Opinion of the Economic and Social Committee on the "Proposal for a Council Directive amending 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of value added tax"
Date: 2001-04-26
Institutions: European Economic and Social Committee
Subjects: VAT, invoicing, simplification of formalities, tax harmonisation

10.7.2001

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Official Journal of the European Communities

C 193/53

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Directive
amending 77/388/EEC with a view to simplifying, modernising and harmonising the conditions
laid down for invoicing in respect of value added tax’

(2001/C 193/13)

On 12 January 2001 the Council decided to consult the Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

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 (meeting of 26 April 2001), the Economic and Social Committee adopted
the following opinion unanimously.

1.

Introduction

1.1.
Invoices are amongst the most important documents
in business. They are subject to accounting, tax, business and
even linguistic rules. VAT legislation forms the core of many
of these rules. At the same time,
invoices are frequently
required for other purposes and may be mandatory even where
no VAT is involved.

The Community VAT system is built around the
1.1.1.
obligation to issue invoices. A VAT invoice has three functions:

— it contains information as to which VAT regime is

applicable;

— it assists tax authorities to carry out controls;

— it enables customers to prove, if necessary, their right to

deduction.

An invoice is also a vast legal concept governed by
1.1.1.1.
commercial and tax legislation, on the basis of which the
parties (i.e. taxable person, customer and tax authorities) may
initiate court proceedings, in particular in the absence of a
written contract.

1.2.
However, the rules governing invoicing vary widely
from one Member State to another. There is no fixed practice
dictating what or how much information must be included in
an invoice; nor has the EU adopted a common legal framework
for electronic invoicing and self-billing. Consequently, Member
States’ rules in these areas are very diverse, ranging from a
total ban to extreme flexibility.

1.3.
As a result of these diversities, traders find themselves
faced with a highly complex legal situation and one which has
clearly failed to keep pace with technological developments.
This lack of harmonisation was cited by their representatives

as an obstacle to the correct functioning of the Internal Market
during the second phase of the SLIM (1) exercise. The results of
this consultation were incorporated in the Commission’s
report on the SLIM initiative (2), whose conclusions were
approved by the Internal Market Council on 27 November
1997. This report includes a commitment to study ‘the details
considered necessary for drawing up an invoice for VAT
purposes and the legal and technical requirements for elec-
tronic invoicing’.

1.4. Moreover, in the course of the work on adapting the
Community’s VAT system to the requirements of electronic
commerce, it has become clear that there is an urgent need to
authorise the widespread use of electronic invoicing, free of
any unnecessary constraints. In June 1998, the Ecofin Council
itself stressed the importance of establishing a legal framework
for the use of electronic invoicing, while ensuring that the
ability of the tax authorities to exercise effective control was in
no way impaired. In late December 1998, the Commission
therefore commissioned a study from PriceWaterhouseCoop-
ers of the conditions currently laid down for invoicing for VAT
purposes.

1.4.1.
Commission in August 1999. It concluded that:

The final report on this study was delivered to the

— electronic invoicing should be explicitly authorised by
Community legislation and should be permitted even
between trading partners operating in different Member
States;

— the conditions imposed on this practice should be neutral
with regard to the technology employed and should take
into account the work that has already been carried out
on electronic signatures;

— no prior authorisation or notification should be required
and only ex-post controls should be carried out by the
authorities, leading to a ban, if necessary;

— storage of invoices using an electronic medium should be

permitted on a similar basis;

(1) Simpler Legislation for the Internal Market
(2) COM(97) 618 final, 24.11.1997

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— minimum conditions should be set to ensure that these
procedures provide the same level of security for tax
authorities as conventional ones.

1.4.2.
The report also concludes that Community legis-
lation should include a harmonised mandatory list of those
statements which must be included on every invoice.
In
addition, the report recommends the adoption of a fairly
flexible approach to the question of which currencies or
languages should be permissible.

