Proposal for a Council Regulation laying down implementing measures for Directive 77/388/EEC on the common system of value added tax
Date: 2004-10-08
Institutions: European Commission
Subjects: European Economic Interest Grouping, VAT, application of EU law, basis of tax assessment, distance selling, electronic commerce, personal income tax, provision of services, tax harmonisation, tax law, vehicle tax

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 25.10.2004 
COM(2004)641 final/2 

Proposal for a 

COUNCIL REGULATION 

laying down implementing measures for Directive 77/388/EEC on the common system of 
value added tax 

Corrigendum: Annule et remplace  
la version envoyée le 8.10.2004.  
Concerne les versions FR/EN/DE. 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Context 

Under Article 29a of the Sixth Council Directive of 17 May 1977 on the harmonisation of the 
laws of the Member States relating to turnover taxes - Common system of value added tax: 
uniform  basis  of  assessment1,  the  Council,  acting  unanimously  on  a  proposal  from  the 
Commission, shall adopt measures necessary to implement the Sixth Directive. The Council 
has reserved its right to decide on these measures, as they might have a significant impact on 
the budget of one or more Member States. The scope of such implementing measures remains 
limited  since,  although  they  are  designed  to  clarify  the  provisions  laid  down  in  the 
Sixth Directive, they can not derogate from them. 

Implementing  provisions  should  ensure  the  correct  and  more  uniform  application  of  the 
current VAT system to improve the functioning of the internal market. They are particularly 
necessary where there is a danger of double taxation of cross-border transactions as the result 
of  divergences  between  Member  States  in  the  application  of  the  provisions  of  the  Sixth 
Directive governing the place of supply. 

Between 1977 and 2003, and in accordance with its rules of procedure under Article 29 of the 
Sixth  Directive,  the VAT Committee, operating in an advisory  role, unanimously adopted a 
number  of  non-binding  guidelines  with  the  intention  of  improving  the  correct  and  more 
uniform  application  of  the  current  VAT  system  and  -  since  1993  -  the  functioning  of  the 
internal  market.  These  guidelines  concern  important  aspects  of  the  application  of  the  Sixth 
Directive, in particular the definition of the taxable person; the place of supply of goods and 
services; the taxable amount; and the application of the transitional provisions. They therefore 
warrant being given a binding legal form in a Regulation for improving future legal certainty 
on how the provisions of the Sixth Directive should be applied.  

The  Commission  has  considered  the  ongoing  validity  and  utility  of  the  unanimously  agreed 
guidelines  and  is  now  proposing  legislation,  where  appropriate,  to  give  some  of  them  legal 
force. In this context, it should not be forgotten that the original guidelines were drawn up in 
response  to  specific  questions  of  application  raised  by  Member  States.  They  therefore  are 
designed to bring consistency of treatment to individual questions and as a result only have a 
narrow application with no automatic read across to other, similar cases. 

Comments regarding the individual provisions 

Article 1 – Subject matter 

Article  1  lists  all  the  Articles  and  the  Annex  of  Directive  77/388/EEC  affected  by  the 
Regulation and thus defines its scope. 

Article 2 – taxable person 

This  Article  clarifies  that  European  Economic  Interest  Groupings  are  capable  of  making 
taxable  supplies  in  their  own  right  as  a  taxable  person  if  all  the  conditions  for  doing  so  are 
met.  

1 

OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/66/EC (OJ L 168, 1.5.2004, p. 35). 

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Article 3 – Definition of services 

Article 3(1) establishes that the sale of an option to exercise a right is a supply of a service in 
its own right and thus not part of any supply made under, or resulting from, the option. The 
paragraph 
fifth  point  of  Article  13(B)(d)  of 
limited 
Directive 77/388/EEC. 

to  options  within 

the 

is 

Article 3(2) clarifies that the mere assembly of a machine (where the parts have been provided 
by the customer) is a service. 

Article 4 – Services falling under 9(1) of Directive 77/388/EEC  

Article 4(1) lists particular instances where the place of the supply will always be decided by 
reference to Art 9(1) of the Directive. The rule does not apply to services supplied within the 
framework of organising a funeral unless the funeral constitutes a single supply of services. 

Article  4(2)  deals  with  situations  where  the  supplier  has  premises  in  both  the  customer's 
Member  State  and  in  another  Member  State.  In  such  cases,  the  place  of  supply  is  to  be  the 
place where the supplier has established his business, except where the supply is effectively 
made from the fixed establishment in the other Member State. The extent of the involvement 
of each location in the supply is a matter for Member States to decide on an individual basis. 

