WRITTEN QUESTION P-1668/02 by Françoise Grossetête (PPE-DE) to the Commission. Persons liable for payment of VAT — interpretation of Article 21 of Directive 77/388/EEC.
Date: 2002-06-05
Institutions: European Parliament, Provisional data
Subjects: VAT, provision of services, tax law

6.2.2003

EN

Official Journal of the European Union

C 28 E/127

(2003/C 28 E/144)

WRITTEN QUESTION P-1668/02

by Françoise Grossetête (PPE-DE) to the Commission

(5 June 2002)

Subject: Persons liable for payment of VAT (cid:1) interpretation of Article 21 of Directive 77/388/EEC

Article 21(1)(b) of Directive 77/388/EEC (1) states that, under the internal system, value added tax is liable
to be paid by ‘taxable persons to whom services covered by Article 9(2)(e) 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’.

This means that if taxable person X in Member State A provides a service covered by one of the articles
above, from an establishment based in A, for the economic activity of taxable person Y, who is established
and identified for VAT purposes in Member State B, the person liable for VAT is:

(cid:1) either customer Y established in Member State B, if supplier X does not have a fixed establishment

in B,

(cid:1) or supplier X’s establishment in B, even if the establishment in B has never been involved in supplying
the service to Y and has no reason to be informed of activities carried out by another department in
the undertaking of which it forms part.

If the Commission takes the view that X’s establishment in B is liable for payment of VAT in B (cid:1) even if it
has never been involved in the activity concerned (cid:1) what can be done to resolve the issue of double
taxation, which might arise because of differences in the application of Article 21(1)(b)? An example is
given below. Undertaking X in Member State A provides music and software online from its principal
establishment in A to a non-taxable person in Member State B. Undertaking X has an establishment in B
that provides advertising services to another category of customers and this establishment has never been
involved in the online supply of music and software. What should be done if Member State A and Member
State B both consider that VAT is payable to them?

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

answer given by Mr Bolkestein on behalf of the Commission

(21 June 2002)

Article 21(1) of the Sixth VAT Directive (value added tax) provides that the person liable to pay tax is the
taxable person who supplies taxable goods or provides taxable services of a kind other than those covered
in paragraphs (b) and (c) and in those cases where the Member State exercises the option provided for in
the second sentence of paragraph (a).

The second sentence of paragraph (a) provides that when the taxable transaction is effected by a taxable
person resident abroad Member States may adopt arrangements whereby tax is payable by someone other
than the taxable person residing abroad. This is known as a ‘reverse charge’ which is one of the options
available to the Member States. It allows Member States, inter alia, to ensure that taxable foreigners do not
have to pay tax in their own country. More use has been made of this option since tax representation
became mandatory for traders established in the Community (since the entry into force on 1 January 2002
of Directive 2000/65/EC) (1).

Paragraphs (b) and (c) also provide in some instances (triangular trade, services of the type covered by
Article 9(2)(e) and Article 28b(C), (D), (E) and (F)) that the taxable person has to be the consignee (this
situation is known as a harmonised ‘reverse charge’).

In both cases the condition is that the taxable person supplying the goods or services may not be
established in the country.

Concerning the example of double taxation that was quoted, the Commission does not agree with the
analysis set out in the question. If taxable person X established in Member State A provides on-line services
from the place where he is established in Member State A to non-taxable customers established in another

C 28 E/128

Official Journal of the European Union

EN

6.2.2003

Member State, the place of taxation remains Member State A in accordance with Article 9(1) of the Sixth
VAT Directive and Member State B cannot require the person to pay tax on the transaction. For the
purpose of calculating the amount of VAT due, the place of taxation first has to be determined. Only then
is it possible to determine who is required to pay. Once the place of taxation has been established, it is the
legislation of the Member State of taxation which decides who is required to pay the VAT in its territory
and it is therefore impossible for double taxation to occur whatever the provisions concerning liability for
VAT.

(1) OJ L 269, 21.10.2000.

(2003/C 28 E/145)

WRITTEN QUESTION E-1688/02

by Stavros Xarchakos (PPE-DE) to the Commission

(12 June 2002)

Subject: Incentives to reverse the downward trend in the birth-rate

in Greece, the situation is particularly acute. It is
Low birth rate is a major problem in Europe and,
estimated that from 2015, the country’s population as a whole (which in any case is showing only
marginal upward movement) will begin to fall. In Greece, a family is defined as ‘large’ if it consists of four
or more children. Such a family qualifies for a small monthly allowance per child from the Greek state,
though this is added to the family’s total taxable income, thereby taking it into a higher tax bracket and
increasing its tax burden.

Are there countries in the Union where families with fewer than four children are defined as ‘large’? Are
there countries in the Union in which the monthly child benefit is not added to the total family income,
thereby avoiding paradoxical situations such as those which arise in Greece? Is there any possibility of
promoting common Community legislation to tackle the problem of the low birth rate at EU level as a
whole, setting two children as the threshold above which Member States should provide generous financial
incentives to encourage young Europeans to have larger families?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(9 July 2002)

The Commission shares the concerns expressed by the Honourable Member in relation to the low fertility
levels observed over recent decades in the Union, and in particular in Greece and other Mediterranean
countries. However, the setting up of policies regarding family and fertility issues remains the responsibility
of Member States, the Commission does not have a legal basis to develop policies in this domain. The
Commission is focusing on the study and monitoring of demographic trends, including fertility trends, as
they have an important impact on Community policies.

In this context, the Commission is undertaking the following activities:

(cid:1) the Commission publishes each year a report on ‘the Social Situation in the European Union’, in
which the evolution of fertility and other demographic trends, as well as their consequences in the
social field, are analysed;

(cid:1) at the same time, the Commission (co)finances every year studies analysing the main demographic and

social trends, including the causes of low fertility;

(cid:1) finally, the Commission finances the European Observatory on the Social Situation, Demography and
Family in order to monitor the related policies in the Member States. More information can be found
at
(http://europa.eu.int/comm/employment_social/family/observatory/
the
home.html).

following website: