Proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax arrangements applicable to certain services supplied by electronic mean
Date: 2000-06-07
Institutions: European Commission
Subjects: VAT, administrative cooperation, computer network, indirect tax, new technology

28.11.2000

EN

Official Journal of the European Communities

C 337 E/65

Proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax
arrangements applicable to certain services supplied by electronic means

(2000/C 337 E/07)

COM(2000) 349 final (cid:16) 2000/0148(CNS)

(Submitted by the Commission on 7 June 2000)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of
Committee,

the Economic and Social

Whereas:

(1) The rules currently applicable to VAT on certain services
supplied by electronic means under Article 9 of 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 5 Common system of value added tax:
uniform basis of assessment (1) are inadequate for taxing
such services consumed within the Community and for
preventing distortions of competition in this area.

(2) In the interests of the proper functioning of the internal
market, such distortions should be eliminated and new
harmonised rules introduced for this type of activity.
in particular,
Action should be taken to ensure,
that
such services where
consideration and
effected for
consumed by customers established in the Community
are taxed in the Community and are not
taxed if
consumed outside the Community.

(3) To this end, certain services supplied by electronic means
to persons established in the Community or to recipients
established in third countries should, in principle, be taxed
at
the services. For the
purpose of establishing a special rule for determining
the place of supply it has to be defined when services
are supplied 9by electronic means:.

the recipient of

the place of

(4) To facilitate the compliance with their fiscal obligations,
economic operators established outside the Community
should be given the possibility to choose for a single
VAT identification in the Community.

(1) OL L 145, 13.6.1977, p. 1, as last amended by Council Directive

1999/85/EC.

(5) Such VAT identification by a non-EU supplier in an EU
Member State should be for the purposes of this directive
only and does not constitute establishment within the
meaning of the Articles 43 or 48 of the EC Treaty or
of other Community directives and a non-EU supplier
freedoms
should not benefit
enshrined in the EC Treaty or in Community directives
merely by becoming identified for VAT.

from the Internal Market

(6) Subject to conditions which they lay down, Member States
should allow statements and returns to be made by elec-
tronic means.

(7) By reason of administrative simplification supplies of
services by electronic means within a threshold indicating
a negligible economic activity in the Community should
benefit from a special scheme for small undertakings and
reviewed and changed if
this
necessary.

threshold should be

(8) The change of the place of supply involves adjustments in
the area of Directive 77/388/EEC as to the modalities of
the definition of the person liable to tax and its obli-
gations.

(9) It appears appropriate to ensure certainty on the rate of
taxation to be applied to the services supplied by elec-
tronic means, which will be in principle the normal VAT
rate.

(10) Directive 77/388/EEC should therefore be

amended

accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 77/388/EEC is amended as follows:

1. In Article 9(2), the following point (f) is added:

first

9(f) the place of supply by electronic means of services
indent as well as of
mentioned in point
(c)
software, of data processing, of computer
services
including web-hosting, web-design or similar services
shall be the place where the
and of
customer has established his business or has a fixed
establishment to which the service is supplied or,
in
the absence of such a place, the place where he has
his permanent address or usually resides, when these
services are supplied by a taxable person

information,

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EN

Official Journal of the European Communities

28.11.2000

5 established in the Community to customers estab-

lished outside the Community; or

5 established in the Community to taxable persons
established in the Community but not in the same
country as the supplier; or

5 established outside the Community to persons estab-

lished in the Community.

For such services however, when they are supplied by a
taxable person identified in accordance with the
provisions in force to non-taxable persons established
in the Community, the place of supply shall be the
place where the supplier has established his business
or has a fixed establishment from which the service is
supplied. For the purposes of point f, a taxable person
established outside the Community shall be deemed to
have a fixed establishment
in the Member State of
identification for services covered by this provision
and supplied under that identification.