Article 5 – Services falling under 9(2)(c) of Directive 77/388/EEC 

Article 5 determines the place of supply for services of the mere assembly of a machine. The 
Article  stipulates  that  the  rule  only  applies  to  a  supply  of  services  of  work  on  tangible 
property  which  does  not  become  part  of  immoveable  property.  This  excludes,  for  example, 
the  supply  of  the  service  of  assembling  and  installing  machinery  such  as  a  lift  or  air 
conditioning plant where part of the service is the machinery's incorporation within the fabric 
of a building. 

Articles 6 to13 – Services falling under 9(2)(e) of Directive 77/388/EEC  

Article 6 clarifies that the services of translating written text are included in Article 9(2)(e). 

Article 7 determines that the  place of supply for television broadcasting rights in respect of 
football matches in certain circumstances will fall under Article 9(2)(e), first indent. 

Article  8  places  the  service  of  dealing  with  8th  Directive  refunds  within  the  third  indent  of 
Article 9(2)(e). 

Article 9 confirms that the agents referred to in Article 9(2)(e) seventh indent may be acting 
on behalf of a buyer or on behalf of a vendor.  

Article  10  has  the  effect  of  ensuring  that  trailers  and  semi-trailers  are  excluded  from  the 
definition of moveable tangible property in Article 9(2)(e) 8th indent. 

Article 11 defines "radio and television broadcasting services" referred to in Article 9(2)(e), 
11th indent. 

Article 12 together with Annex I help to define which services are included in Article 9(2)(e), 
last indent and Annex L to Directive 77/388/EEC. These definitions are not exhaustive.  

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Article 13 helps to define which services are excluded from Article 9(2)(e), last indent. This is 
not an exhaustive list. 

Article 14 - Taxable amount 

Article  14  clarifies  the  VAT  treatment  of  a  practice  used  to  reduce  the  taxable  value  of  a 
supply. Although the overall price to the customer remains the same regardless of the method 
of payment, where payment is made by credit or debit card, a card handling fee is levied. The 
effect is to reduce the taxable value by the magnitude of the exempt card handling fee. 

The Regulation ensures that where the total price charged for a supply of goods or services 
remains unchanged by the method of payment, then the taxable amount is not affected. It does 
not apply, therefore, when an additional charge for paying by credit or debit card is made. 

Articles 15 to 19 - Exemptions 

Article 15 and 16 help to define what is included in the scope of exemptions. Article 15 helps 
to  define  the  phrase  "vocational  training  or  retraining"  found  in  Art  13A(1)(i)  of  the 
Sixth Directive and establishes that the duration of the course does not have any impact on its 
classification.  Although  legal  currency  in  the  Isle  of  Man,  platinum  nobles  are  normally 
regarded as collectors items, and Article 16 excludes them from the exemption for currency, 
bank notes and coins.  

Article 17 establishes that the use of means of transport for private purposes by non-natural 
persons,  in  addition  to  use  by  natural  persons,  is  covered  by  the  provisions  of  15(2)  of  the 
Sixth Directive. 

Article  18  confirms  that  the  value  threshold  in  Article  15(2)  of  the  Sixth  Directive  is  to  be 
calculated  by  using  invoice  values.  If  a  number  of  goods  have  been  supplied  on  the  same 
invoice to the same customer, by the same supplier, the total amount invoiced may be used to 
calculate whether the threshold value has been exceeded.  

Article  19  determines  that  air  traffic  control  services  within  airport  zones  falls  within  the 
scope of the exemption found in Article 15(9) of the Directive. The exemption only applies 
where the services are supplied to meet the direct needs of aircraft specified in Article 15(6).  

Article 20 – Evidence for deduction 

Article 20 allows import documents to be in either paper or electronic form for the purpose of 
Art 18(1) of the Sixth Directive, but only if the importing state has an electronic system and if 
the electronic document can be checked. 

Article 21 – Agricultural flat rate  

Article  21  implements  Art  25(3)  of  the  Sixth  Directive.  It  provides  a  uniform  method  of 
calculating  the  flat-rate,  based  on  average  percentages,  and  in  the  absence  of  data  from  the 
3 years immediately prior to the year for which the flat-rate is being calculated, it allows the 
3 most recent known years to be used. 

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Article 22 – Definition of investment gold 

Article  22  identifies,  through  an  Annex,  a  minimum  definition  of  the  weights  commonly 
accepted by the bullion market. These weights will have to be accepted by Member States as 
qualifying as "investment gold". 

