Opinion of the Economic and Social Committee on "A strategy to improve the operation of the VAT system within the context of the internal market"
Date: 2001-04-25
Institutions: European Economic and Social Committee
Subjects: VAT, single market

10.7.2001

EN

Official Journal of the European Communities

C 193/45

Opinion of the Economic and Social Committee on ‘A strategy to improve the operation of the
VAT system within the context of the internal market’

(2001/C 193/12)

On 8 June 2000, the Council decided to consult the Economic and Social Committee, under Article 262
of the Treaty establishing the European Community, on ‘A strategy to improve the operation of the VAT
system within the context of the internal market’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 9 April 2001. The
rapporteur was Mr Walker.

At its 381st plenary session of 25 and 26 April 2001 (meeting of 25 April), the Economic and Social
Committee adopted the following opinion by 53 votes to six, with four abstentions.

1.

Introduction

1.1. When the 1st and 2nd VAT Directives were adopted
in April 1967, the Community undertook a legal and political
commitment (as part of its objective to create the most efficient
possible common market) to establish a common VAT system
under which the taxation of imports and the non-taxation of
exports in intra-Community trade would be abolished. This
commitment underpinned the objective to design a VAT
system which was tailored to the internal market and would
operate within the European Union in the same way as it
would within a single country.

1.2.
The Commission put forward proposals for such a
system in 1987 under the work programme to establish the
internal market by January 1993. The key elements of these
proposals, which were designed to achieve a genuine internal
market by means of taxation in the country of origin, were:

— a harmonised structure with two rates of VAT;

1.3.1.
This transitional system, with a number of modifi-
cations, is still in force and there is no immediate prospect of
replacing it, although it is generally accepted that it has a
number of shortcomings because it is complicated, susceptible
to fraud and out-moded.

The Commission put forward new proposals for the
1.4.
introduction of a definitive system by 31 December 1996.
Before doing so, it carried out a thorough evaluation of the
transitional arrangements (1) and polled the Member States on
their views to avoid a repetition of the situation which had led
to the rejection of the previous proposals.

1.4.1.
Despite this, little progress has been made in the
Council on the Commission’s revised proposals; if a trader’s
economic activity across the entire EU is taxed in one single
Member State, taxation systems have to be closely harmonised
to ensure a uniform application. There also has to be some
harmonisation of rates to ensure that the tax has a neutral
impact on business competition. It has been impossible to
achieve agreement to this degree of harmonisation because of
differing domestic arrangements in the Member States.

— harmonisation, within a defined band, of the rates applied

by Member States;

— a clearing mechanism for the redistribution of VAT

receipts.

1.5.
The Commission believes that there is a patent need to
modernise, simplify, strengthen and apply more uniformly the
VAT system in order to bring it up to date and ensure that it
encourages legitimate commercial
transactions within the
internal market without providing greater scope for fraud.

By 1989,

it had become clear that

1.3.
it would be
impossible to adopt the Commission’s proposals by 1 January
1993 and the ECOFIN Council therefore decided to adopt
a transitional system which would enable controls at the
Community’s internal borders to be abolished whilst allowing
tax to continue to be collected in the Member State of
destination. At the same time, the Council reaffirmed both
legally and politically the commitment it had made in April
1967 to introduce a ‘definitive system’ of taxation where goods
and services would be taxed in the Member State of origin by
the new target date of 31 December 1996.

2.

The Commission’s proposals: a new strategy for
2000

The details of

the Commission’s proposals for a
2.1.
reappraisal of the programme proposed in 1996 are set out in
Appendix 1.

(1) COM(94) 515 final, dated 23.11.1994.

C 193/46

EN

Official Journal of the European Communities

10.7.2001

The Commission’s Action Programme is set out in

2.2.
Appendix 2.

3. General comments

In opinion after opinion (1) the Committee has reiter-
3.1.
ated its support for the principle of a new definitive system of
VAT based on taxation in the country of origin and has called
upon Member States to stop blocking progress in this direction.
It has repeatedly high-lighted the defects in the transitional
system and called for action to modernise the system and
remedy its shortcomings, which are having a negative impact
on legitimate business as well as facilitating fraud.

As long ago as 1988, the Committee pointed out (2)
3.1.1.
that it is an anachronism that, within what is supposed to be a
single market, transactions between Member States are treated
as ‘imports’ and ‘exports’. In a true single market these concepts
should be reserved for transactions with external traders.