For the purpose of this Article the term Csupply by elec-
tronic meansD shall mean a transmission sent initially and
received at its destination by means of equipment for the
processing (including digital compression) and storage of
data, and entirely transmitted, conveyed and received by
wire, by radio, by optical means or by other electronic
the
means,
meaning of Directive EEC/89/552 and radio broadcasting.:

broadcasting within

television

including

2. In Article 12(3)(a), the following fourth sub-paragraph is

added:

9With the exception of
the reception of broadcasting
services mentioned in Category 7 of Annex H, the third
sub-paragraph shall not apply to the services referred to
in Article 9(2)(f).:

3. In Article 24 the following point (2a) is added:

92(a) Member States
from tax persons
supplying services under Article 9(2)(f) third indent where
these are their only supplies made in the Community and
their annual turnover does not exceed EUR 100 000.

shall exempt

in Article 22 paragraph (1) point (c), that his customer
is a taxable person established in the Community,
Member States
the supplier be
shall provide that
discharged from being liable for tax and that the tax is
payable by the person to whom the service is supplied.:

(b) Point (b) is replaced by the following:

9(b) taxable persons to whom services covered by Article
9(2)(e) and (f) first sub-paragraph second and third
indent are supplied or persons who are identified for
value added tax purposes within the territory of the
country to whom services covered by Article 28b
(C), (D), (E) and (F) are supplied, if the services are
carried out by a taxable person established abroad;
however,
third
sub-paragraph of point
(a) Member States may
require that the supplier of services shall be held
jointly and severally liable for payment of the tax;:

prejudice

without

the

to

5. In Article 28h, Article 22(1) is amended as follows:

(a) Point (a) is replaced by the following:

9(a) Every taxable person shall state when his activity as
a taxable person commences, changes or ceases.
Subject
lay down,
Member States shall allow such statements to be
made by electronic means.:

to conditions which they

(b) In paragraph 1, the following is added:

9(f) A taxable person established outside the Community
supplying services by electronic means as defined in
Article 9(2)(f) third indent to non-taxable persons
established in the Community in excess of
the
threshold provided for in Article 24(2a) shall be
required to identify for VAT purposes in a Member
State into which he supplies services.

On the basis of a report from the Commission, the
Council shall, no later than 31 December 2003,
review this provision. The Council, acting unani-
mously on a proposal from the Commission, may
decide on whatever changes are necessary:

threshold shall be calculated in accordance with

This
paragraph 4.:

(c) In paragraph 4, point (a) is replaced by the following:

4. In Article 28g, Article 21(1) is amended as follows:

(a) in point (a) the following sub-paragraph is added:

9Where a supplier of services under Article 9(2)(f) has
acted with all possible diligence normally used in
commercial practice of a given sector and has verified
by a consistent set of data from an independent source,
notably by means of the individual number referred to

9(a) Every taxable person shall submit a return by a
deadline to be determined by Member States. That
deadline may not be more than two months later
than the end of each tax period. The tax period shall
be fixed by each Member State at one month, two
months or a quarter. Member States may, however,
set different periods provided they do not exceed
one year. Subject
to conditions which they lay
down, Member States shall allow such returns to
be submitted by electronic means.:

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Official Journal of the European Communities

C 337 E/67

(d) In paragraph 6, point (a) is replaced by the following:

Directive by 1 January 2001. They
Commission thereof.

shall

inform the

including all

9(a) Member States may require a taxable person to
submit a statement,
the particulars
specified in paragraph 4, concerning all transactions
carried out in the preceding year. That statement
shall provide all the information necessary for any
adjustments. Subject to conditions which they lay
down, Member States shall allow such statements
to be made by electronic means.:

6. In Annex H, Category 7, the words 9Reception of broad-
casting services.: are replaced by the following:
9Reception
including television broadcasting
of broadcasting services,
within the meaning of Directive 89/552/EEC and radio
broadcasting.:.

When Member States adopt those provisions, they shall contain
a reference to this Directive or shall be accompanied by such
reference on the occasion of their official publication. Member
States shall determine how such reference is to be made.

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 twentieth day
following that of its publication in the Official Journal of the
European Communities.

Article 2

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this

Article 4

This Directive is addressed to the Member States.