1.4.3.
Having studied these conclusions in depth and
discussed them both with traders and national administrations,
the Commission has decided to propose an amendment to
paragraph 3 of Article 22 of the Sixth VAT Directive, which
deals with the obligation to issue invoices. The aims of this
amendment are, firstly, to harmonise the rules determining
what statements must be included on invoices and, secondly,
to establish a Community legal framework for electronic
invoicing and self-billing.
the
Commission has sought to balance the need to simplify the
obligations imposed on traders with the administrations’
legitimate needs in terms of tax control.

these domains,

In both of

1.5.
The Commission’s initiative is not the only one looking
at invoicing requirements. Work is being undertaken within
the OECD on simplifications to facilitate developments in
electronic commerce. Additionally, a ‘Global Invoice Project’
was set up last year by American, European and Japanese
automotive manufacturers, their suppliers and EDI experts to
develop a harmonised electronic invoice message as a standard
for global use in the motor industry.

2.

The present provisions of the Sixth Directive

2.1. The obligation to issue an invoice

2.1.1.
The current provisions of the Sixth Directive con-
cerning the obligation to issue an invoice (Article 22(3)) are
sketchy and leave considerable freedom of interpretation to
the Member States. This paragraph was drafted at a time when
the only conceivable invoice was a paper document and the
idea of electronic invoicing is therefore entirely foreign to it.
In addition, the invoicing obligations are entirely based on the
concept of a paper invoice and cannot easily be transposed to
deal with electronic invoicing. Thus, for example, the obli-
gation to keep a copy of each document is difficult to transpose
to invoices using a virtual medium.

the same paragraph also provides that ‘Member States shall lay
down the criteria that shall determine whether a document
may be considered an invoice’. This can only be interpreted as
providing for the possibility that an invoice issued by a third
party or by the customer may also be valid; the European
Court of Justice (ECJ) has confirmed this interpretation (1).

2.1.3.
Such practices are very common and have been so
for a long time. The out-sourcing of invoicing operations is an
established practice in almost all European countries, even
though it is not specifically provided for in Community law. It
is therefore desirable to take the opportunity provided by this
Directive to clarify that point.

2.1.4.
Self-billing is also standard practice in a number of
different sectors, for example, where goods are held by the
customer as consignment stock. There is substantial economic
justification for this practice and it would therefore be
prejudicial to forbid it on a Community-wide scale, particularly
as it would not appear to create any major risk of tax
fraud. The Commission therefore believes that it would be
appropriate to establish common mechanisms to allow self-
billing under certain specified conditions.

2.1.5.
The Sixth VAT Directive provides that every taxable
person is obliged to issue an invoice for every act of supply of
goods or services to another taxable person or non-taxable
legal person. There is no obligation to issue invoices to non-
taxable persons except in the case of the supply of new
means of transport (Article 28cA) or some distance selling
(Article 28bB(1)). Other laws, however, allow Member States
to make invoicing obligatory in other cases as well. The
Commission does not see any need to amend these provisions
at this stage, as it is not aware of their having created any
major problems.

2.2.

Invoice contents

2.2.1.
Paragraph 3 of Article 22 simply refers to a non-
exhaustive list of statements to be mentioned on the invoice.
This list can, therefore, be extended by any Member State if it so
wishes by adding any further information which is considered
useful, on condition that the principle of proportionality is
respected (ECJ Judgement of 14 July 1988 — joined cases 123
and 330/87).

2.2.2.
In practice, the required statements vary widely from
one Member State to another, thus creating many problems
for traders who operate in more than one Member State.

2.1.2. While Article 22(3) begins by stating that it is the
taxable person himself who must issue the invoice, point (c) of

(1) Judgement of 17 September 1997:

‘Finanzamt Osnabrück —

Land v Bernahrd Langhorst’.

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2.3. Electronic invoicing

3.

The Commission’s proposals

from the

The concept of electronic invoicing, as such,
absent

is
2.3.1.
entirely
Sixth Directive. However,
Article 22(3)c allows, but does not require, Member States to
accept this type of invoice. The result is that, not only are
Member States free to choose whether or not to allow or
forbid this practice, but the conditions under which such a
framework may be established also vary widely.

2.3.2.
The fact that the conditions governing electronic
invoicing are not harmonised represents a significant obstacle
to the wide-scale deployment of this practice, especially to
large companies who may wish to delegate all their invoicing
activities to a single subsidiary (or third party) acting on behalf
of all their operations in a number of Member States, which
are thus subject to different laws.

At the same time, recent technological developments
2.3.3.
have made it a matter of some urgency to establish a common
legal framework for electronic invoicing. Electronic invoicing,
which was long the exception,
is set to become the rule,
particularly given the substantial cost savings it can bring. The
study carried out for the Commission has revealed that the
cost of an electronic invoice ranges between EUR 0,28 to
EUR 0,47, compared to EUR 1,13 and EUR 1,65 for a
conventional invoice.

It should be emphasised that

2.3.4.
this revolution in
business practice in no way represents a threat to the tax
authorities.

2.3.4.1.
These changes should actually make tax control
more effective, as new tax-control software programmes which
are now available enable electronic invoices to be checked
both more quickly and more easily than bulky files of paper
invoices.

2.4. Storage of invoices

3.1. The obligation to issue an invoice (Article 22(3)(a))

3.1.1.
It should be noted that the criteria determining in
which cases there is an obligation to issue an invoice at
Community level would remain unchanged. As far as VAT is
concerned, the range of cases presently covered by the Sixth
Directive is adequate, though it is possible that other laws may
impose an obligation to produce an invoice, or a document
serving as an invoice, for other purposes.

3.1.1.1.
The conditions imposed on invoicing by Com-
munity law would only be applicable in those cases where
Community law itself imposes an obligation to issue an invoice
for VAT purposes; in other cases, it will be up to the Member
States themselves to lay down these conditions.

3.1.2.
On the other hand, the right to delegate to a third
party the obligation to issue an invoice (out-sourcing) or to
the customer (self-billing) would be explicitly laid down.
Henceforth, the taxable person who carries out the transaction
would simply be the sole person responsible for ensuring that
invoices are issued and that
legal
requirements, without being obliged, sensu strictu, to issue them
himself.

they comply with all

3.1.3.
In the case of self-billing, further conditions might
be imposed at some point by the Member States in order to
ensure effective control. Such conditions should not discrimi-
nate against traders established in another Member State and
it would therefore not be possible to impose more restrictive
conditions on cross-border self-billing than on self-billing
within a single Member State.

3.1.3.1.
However, in those cases where the third party or
customer who issues the invoices on behalf of the taxable
person is established in a non-Community country with which
there is no legal framework for mutual assistance, harsher
conditions may be justified and Member States would have
discretion to impose them.

3.1.4.
The proposal provides a clear basis for summary
invoicing and debit and credit notes. As regards debit and
credit notes, the Commission proposes that they should be
treated in exactly the same way as the invoices they qualify. In
that case, all the provisions laid down in Paragraph 3 would
apply to them mutatis mutandis.

3.2.

Invoice contents (Article 22(3)(b))

2.4.1.
Under the Sixth VAT Directive, traders are obliged to
keep a copy of all documents which they issue. However, this
provision does not make much sense in relation to an
electronic invoicing system. It should therefore be modernised
to take the form of a more general obligation to store
information, whatever the method used.

3.2.1.
The Commission believes that it has become essential
to harmonise the statements required on invoices and has
therefore produced a list of the statements which may be
required. This list, unlike previous lists, is exhaustive; as a
result, tax administrations would not have the power to require
further statements for VAT purposes.

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3.2.2.
universal components:

The list proposed by the Commission contains twelve

— date of issue;

— a specific number;

— the VAT identification number referred to in para-
graph 1(c) of the taxable person and, where applicable,
his customer;

— the full name and address of the taxable person and his

customer;

— a description of the goods or services;

— the quantity of goods supplied or, if applicable, of services

rendered;

— the place of supply (i.e. the country) of the goods or the

rendering of services;

— the date of supply of goods or rendering of services;

— the taxable amount per rate;

— the VAT rate(s);

— the VAT amount payable;

— the total amount payable.

It also contains the following conditional elements:

— where an exemption is involved, reference to the pro-
vision of this Directive which justifies the exemption;

— where the supply of new means of transport is involved,

the particulars referred to in Article 28a(2);

Article 22(9)(a) and Article 25(4),
introduce simplifying
measures of their own. Under these provisions, Member States
are authorised to abolish obligatory statements in cases where
the taxable person is carrying out only transactions which are
exempt pursuant to Articles 13 and 15, is eligible for the
special scheme for small undertakings, is a flat-rate farmer or
does not carry out any intra-Community transactions. These
powers would remain unchanged.

