies  of  goods
or  of  services  which  are  exempt  under  Articles  13
and  15  of  this  Directive.

who, 
in  accordance  with  Article  21(1),  are
considered  to  be  liable  to  pay  the  tax  instead  of
the  taxable  person  comply  with  the  obligations  set
out  in  this  Article,  relating  to  declaration  and
the  measures
payment; 
necessary  to  ensure  that  those  persons  who,  in
accordance  with  Article  21(1),  are  held  to  be
jointly  and  severally  liable  for  the  payment  of  the
to
tax  comply  with 
payment,  set  out  in  this  Article.’

the  obligations  relating 

shall  also 

they 

take 

Member  States  may  provide  that  someone  other
than  the  person  liable  for  payment  of  the  tax  shall
be  held  jointly  and  severally  liable  for  payment  of
the  tax,  provided  this  option  is  applied  without
discrimination 
taxable
persons.

non(cid:220)established 

against 

2.(cid:217)On  importation,  value  added  tax  shall  be  payable
by  the  person  or  persons  designated  or  accepted  as
being  liable  by  the  Member  State  into  which  the
goods  are  imported.’

4.(cid:217)In  Article  28h,  Article  22  is  amended  as  follows:

(a)(cid:217)In  paragraph  1(c),  the  first  indent  is  replaced  by

the  following:

to 

"-(cid:217)every  taxable  person,  with  the  exception  of
those  referred 
in  Article  28a(4),  who
within  the  territory  of  the  country  effects
supplies  of  goods  or  of  services  giving  him  the
right  of  deduction,  other  than  provisions  of
services  for  which  tax  is  payable  solely  by  the
customer  or  the  recipient  in  accordance  with
Article  21(1)(b)  and  (c).  However,  Member
States  need  not 
taxable
persons  referred  to  in  Article  4(3).’

identify  certain 

Article  2

1.(cid:218)(cid:217)Member  States  shall  bring 
laws,
regulations  and  administrative  provisions  necessary  to
comply  with  this  Directive  on  1  January  2000.  They  shall
forthwith  inform  the  Commission  thereof.

into  force  the 

When  Member  States  adopt  these  measures,  they  shall
contain  a  reference  to  this  Directive  or  shall  be  accom(cid:220)
panied  by  such  reference  on  the  occasion  of  their  official
publication.  The  methods  of  making  such  reference  shall
be  laid  down  by  Member  States.

States 

communicate 

2.(cid:218)(cid:217)Member 
the
shall 
Commission  the  text  of  the  provisions  of  national  law
which  they  adopt  in  the  field  governed  by  this  Directive,
and  a  table  correlating  the  provisions  of  this  Directive
with  the  provisions  of  national 
its
implementation.

law  adopted  for 

to 

Article  3

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

(b) Paragraph  7  is  replaced  by  the  following:

"7.(cid:218)(cid:217)Member  States  shall 
the  measures
necessary  to  ensure  that  the  tax  representatives

take 

Article  4

This  Directive  is  addressed  to  the  Member  States.