WRITTEN QUESTION E-3729/00 by Michel Hansenne (PPE-DE) to the Commission. VAT deductions ‐ VAT Committee guidelines.
Date: 2000-11-30
Institutions: European Parliament, Provisional data
Subjects: European tax cooperation, VAT rate, share capital

C 174 E/128

Official Journal of the European Communities

EN

19.6.2001

(2001/C 174 E/131)

WRITTEN QUESTION E-3729/00

by Michel Hansenne (PPE-DE) to the Commission

(30 November 2000)

Subject: VAT deductions (cid:129) VAT Committee guidelines

According to a notice issued by the Irish VAT authorities in August 1990, which was published in a
brochure entitled (cid:145)VAT and Financial Services(cid:146) (June 1999, Appendix VIII, p. 102), at a recent meeting of
the VAT Committee in Brussels, an agreement was reached to the effect that all expenditure relating to the
purchase or sale of company shares concerns exempted activities and therefore does not give rise to an
entitlement to deduct VAT at source.

Can the Commission, which provides the chairman and secretariat of the Advisory Committee on VAT set
up under Article 29 of Directive 77/388/EEC (1), confirm that the committee adopted the above guidelines
unanimously? If it can, why has it not made them public?

Why has the Commission submitted only two reports on the application of the common system of value
added tax in the Member States since 1992, when, under the terms of Article 34 of Directive 77/388/EEC,
it should have submitted a first report on 1 January 1982 and further reports every two years since then?

(1) OJ L 145, 13.6.1977, p. 1.

Answer given by Mr Bolkestein on behalf of the Commission

(2 February 2001)

The Commission can confirm that delegations at the July 1990 meeting of the VAT Committee were
unanimous in the view that VAT on costs relating to share transactions is not deductible, such transactions
being exempt under Article 13(B)(d)(5) 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 (cid:129) Common system of value
added tax: uniform basis of assessment.

The VAT Committee, which was set up under Article 29 of the Directive, is an advisory committee. This
means that its guidelines have no legal force and the Member States are not obliged to apply them. A
Member State may therefore choose to deviate from the common interpretation, but such divergences can
also result from court rulings condemning practices based on common interpretations. Since the guidelines
are not legally binding, they cannot be invoked in court by parties in litigation. Nor do they figure in the
accession treaties of new Member States.

Furthermore, the rules of procedure adopted by the Committee under Article 29(3) of the Sixth Directive
state that Member States may publish guidelines adopted on specific questions, but that they do so on their
own responsibility.

In these circumstances, the Commission does not see publishing the guidelines of the VAT Committee as
part of its responsibilities.

However, the lack of transparency and the guidelines(cid:146)
lack of legal status did lead the Commission,
in June 1997, to present a proposal for a directive changing the status of the VAT Committee (1). The
proposal is intended to give legal force to Commission decisions adopted with the Committee(cid:146)s assent and
to ensure their official publication. The Commission believes that changing the Committee(cid:146)s status would
enable more uniform application of the common VAT system throughout the Community. The Council
has yet to come to an agreement on the proposal.

The Commission(cid:146)s 1994 report on the functioning of the transitional arrangements (2) and its 1996
technical memorandum on the common VAT system offer a detailed description of how the VAT system
works. The scant progress achieved in the Council since the 1996 report means that there has been very
little material change in the working of the common VAT system. This is why the Commission, on 7 June

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Official Journal of the European Communities

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last year, adopted a new strategy to improve the operation of the VAT system within the context of the
internal market (3). Meanwhile the Commission has preferred to concentrate on new legislative projects,
including proposals for directives on e-commerce, taxable persons, the right of deduction and reduced
rates on highly labour-intensive services.

(1) OJ C 278, 13.9.1997.
(2) COM(94) 515 final.
(3) COM(2000) 348 final.

(2001/C 174 E/132)

WRITTEN QUESTION P-3732/00

by Brian Crowley (UEN) to the Commission

(28 November 2000)

Subject: Massacre in La Union, Colombia

On 8 July 2000, 20 masked paramilitaries entered the village of La Union in Colombia and massacred six
men. The paramilitaries stated they would be back and told the community to leave their land.

1. Will the Commission give an assurance that the Colombian Government(cid:146)s investigation into the
massacre at La Union will be monitored very closely at EU level, including the role and responsibility of
the army?

2. Will the Commission indicate what support at EU level can be provided for the UN Human Rights
Office in Colombia, which currently has a shortfall of USD 2 million, representing 60 % of its required
funding?

Answer given by Mr Patten on behalf of the Commission

(19 December 2000)

Deeply shocked by the massacre that took place in (cid:145)La Uni(cid:243)n(cid:146), the Union immediately called on the
Colombian government to investigate the exact circumstances of these crimes. The Colombian government
set up a commission of inquiry, consisting of officials from the offices of the Public prosecutor, the
Attorney general and the Ombudsman, who are in charge of investigating the massacre. They have carried
out investigation missions, but have not issued their report yet. The EUAmbassadors in Bogota are
following closely this issue.

The Colombian authorities have demonstrated increased willingness to respond to the international claims.
First steps have been taken by the government (the lay-off of army officers involved in human rights
violations and the trial of military personnel before civilian courts). But there is obviously still a long way
to go and the international community should continue with an active human rights policy.

As for the United Nations Office for Human Rights in Bogota, the Union has been supporting its activities
right from the outset and has granted a total amount of € 1,21 million over three years. The Union,
however, made it clear that its contribution was intended to help (cid:145)launch the process(cid:146), an objective that has
already been achieved. Discussions are currently underway in order to explore the possibility of providing
additional funding, which fall under the mandate of the Office.