The proposal also specifically states that, when
3.2.4.
invoices are sent in batches to a single recipient, the required
statements may be made only once if they are identical for all
the invoices in the batch. In addition, Member States are not
permitted to impose conditions with regard to the signature of
invoices, except for those whose sole purpose is to guarantee
the technical security of electronic invoicing.

irrespective of whether or not

3.2.5.
The Commission believes that no problems would
be created by giving traders the right to issue invoices in any
currency,
it is a national
currency or a Community currency, on condition, of course,
that the VAT amount is converted into the national currency
using the conversion methods defined in Article 11(C)(2).
With regard to languages, the Commission has applied the
principle of subsidiarity in leaving the Member States free to
decide the permissible languages, provided that the conditions
which they impose apply only to invoices issued by traders
within their jurisdiction and not to those which they receive.

— where the margin scheme is applied,

reference to

Article 26 or 26a;

3.3. Electronic invoicing (Article 22(3)(c))

— where the provisions of Article 28c(E)(3) are applied, an
explicit reference to that provision, as well as the
identification number for VAT purposes under which the
the intra-Community
taxable person has carried out
acquisition and the subsequent supply of goods and the
number by which the person to whom this supply is
made is identified for VAT purposes.

3.2.3.
This list of statements would be obligatory for
registered traders in all Member States and no other statements
would be obligatory for VAT purposes. Of course, traders
would be free to add other statements as they wished. In
addition, the Member States would be allowed to depart from
the compulsory list in the case of invoices for smaller amounts
and would be allowed to reach their own decisions about
waiving any or all of the compulsory statements on condition
that they might remove but not add. These provisions relate
only to transactions carried out within the jurisdiction of a
Member State and do not apply to cross-border transactions
within the Community.

3.2.3.1.
can always, by virtue of

It should also be remembered that Member States
the provisions contained in

3.3.1.
Article 22(3)(c) would establish the general principle
that an invoice can be issued on any medium, whether physical
or, subject to advance notification of the customer before the
transaction, electronic, so as to ensure the greatest possible
neutrality. The Commission believes that only through such a
general principle, unencumbered by any list of acceptable
technologies or methods, will it be possible to create a legal
framework which will be technologically neutral and thus able
to withstand the test of time.

3.3.2.
The Commission accepts that a prior notification
system may be necessary in the early stages of development
but believes that even this could and should be phased out as
more experience is acquired by Member State administrations.
It therefore proposes to allow Member States the option to
require prior notification up to 31 December 2005, provided
that
this does not prove obstructive and that under no
circumstances would a tax administration be able to give prior
refusal or impose any form of provisional suspension under
such a system.

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3.3.3.
The proposed legal framework consists of a number
of core conditions designed to guarantee the technical security
of electronic invoicing and to protect the interests of traders
who are aware of the need for secure electronic invoicing, as
well as those of the tax authorities. These conditions are:

— authenticity of the invoice’s origin must be guaranteed;

— integrity of the invoice’s contents must be guaranteed.

3.3.3.1.
In order to fulfil these two conditions, an electronic
invoice must bear an advanced electronic signature within
the meaning of Article 2(2) of Directive 1999/93/EC on a
Community framework for electronic signatures. According
this Directive, an advanced electronic
to Article 2(2) of
signature is an electronic signature which fills all of the
following requirements:

— it is uniquely linked to the signatory;

— it is capable of identifying the signatory;

3.4.1.1.
The Commission considers that it is up to traders
themselves to freely determine the place in which these
invoices are stored; this may lie outside the national territory.
This freedom would be subject to two conditions:

— traders must have immediate access at any time from
their own premises to all the information contained in
the invoices, so as to be able to comply with any request
for information which they may receive from the tax
authorities of their countries;

— the integrity of the data and its readability must be

guaranteed for the entire storage period.

3.4.1.2.
Such invoices would have to be stored in electronic
signature which
form and
electronic
accompanies them would have to be stored along with them
simultaneously.

advanced

the

3.4.2.
For storage facilities located in a non-Community
country with which there is no legal framework for mutual
assistance, Member States would be able to impose such
further conditions as they deem necessary.

— it is created using means that the signatory can maintain

under his sole control;

— it is linked to the data to which it relates in such a manner

that any subsequent change can be detected.

3.5. Article 1(2)

3.3.3.2.
In the case of invoices sent electronically from a
non-Community country with which there is no legal frame-
work for mutual assistance, the Member States would be able
to impose additional conditions for the acceptance of such
invoices for VAT purposes.

3.3.3.3.
It would still be possible for traders who so wish
to impose stricter requirements on themselves. They may also
choose to go further in securing the contents of the messages
they send, for example, by the use of encryption techniques.
The Commission does not believe that either of these practices
should be made compulsory.

3.4. Storage of invoices (Article 22(3)(d))

3.4.1.
The idea of an obligation to ‘store a copy’ is to be
replaced by a more general obligation to ‘store’ invoices issued
and received, as being more appropriate to the developing
technology of electronic invoicing. The period of time for
which invoices should be stored is left to the discretion of the
Member States. Where the invoices were stored in a country
other than that in which the registered trader is located, the
applicable law would be that of the Member State in which the
taxable person is registered.

3.5.1.
Article 22(8) currently allows Member States to lay
down additional obligations which they deem necessary to
ensure that they collect the correct amount of tax and to
prevent fraud. The Commission proposes that this paragraph
be amended so as to indicate that it cannot be used to impose
additional obligations on the invoicing procedure, as the
relevant obligations have now been harmonised.

4. Comments

4.1.
The Committee welcomes the proposal to update
Community legislation by recognising the right of traders to
carry out invoicing by electronic means and endorses the
concept of harmonisation of the contents of the invoice.

The Committee has consistently supported the aims
4.2.
and objectives of the SLIM initiative and consequently wel-
comes the Commission’s present proposals as a further
implementation of those principles.

4.2.1.
It has also pointed out on several occasions that the
differences in VAT regulations, interpretations, requirements,
custom and practice, which divide the Community into fifteen
different legal and tax systems, create greater problems for
traders attempting to carry out cross-border transactions
within the Community than differences in the VAT rates.

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4.3.
The Committee agrees with the Commission that the
diversity of VAT regulations between the Member States
creates disincentives to cross-border trade, particularly for
SMEs, results in distortions of competition and, therefore,
interferes with the operation of the Single Market.

4.4.
Any measure which seeks to reduce this diversity
and produce a more harmonious situation must reduce the
administrative costs for European businesses and, as the
Commission points out, make them more competitive vis-à-vis
non-Community companies.

4.4.1.
The Committee therefore accepts the Commission’s
contention that Community legislation is necessary in this area
to harmonise the conditions imposed on invoicing, whether
invoices are issued on paper or electronically, in order to
ensure that the Single Market functions properly.

The Committee also agrees with the importance which
4.5.
the Commission attaches to removing obstacles to the develop-
ment of electronic invoicing if Community businesses are not
to be left behind by the technological advances which are
being made throughout the world at an increasingly rapid rate.

4.5.1.
The Committee endorses the Commission’s view that
legislation in this area should be neutral as to technology and
should be based on a general principle unencumbered by any
list of acceptable technologies. Any such list would quickly
become outdated by technological advances and would require
It would have been
constant updating of the legislation.
preferable had the Commission adopted a similar approach in
its proposals relating to the taxation of e-commerce instead of
producing lists of the supplies that were caught by that
proposal.

4.5.2.
The Committee would observe that traders making
use of electronic invoicing and storage systems should be alert
to the risk of compromising the confidentiality of sensitive
data.

The Committee takes note of the fact

4.6.
that some
Member State administrations are not currently in a position
to permit electronic invoicing because they do not have the
necessary technology to enable them to control it. It would
seem likely that this state of affairs will give rise either to
derogations or to a delay in implementing the Commission’s
proposals sufficient to allow those administrations to re-equip.
The Committee hopes that any such derogations or any
deferral of the implementation date will be restricted to the
shortest possible period.

4.7.
The Committee notes that ‘the new compulsory list
that would result should be applicable only in cases in which
invoicing is obligatory under the Sixth VAT Directive and not
in other cases which might be required by particular national
legislation’.
the Member States tax
administrations would not have the power to require further
statements for VAT purposes. It hopes that Member States will
not seek to circumvent this restriction by demanding additional
compulsory statements, ostensibly for other purposes.