For  the  purpose  of  drawing  up  the  list  referred  to  in  Article  26b  of  Directive  77/388/EEC 
Article 22 establishes a common date (1 April) for Member States to apply one of the tests to 
define gold coins as investment gold - that the selling price of gold coins should not exceed 
the open market value by more than 80%. Where 1 April falls on a day on which the markets 
do not set a price, an alternative date – the next date on which the price is fixed - is provided 
for.  

Article 23 – Special scheme for electronically supplied services 

Article  23  deals  with  the  arrangements  for  running  the  special  scheme  for  electronically 
supplied services.  

Article  23(1)  confirms  that  a  non-established  taxable  person  using  the  special  scheme  for 
electronically  supplied  services  in  Article  26c(B)  of  Directive  77/388/EEC  can  be  excluded 
from the special scheme at any time in that quarter after they met the criteria for exclusion. 
There is no requirement to wait, for example, until the end of a calendar quarter or calendar 
year.  

The second sub-paragraph of Article 23(1) ensures that supplies made under the scheme up to 
the date of exclusion are only accounted for on a scheme return. Under Article 26c(B)(5) this 
should be rendered within 20 days of the end of the calendar quarter in which exclusion took 
place. It is implicit that paragraphs (6) and (7) of Article 26c(B) will apply to this return. and 
explicit that the return has no impact on the person's obligations under the normal rules. 

Article  23(2)  caters  for  overpayments  compared  to  a  return  rendered  under  the  special 
scheme. If the error is discovered prior to the amounts being disbursed by the Member State 
of identification then the trader shall be directly reimbursed. If the error is discovered after the 
tax  has  been  distributed  (because  it  is  the  result  of  the  correction  of  an  incorrect  return  for 
example) then Member States will directly reimburse the trader, advising the Member State of 
identification. 

Article 23(3) precludes the accounting for errors through adjustments on subsequent returns. 
It requires VAT due in a particular quarter to appear only on that quarter's return and for the 
payment only to be accounted for against that return. By ensuring that tax which accrues in a 
particular period is declared and accounted for in relation to that period only, each Member 
State is assured of obtaining its fair proportion of revenue. 

Article  23(4)  stipulates  that  figures  on  returns  under  the  scheme  are  not  subject  to  any 
rounding. 

Article 24 – Incorrect treatment of intra-Community supplies 

Article  24  caters  for  circumstances  in  which  a  mistake  has  been  made  in  the  application  of 
certain rules on intra-Community transactions. It ensures that incorrect treatment of the supply 
in  the  vendor's  Member  State  shall  not  affect  the  correct  application  of  the  rules  in  the 

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Member State of acquisition. Any refund of the VAT in the vendor's Member State which it 
turns out was wrongly charged and accounted for shall only be made by the tax authority to 
the  registered  person  originally  accounting  for  the  tax,  subject  to  national  rules  covering 
refunds. 

Article 25 – Taxation of new means of transport 

Article  25  ensures  that  the  transfer  between  Member  States  of  a  means  of  transport  by  a 
private person as part of a transfer of their usual residence does not create a tax charge even 
though the means of transport is still new. This does not apply when there is evidence to show 
that the person involved envisaged a move when the new means of transport was originally 
purchased. 

Article 26 – Implications of breaching the distance selling thresholds 

Article  26  deals  with  the  operation  of  the  distance  selling  thresholds.  Under  Article  26  first 
sub-paragraph,  the  treatment  of  supplies  made  whilst  still  below  the  threshold  level  are  not 
affected by a breach of the threshold. The second sub-paragraph of Article 26 identifies the 
supplies whose place of supply are affected the breaching of the threshold: the supply which 
took  the  total  supplies  over  the  threshold  in  that  Member  State  (letter  a);  any  subsequent 
supplies  to  that  Member  State  (letter  b);  and  any  supplies  in  the  following  calendar  year  to 
that Member State (letter c). 

Article 27 – Details of commencement 

Self-explanatory.  

Annexes 

Annex I is referred to in Article 12 and amplifies the illustrative list of services in Annex L of 
Directive 77/388/EEC. It comprises a non-exhaustive list of services, which, when delivered 
over the internet or an electronic network, are defined as electronically supplied services. 

Annex II refers to Article 22 and lists the commonly traded weights accepted by the bullion 
markets. 