It is an indictment of the Member States that a
3.1.2.
concept which was accepted in principle thirty-three years ago
still seems as far from realisation as it was then. The history of
VAT legislation in Europe is a catalogue of failure, not on the
part of the Commission, which has acted with commendable
consistency and unrelenting effort in attempting to move the
situation forward, but on the part of the Member States, who
have continually frustrated these efforts.

It

the current

is widely accepted that

3.2.
transitional
arrangements are complicated, susceptible to fraud and out of
date. Moreover, they are incompatible with the principles of
the Single Market. The Committee agrees with the Commission
that there is a patent need to modernise, simplify, strengthen
and more uniformly apply the VAT system in order to bring it
up to date and to ensure that
it encourages legitimate
commercial transactions within the internal market while
reducing the scope for fraud.

3.2.1.
The Committee accepts the Commission’s contention
that the Single Market could, and would, function better with
a VAT system based on the principle of taxation in the
country of origin, as this would be easier to administer (and
consequently less costly for businesses) and less susceptible to
fraud, thereby providing a better guarantee of stable tax
revenue.

3.2.2.
The Committee considers it unfortunate that the
current political climate renders it unlikely that such a system
can be introduced in the foreseeable future.

3.3.
The Committee is relieved that the Commission does
not question in any way the idea of a definitive system of
taxation in the Member State of origin as a long-term
Community goal. Given the realities of the political situation,
it accepts that there is a short-term requirement to define a
viable strategy for the transitional system, based on the
following objectives:

— simplification and modernisation of current rules;

— more uniform application of current rules;

— closer administrative cooperation.

The Committee recognises that

this will only be
3.4.
possible if all Member States are prepared to consider changes
to their national VAT systems and, in particular, a reduction
in the large number of special schemes, options, exemptions
and derogations which currently exist. Given the recent history
of VAT legislation, the prospects are not hopeful.

The Committee agrees with the Commission that a
3.5.
continuation of the present transitional arrangements will
require a greater emphasis on tighter controls and closer
administrative cooperation than has been achieved in the past.
The fact that, under the present system, goods can circulate
between Member States without VAT being paid is an invi-
tation to fraud.

The Committee endorses the Commission’s insistence
3.6.
that the proposals already tabled under the 1996 programme
and the SLIM exercise must be adopted as soon as possible
and calls upon the Member States to cooperate with the
Commission in simplifying, modernising and enhancing the
transitional system.

The Committee has already issued opinions broadly
3.6.1.
approving the Commission’s proposals concerning the right
to deduction and abolition of the procedure provided for
under the Eighth Directive (3) , determination of the person
liable for payment of VAT (4), the reform of the VAT Com-
mittee (5) and the improvement of mutual assistance for the
recovery of claims (6). It is disappointed that these necessary
and desirable measures have not yet been put into effect.

3.6.1.1.
The Committee considers that the situation would
be substantially improved if the time period for payments were
harmonised across the Member States, or at least brought into
closer approximation.

(1) OJ C 82, 19.3.1996, p. 49; OJ C 204, 15.7.1996, p. 94; OJ C 296,
29.9.1997, p. 51; OJ C 101, 12.4.1999, p. 73; OJ C 209,
22.7.1999, p. 53; OJ C 116, 20.4.2001, p. 59.

(2) OJ C 237, 12.9.1988, p. 14.

(3) COM(98) 377 final, ESC Opinion OJ C 101, 12.4.1999, p. 73.
(4) COM(98) 660 final, ESC opinion OJ C 116, 28.4.1999, p. 14.
(5) COM(97) 325 final, ESC opinion OJ C 19, 21.1.1998, p. 56.
(6) COM(98) 364 final, ESC Opinion OJ C 101, 12.4.1999, p. 26.

10.7.2001

EN

Official Journal of the European Communities

C 193/47

3.6.2.
The Committee has also expressed its support for the
proposal to abolish compulsory tax representation (1), and is
pleased to note that the Council has now adopted a Directive
abolishing this requirement from 1st January 2002.

Community. It regards this as a highly desirable, and long
overdue,
improvement which will substantially reduce the
compliance burden and the cost for many businesses.

The Committee agrees with the Commission’s Action
3.7.
Programme and hopes that it will be possible to implement it
but, given the current political climate, doubts whether this
can be achieved within the timescale envisaged.

3.8.
The Committee notes that, at a meeting of the Tax
Policy Group on 2 March 2000, representatives of the Member
States endorsed the pragmatic approach adopted by the
Commission in tackling the problems presented by the present
transitional system. It hopes that this endorsement will be
translated into legislative action in the Council.