It also observes that

The list of compulsory data includes a specific invoice
4.7.1.
number, which need not, however, be in a sequential series.
The Committee considers that the scope for fraud would be
considerably reduced if there were a requirement for these
numbers to be sequential; this would improve the system of
control by making it easier to detect when an invoice had been
removed. At the very least, Member States should be given the
option of stipulating this requirement.

4.8.
The Committee agrees with the Commission that prior
notification systems are unnecessary in the long run and
approves the proposal to prohibit their use after 31 December
2005.

4.9.
Certain Member States currently require invoices to be
produced on stationery issued by suppliers who are approved
by the national tax authorities. The Committee considers that,
as long as the invoice format complies with the Directive and
fulfils all mandatory requirements, the taxpayer should be
allowed to choose the form of document on which the
information is printed. In any case, such a requirement in
incompatible with the concept of electronic invoicing.

4.10.
The Committee welcomes the fact that out-sourcing
and self-billing would be specifically recognised in Community
legislation and endorses the Commission’s proposals in this
area, recognising that, while the Commission’s proposals
authorise traders to delegate the production of the invoice,
they cannot evade their responsibility to the tax authorities for
ensuring that such production takes place and that the invoice
complies with all legislative requirements.

A clear basis is provided for summary invoicing.
4.10.1.
The Commission has confirmed that there is no linkage here
to the continuous-supply provisions in Article 10(2) of the
Sixth VAT Directive.

4.10.2. With regard to the proposed treatment for debit
and credit notes, the Committee believes that there would be a
reduced risk of fraud if Member States were empowered to
require that debit and credit notes should be cross-referenced
to the original invoice to which they refer.

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4.11.
The Committee agrees with the Commission that
traders should be free to determine the medium on which
invoices are recorded as well as the place where they are
stored,
territory,
including locations outside the national
subject to the necessary conditions which the Commission has
laid down to protect the integrity of the data and ensure ready
access to it for tax control purposes. However, it is concerned
that, where the storage takes place in a non-EU country with
which the Member State concerned does not have a bilateral
agreement, there may be a risk of fraud if the additional
conditions imposed are not sufficiently strict. Difficulties may
also arise where invoices are stored in a country which has a
bilateral agreement with one or more Member States but not
with others.

4.11.1.
The storage of data in non-EU countries may also
give rise to data protection implications. The European Data
Protection Directive forbids the transfer of personal data to
countries that do not subscribe to European data protection
principles. Such data might include names, addresses, postco-
des, email addresses and other information which is required
on the invoice.

revenue. As long as there are fifteen different tax adminis-
trations, effective control can only be exercised through a high
degree of mutual cooperation and assistance, whatever VAT
regime is in force. It is difficult to escape the conclusion that
Member State tax administrations have allowed a substantial
degree of fraud to take place by failing to utilise to the fullest
possible extent the instruments of control at their disposal
through a lack of coordinated effort. The Committee hopes that
a much higher degree of mutual cooperation and assistance can
be attained in the future.

4.14.
It should be an objective of any modification to the
VAT system to reduce the administrative burden on businesses,
and especially SMEs, to the greatest extent possible without
compromising the ability of the tax authorities to maintain
effective controls. The Committee accepts that, while the
present proposals would increase the existing burden for
businesses located in some Member States, they would reduce
the burden for others and it considers that, overall, the
objective has been achieved in this instance.

4.12.
The Committee agrees that Member States should not
be permitted to impose conditions for the signing of invoices
except
for the advanced electronic signature whose sole
purpose is to guarantee the technical security of electronic
invoicing. Indeed, it considers that, while the requirement for
an advanced electronic signature is desirable for invoicing via
the Internet, it might prove to be a burden for businesses, and
especially small businesses,
in relation to Electronic Data
Interchange (EDI) systems. The Committee considers that,
where a business uses an EDI communications system which
is in itself secure and tamper-proof, consideration should be
given to dropping this requirement.

5. Conclusions

The Committee broadly welcomes the Commission’s
5.1.
intended approach. It approves the concept of a harmonised
system which imposes the same obligations for paper-based
and electronic systems and which makes no distinction
between internal and cross-border transactions. The new rules
need to be sufficiently flexible to meet the needs of both large
and small businesses and to keep pace with the development
of new commercial practices and technologies.