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Proposal for a 

COUNCIL REGULATION 

laying down implementing measures for Directive 77/388/EEC on the common system of 
value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the 
laws of the Member States relating to turnover taxes - Common system of value added tax: 
uniform basis of assessment2, and in particular Article 29a thereof, 

Having regard to the proposal from the Commission3, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

In  order  to  improve  the  functioning  of  the  internal  market,  it  is  essential  to  ensure  a 
more  uniform  application  of  the  current  value  added  tax  system.  The  adoption  of 
provisions implementing Directive 77/388/EEC is a major step forward in that respect. 
A  Regulation,  binding  and  directly  applicable  in  all  Member  States,  will  ensure  that 
certain  divergences  in  the  application  of  the  provisions  of  Directive  77/388/EEC  no 
longer  occur  in  the  future.  This  Regulation  will  apply  only  when  value  added  tax 
becomes chargeable after the date of its entry into force. 

In accordance with the principle of proportionality, it is necessary and appropriate for 
the achievement of the basic objective of ensuring a more uniform application of the 
current value added tax system to lay down rules implementing Directive 77/388/EEC, 
in particular in respect of taxable persons; the supply of goods and services; and the 
place of their supply. This Regulation does not go beyond what is necessary in order to 
achieve the objectives pursued, in accordance with the third paragraph of Article 5 of 
the Treaty. 

The implementing provisions contain specific rules in response to selective questions 
of  application  and  are  designed  to  bring  consistency  of  treatment  throughout  the 
Community to those specific circumstances only. They are therefore not conclusive for 
other cases.  

The further integration of the internal market led to an increased need for co-operation 
by economic operators established in different Member States across internal borders 
and  the  development  of  European  economic  interest  groupings,  constituted  in 
accordance  with  Council  Regulation  (EEC)  No  2137/854;  it  should  therefore  be 

2 
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4 

OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/66/EC (OJ L 168, 1.5.2004, p. 35). 
OJ C […], […], p. […]. 
OJ L 199, 31.7.1985, p. 1.  

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provided  that  such  groupings  are  also  taxable  persons  where  they  supply  goods  or 
services for consideration or intend to make such supplies. 

In  particular  cases,  supplies  of  machines  go  hand-in-hand  with  specific  assembly 
activities, creating a need to define in which cases the transactions involved should be 
supplies of services and to establish the place of supply. 

The sale of an option as a financial instrument has to be treated as a supply of services 
separate from the underlying transactions to which the option relates. 

The application of rules governing the place of supply for the hiring of railway wagons 
varies considerably in the Member States; as such hiring often involves cross-border 
scenarios, it is necessary to specify the rule on the place of supply. 

(5) 

(6) 

(7) 

(8)  Where various services supplied in the framework of a funeral form a part of a single 

service, the rule on the place of supply should also be determined. 

(9)  Where  the  supplier  of  services  has  established  his  place  of  business  in  one  Member 
State and a fixed establishment in another, priority should be given to the former for 
establishing the place of supply of the services, unless the supply is effectively made 
from the latter. 

(10)  Certain  specific  services  such  as  the  assignment  of  television  broadcasting  rights  in 
respect of football matches, the translation of texts, services for claiming value added 
tax  refunds,  certain  services  as  an  agent,  the  hiring  of  means  of  transport,  radio  and 
television broadcasting  services, and certain  electronic services, involve cross-border 
scenarios  or  even  economic  operators  established  in  third  countries.  The  place  of 
supply of these services needs to be clearly determined in order to create greater legal 
certainty.  It  should  be  noted  that  the  services  identified  as  electronic  services  or 
otherwise do not constitute a definitive, exhaustive list. 

(11) 

In certain  specific  circumstances a credit or debit card  handling fee which  is paid in 
connection with a supply should not decrease the taxable amount for the latter. 

(12)  Exempt vocational training or retraining should include instruction relating directly to 
a  trade  or  profession  as  well  as  any  instruction  aimed  at  acquiring  or  updating 
knowledge  for  vocational  purposes,  regardless  of  the  duration  of  a  course,  because 
they fulfil the purpose pursued by the exemption. 

(13) 

“Platinum  nobles”,  that  is  to  say,  coins  containing  at  least  1oz  (31.1  grams)  of  pure 
platinum, are normally treated as collectors' items or as an investment medium, but are 
also recognised as legal tender on the Isle of Man. They should in all cases be treated 
as being excluded from the exemptions for currency, bank notes and coins. 

(14)  Associations  and  bodies  governed  by  public  law  should,  in  the  same  way  as  natural 
persons,  be  denied  exemption  for  goods  transported  outside  the  Community  by  the 
purchaser and used for equipping, fuelling or provisioning of means of transport. 

(15)  National  administrative  practices  for  the  calculation  of  the  minimum  value  for 
exemption on  exportation of  goods carried in the personal  luggage of travellers  vary 
considerably and therefore need to be harmonised. 

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(16)  Certain  air  traffic  control  activities  in  the  airport  zone  should  be  exempt  from  value 

added tax, subject to appropriate conditions.  