3.9.
The multitudinous piecemeal amendments which have
been made to the Sixth Directive over the years have resulted
in a text which is complex, confusing and, at times, even
contradictory. The Committee welcomes the information that
the Commission has embarked upon a definitive rewrite of the
entire Sixth Directive and that it has made this project a
priority of its 2001 work programme.

4.

Specific comments

4.1.
The Committee agrees with the Commission that
exemption of public-sector postal services is creating distor-
tions in a situation where these services are increasingly being
privatised in a number of Member States. Taxation of private-
sector operators in this field while exempting the public sector
infringes the principle of neutrality which lies at the heart of
all taxation systems. It also distorts competition, both within
Member States where there are both public and private sector
operators and also between Member States where the service
in one country is privatised and in another is still provided by
the public sector.

The Committee has issued an opinion (2) on the
4.2.
Commission’s proposals on the treatment of e-commerce and
radio and TV broadcasting.

4.3.
The Committee welcomes the Commission’s proposals
for the acceptance of electronic invoicing for VAT purposes
and to formulate rules for harmonising practices within the

The Committee has also issued an opinion (2) approv-
4.4.
ing the Commission’s proposals for revision of the rules on
administrative cooperation and mutual assistance.

The Committee has supported the extension for a
4.5.
further five years of the provisions of Article 12(3) of the 6th
VAT Directive setting the minimum standard rate of VAT at
15 %, which is due to expire on 31 December this year (3). It
regrets that proposals for the introduction of a standard rate
band have been twice rejected.

The Committee notes that, pursuant to Article 12(4),
4.6.
the Commission will present a report reviewing the scope of
reduced VAT rates, which will look at the harmonisation of
rates and assess the impact of their structure on the functioning
of
this is a
highly contentious area where the prospects of obtaining the
necessary political agreement are not great.

It would point out

the single market.

that

4.7.
The Committee accepts that the increasing privatisa-
tion of activities which were previously the exclusive reserve
of
the public sector is leading to greater distortions of
competition between exempt, non-taxable and taxable services;
as a consequence, the principle of neutrality is being under-
mined. The Committee agrees that the system needs to be
modernised in respect of such services but would counsel that
this should not necessarily result in VAT being levied on
activities which are currently exempt.

4.7.1.
The Committee also agrees with the Commission’s
proposal to examine the VAT treatment of subsidies in order
to ensure simpler and more harmonised treatment within the
EU. It concurs that exemptions without the right to deduction
for social, educational, cultural and other activities need to be
reviewed to determine whether there is an ongoing justification
for their existence.

4.8.
The Committee notes that the Commission intends to
financial and
address the issue of the VAT treatment of
insurance services. It agrees that the sector has increased both
in size and complexity in recent years and that its structures
and operating methods have undergone considerable change.
This certainly warrants an examination of the subject but these
factors will increase the difficulty of evolving a suitable VAT
regime; the Commission tacitly acknowledges the possibility

(1) COM(98) 660 final, ESC opinion OJ C 116, 28.4.1999, p. 14.
(2) OJ C 116, 20.4.2001, p. 59.

(3) OJ C 116, 20.4.2001, p. 67.

C 193/48

EN

Official Journal of the European Communities

10.7.2001

of failure when it says ‘even if this proves neither desirable nor
feasible’. The Committee would stress that one of the most
important criteria for any VAT system in this sector is that it
should not act in such a way as to hinder or curb the
development of markets which are such major contributors to
economic growth and employment.

4.9.
The Committee accepts the logic of changing pro-
visions of the Sixth Directive which have been rendered
ambiguous, incomplete or out of date by decisions of the
European Court of Justice.

The Committee agrees that the current rules regarding
4.10.
the place of supply of goods need to be standardised in cases
where the supplier is responsible for assembly and installation
on the customer’s premises.

4.10.1.
The Commission notes that the growing liberalis-
ation of the utilities sector means that supplies are increasingly
being thrown open to competition between private sector
producers to the benefit of consumers, who are able to use the
most competitive suppliers; it concludes that steps must be
taken to ensure fair competition in this environment. The
Committee would point out that, strictly, it is not the function
of tax regimes to ensure fair competition; they should simply
be structured in such a way as to avoid themselves creating
distortions of competition.

4.10.2.
The Committee understands the need to review the
procedures under the transitional arrangements governing
distance selling within the Community. This is increasingly
being effected by electronic means and many of the consider-
ations which apply to e-commerce are valid here.

The Committee is strongly of the opinion that a
4.11.
much closer administrative cooperation between the tax
authorities of the Member States than currently exists is
essential to the operation of the transitional arrangements or,
indeed, of any tax system. It is pleased to note that this
problem is being addressed by the Commission and the
Council. It would agree that the existing Community legal
instruments for administrative cooperation and mutual assist-
ance need to be enhanced in order to deal with the fraud
arising from the fact that goods can circulate within the
Community without VAT being paid but it would observe that
improvements in legal instruments will be of little use unless
there is a willingness on the part of the Member State tax
administrations to make effective use of them.

4.13.
The Committee notes with approval that there will
be a general and thorough review of the rules governing the
place of supply of services under Article 9. It joins the general
consensus that the scope of taxation at the place where the
customer is located (reverse charge procedure) should be
extended or made the general principle for taxation of
services. It considers that this principle is more important than
protecting the system of fractionated payments. In a previous
opinion (1), the Committee pointed to the fact that abolishing
the system of fractionated payments would represent the single
greatest contribution that could be made to the reduction of
the compliance burden for businesses.

The Committee reiterates this position. It does not
4.13.1.
consider that abandoning the system of fractionated payments
would in any way reduce the ability to police the system.
Indeed, it is of the opinion that, by dramatically reducing the
compliance costs for business, it would encourage a greater
degree of voluntary compliance and thereby reduce the
incidence of fraud. Many small businesses, and particularly
sole traders, evade registration not because they wish to obtain
a competitive advantage or defraud the Revenue but because
they do not have the resources to cope with the burden created
by the administrative requirements of completing returns.

4.14.
The Committee agrees with the desirability of rationa-
lising the derogations which have been granted to Member
States under Article 27. The present situation is rightly
described by the Commission as ‘chaotic’. The differences
between the regimes of the different Member States created by
the number and diversity of these derogations constitutes a
major disincentive to generating cross-border activity within
the Community, especially for SMEs.

4.15.
The need for a general rationalisation of options,
rights and derogations is just as acute. As the Commission
points out, even temporary derogations have proved imposs-
ible to abolish because of the lack of an unanimous consensus
to do so. Member States which have secured derogations seem
to feel compelled to hang on to them at all cost; they have
also, on too many occasions, become bargaining counters.
There can be no doubt that many of them constitute real
obstacles to the proper functioning of the Internal Market and
that their abolition would ensure more uniform application of
VAT. The Committee therefore agrees that a review of the
Thirteenth Directive would be timely and apposite.

4.12.
The Committee approves the concept of closer coor-
dination between customs and tax authorities and awaits with
interest the outcome of the deliberations of the ad hoc group
which is addressing this issue.

(1) OJ C 116, 28.4.1999, p. 14.

10.7.2001

EN

Official Journal of the European Communities

C 193/49

4.16.
The Committee notes the intention of the Com-
mission to carry out a review and rationalisation of the rules
and derogations applying to the definition of reduced VAT
rates once the current pilot project introduced by Directive
1999/85/EC has been completed. It would comment that,
however desirable this step may be, it is a contentious issue on
which it will be difficult to obtain the necessary unanimity.

4.17.
There have been repeated calls, in which the Com-
mittee has joined, for a thorough overhaul of the special
schemes applying to small businesses and, in particular, to
these exemptions, which differ widely from one Member State
to another. By creating differences between the tax regimes of
the Member States, these schemes, which are supposed to
assist small businesses, have too often acted against their
interests by discouraging them from entering into cross-border
transactions. The Committee welcomes the fact that there are
plans to deal with this issue but would wish that any
harmonisation should be on the basis of those existing schemes
which are most favourable to small businesses.

5. Conclusions

5.1.
The Committee reiterates its position that the manifold
and serious weaknesses of the present transitional system can
only be finally removed by the introduction of a new definitive
system based on the principle of taxation in the country of
origin. It deeply regrets the total lack of progress which has
been made towards achieving this goal and, while it welcomes
the Commission’s continued dedication to this as a long-term
measure, it wonders how many more years of the ramshackle
transitional system will have to be endured before this objective
can be attained.

Brussels, 25 April 2001.

5.1.1.
It calls upon the Member States to realise the
advantages for the European Union which would accrue from
a system which would make a reality of the Single Market,
rather than undermining it, and do so much to stem the
current tide of VAT fraud.