4.13.
The Committee is concerned by the substantial losses
to Member State revenues which stem from the vast scale of
fraud in relation to VAT; these losses are estimated to exceed
35 billion Euro per annum in the Community as a whole. It
must therefore be a prime requirement of any proposed
modifications to the system that they should in no way
increase the risk of fraud and should preferably serve to reduce
it.

5.2.
The Committee agrees with the Commission that its
proposals will encourage the emergence of standardised inter-
operable electronic formats for invoicing. It would like to see
this work harmonised as far as possible with wider global
initiatives (e.g. the OECD project) on simplification to facilitate
developments in electronic commerce.

The Committee accepts the Commission’s prop-
4.13.1.
osition that these proposals do not represent a threat to the
tax authorities. However, it considers that they will place an
even greater emphasis on the need for close cooperation
between the tax authorities. Such cooperation has been sadly
lacking in the past and lies at the heart of much of the fraud
which is currently depriving Member States of their legitimate

5.3.
The Committee stresses the need for the prevention of
fraud in the VAT system. It accepts the Commission’s view
that the proposals provide the Member State tax adminis-
trations with sufficient guarantees that the security they require
will not be compromised and that electronic invoicing will
facilitate the control process because electronic invoices can
be checked more quickly and more easily than bulky files of
paper invoices.

C 193/60

EN

Official Journal of the European Communities

10.7.2001

The Committee recognises that

5.4.
the Commission’s
proposals will require some Member States to forego some of
the information which they currently require to be included
on an invoice and to relax some of the regulations which are
currently in force in the territory under their jurisdiction.
Conversely, the harmonised invoice contents may require
businesses in some Member States to furnish information
which they are not currently required to produce. The
Committee believes that such sacrifices are necessary for the

completion of the Single Market and will ultimately be to the
benefit of businesses and tax administrations alike. It calls
upon the Member States to accept these changes as a necessary
adjunct of Single Market harmonisation and co-ordination.

The Committee hopes that any derogations given to
5.5.
Member States in respect of
to accept
electronic invoicing will be limited to the shortest possible
time.

the requirement

Brussels, 26 April 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on ‘EU enlargement: the challenge faced by
candidate countries of fulfilling the economic criteria for accession’

(2001/C 193/14)

On 13 July 2000 the Economic and Social Committee decided, under Rule 23 of its Rules of Procedure,
to draw up an opinion on ‘EU enlargement: the challenge faced by candidate countries of fulfilling the
economic criteria for accession’.

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 13 March 2001.
The rapporteur was Mr Vever.

At its 381st plenary session on 25 and 26 April 2001 (meeting of 25 April) the Economic and Social
Committee adopted unanimously the following opinion.

1.

Summary

1.1.
In the course of this decade the European Union will
be expanding on a large scale, making a reality of the new
political ambition to unify the greater part of the European
continent from west to east. The guidelines of the enlargement
strategy, updated by the Commission in November 2000 and
since approved by the Council, deem that the preconditions
on the EU’s side have now been met, on the financial level by
the Berlin agreement on Agenda 2000, and on the institutional
level by the Nice agreement reforming the Treaty. The new
enlargements essentially depend on the ‘road maps’ for each of
the applicant countries,
i.e. their progress in adopting the
Community acquis, considered to be going well for the great
majority of the applicants, and in concluding the accession
negotiations, considered to be possible as of 2002 for the
applicant countries which are in the best position. While

subscribing to the main points of this assessment, the Com-
mittee would also stress that responsibilities will necessarily
still have to be shared between the 15 EU Member States and
the applicant countries for taking up the economic challenge
of enlargement. This is a moving target and the stakes are
threefold: effective adoption of the acquis, more effective
support methods and preparation for new cohesion in an
enlarged Union.

1.2.
Taking on board the Community acquis effectively is
very exacting because of the high level of integration which
the Union has already achieved and will continue to work on.
The issue is inevitably complicated by the high number of
applicant countries,
the gaps between them in terms of
development and the diverse nature of their adjustment needs.
The Commission’s report of November 2000 set out the highly
encouraging progress achieved in the applicant countries,
demonstrated by increasing trade with the European Union.
This progress opens up the prospect of accession for a large