In the continued absence of the political consensus
5.2.
that would bring this about, the Committee accepts the need
for further amendments to the transitional system which
would mitigate some of its worst defects and hopes that this
much progress can at last be made.

5.3.
The Committee agrees that the key elements in improv-
ing the transitional system are simplification and modernis-
ation of current rules, more uniform application of
the
rules and closer administrative cooperation. It accepts the
Commission’s proposition that ‘modernisation and simplifi-
cation’ and ‘administrative cooperation and fraud prevention’
form a single package and must go hand in hand.

5.4.
The Committee broadly approves the agenda set out in
the Commission’s New Strategy for 2000 and in its Action
Programme 2000/2001.

5.5.
The Committee agrees with the majority view that the
reverse charge mechanism should be extended or made the
general principle for taxation of services.
It reiterates its
position that removing the system of fractionated payments
would do more than any other measure to reduce compliance
costs for business without providing any greater scope for
fraud.

The President

of the Economic and Social Committee

Göke FRERICHS

C 193/50

EN

Official Journal of the European Communities

10.7.2001

APPENDIX I

to the Opinion of the Economic and Social Committee

A reappraisal of the programme proposed in 1996

Defining a viable strategy to improve the present system

It should be pointed out from the outset that the internal market could and would function better with a VAT system
based on taxation in the Member State of origin as this would be easier to administer (and consequently less costly
for business) and less susceptible to fraud (providing a better a guarantee of stable tax revenue). However, it must
also be recognised that in the current climate (where the conditions are not propitious for rapid progress towards
closer harmonisation of VAT rates and legislation and it would be difficult to introduce a really reliable system of
reallocating revenue) it is unlikely that significant progress will be made in the immediate future.

It is not in any way the Commission’s intention to question the idea of a definitive system of taxation in the Member
State of origin of transactions giving rise to consumption in the Community as a long-term Community goal.
However, in the interest of improving the functioning of the internal market in the short term, the Commission
considers it necessary to reappraise the programme it proposed in 1996 and to define a viable strategy based on four
main objectives: simplification and modernisation of current rules, more uniform application of current rules and
closer administrative cooperation.

The objective of such an exercise is to create fresh impetus within the Council to achieve the much needed
improvements to the present system as quickly as possible. This will of course only be possible if all Member States
are prepared to consider changes to their national VAT systems (and, if necessary, to agree to a reduction in the large
number of special schemes or options, derogations, etc. which exist at present) which can help bring about an overall
improvement in the way the common VAT system operates. If the present transitional arrangements are retained
Member States will also have to accept the need for greater emphasis on tighter controls and closer administrative
cooperation in order to deal with the problem of fraud highlighted in the Commission’s report on administrative
cooperation and VAT control (1). The fact that under the transitional VAT system goods can circulate between
Member States without VAT being paid (2) inevitably creates risks, particularly of ‘carousel fraud’ and stringent
‘Modernisation and simplification’ and ‘administrative cooperation and fraud
counter-measures are required.
prevention’ form a single package and must go hand in hand.

Proposals already before the Council must be adopted

This does not mean that the Council does not have to adopt the proposals already tabled by the Commission under
the 1996 programme and the SLIM exercise (Simpler Legislation for the Internal Market). On the contrary, these
proposals were specifically designed to simplify, modernise, enhance and ensure more uniform application of the
current VAT system in areas where improvements are essential.

(1) Report from the Commission to the Council and the European Parliament — Third Article 14 report on the application of
Council Regulation (EEC) No 218/92 of 27.1.1992 on administrative cooperation in the field of indirect taxation (VAT) and
Fourth report under Article 12 of Regulation (EEC, Euratom) No 1553/89 on VAT collection and control procedures
(COM(2000) 28 final of 28.1.2000) http://europa.eu.int/comm/taxation–customs/publications/official–doc/com/com.htm.
(2) Intra-Community trade is valued at EUR 930 billion annually. VAT accounts for 15 to 25 % depending on the Member State,
i.e. EUR 162,75 billion. According to the Commission’s estimates fraud accounts for 5 % of this amount, in other words a loss
of EUR 8 billion in tax revenue.

10.7.2001

EN

Official Journal of the European Communities

C 193/51

The proposals concerning the right to deduction and abolition of the procedure provided for under the Eighth
Directive (COM(98) 377)(1) and determination of the person liable for payment of VAT (COM(98) 660)(2) are crucial
to the simplification of existing procedures. They cover areas where refunds of VAT are difficult to obtain from other
Member States and deal with the cost and complexity of using tax representatives who are considered to be the main
source of problems for traders operating in other Member States, particularly for small businesses which are directly
affected by the cumbersome procedures involved. These proposals will be reviewed in the course of their examination
by the Council to ensure that they are compatible with the proposed changes to the current rules.

Two other proposals which the Commission still considers to be essential are the reform of the VAT Committee
(COM(97) 325)(3) and the improvement of mutual assistance for the recovery of claims (COM(98) 364)(4). The VAT
Committee plays an important role in ensuring existing rules are more uniformly applied, but its effectiveness
depends on finding a way of involving it in the procedure by which the Commission adopts binding implementing
decisions. The proposal on the recovery of claims is crucial to closer administrative cooperation and should be
adopted as quickly as possible. It will also be a perfect adjunct to the proposal to abolish compulsory tax
representation (COM(98) 660).

Other measures

The proposals already before the Council will be supplemented by other measures under a new strategy covering a
number of areas where Community legislation needs updating (e.g. postal services, e-commerce, etc.).

These areas are described in the annex. The list is in no way exhaustive and in no way excludes others being included.
The Commission will ensure that account is taken of the EU’s international obligations and their VAT implications.

(1) Proposal for a Council Directive amending Directive 77/388/EEC as regards the rules governing the right to deduct value added
tax and proposal for a Council Regulation (EC) on verification measures, measures relating to the refund system and
administrative cooperation measures necessary for the application of Directive 98/xxx/EC presented by the Commission on
17 June (COM(98) 377 final) (OJ C 219, 15.7.1998, pp. 16 and 20).

(2) Proposal for a Council Directive amending Directive 77/388/EEC as regards the determination of the person liable for payment

of value added tax presented by the Commission on 27.11.1998 (COM(98) 660 final) (OJ C 409, 30.12.1998, p. 10).

(3) Proposal for a Council Directive amending Directive 77/388/EEC on the common system of value added tax (the Value Added

Committee) presented by the Commission on 26.6.1997 (COM(97) 325 final) (OJ C 278, 13.9. 1997, p. 6).

(4) Proposal for a European Parliament and Council Directive amending Council Directive 76/308/EEC 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 agricultural levies and customs duties and in respect of value added tax and certain excise duties
presented by the Commission on 26 June 1998 (COM(98) 364 final) (OJ C 269, 28.8.1998, p. 16) and (COM(1999) 183 final)
(OJ C 179, 24.6.1999, p. 6).

C 193/52

EN

Official Journal of the European Communities

10.7.2001

APPENDIX II

to the Opinion of the Economic and Social Committee

The action programme

A meeting of the Tax Policy Group was held on 2 March 2000 to sound out Member States’ views on a new
approach to VAT and to establish where improvements could be made. Member States’ representatives endorsed this
pragmatic approach which demonstrated a determination to quickly tackle the problems encountered by traders and
provide them, as far as possible, with a solution which will enable them to benefit more effectively from the single
market.

The Commission has drawn up an action programme to implement this new VAT strategy based on four objectives:
simplification and modernisation of current rules, more uniform application of current rules and a new approach to
administrative cooperation.

Phase One: 2000/2001 — Adoption by the Council of the proposals already tabled

The following proposals are to be adopted as soon as possible:

— Changes to the status of the VAT Committee (COM(97) 325);

— Improving mutual assistance on recovery (COM(98) 364);

— Proposal on the right to deduction and the Eighth Directive (COM(98) 377);

— Proposal on the person liable for VAT (COM(98) 660).

Phase Two: 2000/2001 — Presentation of new proposals by the Commission

The Commission has tabled or will table proposals for Directives in the following areas in the course of the year:

— taxation of postal services;

— e-commerce;

— invoicing including electronic invoicing;

— revision of rules on administrative cooperation and mutual assistance;

— a minimum standard rate of VAT;

— the Commission will also present a report on the application of the reduced rate.

Phase Three: 2001 — Evaluation and definition of future priorities

Future priorities will largely depend on the progress made by the Council in adopting the proposals already tabled.
The Commission will present a progress report in 2001 and, once it has been discussed by the Council, will use it to
draw up a work programme setting future priorities, initially for 2001/2002. These priorities will be defined in the
light of the findings of a review of the issues discussed in the annex and any subsequent new requirements. Each of
the subsequent phases will largely depend on the proposals already presented being adopted by the Council. The aim
is to avoid a whole package of proposals waiting for the Council’s approval.