(17)  Electronic import documents should also be admitted to exercise the right to deduct, 

where they fulfil the same requirements as paper-based documents. 

(18)  The  flat-rate  compensation  percentages  should  be  calculated  on  a  uniform  basis  to 

avoid competitive distortions between farmers in different Member States. 

(19)  Weights  for  investment  gold  which  are  definitely  accepted  by  the  bullion  market 
should  be  named  and  a  common  date  for  establishing  the  value  of  gold  coins  be 
determined to ensure equal treatment of economic operators. 

(20)  The special scheme for taxable persons not established in the Community, supplying 
electronic  services  to  non-taxable  persons  established  or  resident  within  the 
Community  is  subject  to  certain  conditions, and  the  consequences  of  failure  to  meet 
those conditions should be made clear. 

(21)  Where  certain  rules  for  intra-Community  acquisitions  of  goods  have  been  applied 
incorrectly, the right of the Member State of acquisition to tax the acquisition should 
remain unaffected by the value added tax treatment of the transaction in other Member 
States. 

(22) 

It should be ensured that in certain circumstances, the transfer between Member States 
of a means of transport by a private person as part of a transfer of residence does not 
create a second tax charge even though the means of transport is still new. 

(23)  Rules need to be established to ensure the uniform treatment of supplies of goods once 
a supplier has exceeded the distance selling threshold for supplies to another Member 
State,  

HAS ADOPTED THIS REGULATION: 

Chapter I 
Subject-matter  

Article 1 

This Regulation lays down measures for the implementation of Articles 4, 6, 9, 11, 13, 15, 18, 
25, 26b, 26c, 28a and 28b of Directive 77/388/EEC, and of Annex L thereto.  

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Chapter II 
Taxable persons and taxable transactions 

SECTION 1 
(ARTICLE 4 OF DIRECTIVE 77/388/EEC) 

Article 2 

Where  a  European  Economic  Interest  Grouping  (EEIG),  constituted  in  accordance  with 
Regulation (EEC) No 2137/85, supplies goods or services for consideration to its members or 
to third parties, that EEIG is carrying out an economic activity for the purposes of Article 4(1) 
of Directive 77/388/EEC. 

SECTION 2 
(ARTICLE 6 OF DIRECTIVE 77/388/EEC) 

Article 3 

1. 

2. 

The sale of an option, where such a sale is a transaction within the scope of point (5) 
of  Article  13(B)(d)  of  Directive  77/388/EEC,  shall  be  regarded  as  a  supply  of 
services within the meaning of Article 6(1) of that Directive. That supply of services 
shall  be  regarded  as  separate  from  the  underlying  operations  to  which  the  services 
relate.  

Where a supplier only assembles the different parts of a machine provided to him by 
his  customer,  that  supply  shall  be  regarded  as  a  supply  of  services  within  the 
meaning of Article 6(1) of Directive 77/388/EEC. 

Chapter III 
Place of taxable transactions 

SECTION 1 
(ARTICLE 9(1) OF DIRECTIVE 77/388/EEC) 

Article 4 

1. 

The  place  of  supply  in  respect  of  the  following  transactions  shall  be  established  in 
accordance with Article 9(1) of Directive 77/388/EEC: 

(a) 

the hiring of railway wagons; 

(b) 

services  supplied  in  the  framework  of  organising  a  funeral,  if  constituting  a 
single service.  

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2. 

Where the supplier of a service has established his place of business in one Member 
State and has a fixed establishment in another, the place of supply under Article 9(1) 
of  Directive  77/388/EEC  shall  be  the  place  where  the  supplier  has  established  his 
business, except where the supply is effectively made from his fixed establishment. 

SECTION 2 
(ARTICLE 9(2) OF DIRECTIVE 77/388/EEC) 

Article 5 

Except where the goods being assembled become part of immovable property, the place of the 
supply  of  services  specified  in  Article  3(2)  of  this  Regulation  shall  be  established  in 
accordance with Article 9(2)(c) or Article 28bF of Directive 77/388/EEC.  

The service of translating text shall be covered by Article 9(2)(e) of Directive 77/388/EEC. 

Article 6 

Article 7 

Where a body established in a third country assigns television broadcasting rights in respect 
of football matches to taxable persons established in the Community, that transaction shall be 
covered by the first indent of Article 9(2)(e) of Directive 77/388/EEC. 

Article 8 

The  service  of  applying  for  or  of  receiving  refunds  of  value  added  tax  under  Council 
Directive 79/1072/EEC5  shall  be  covered  by  the  third  indent  of  Article  9(2)(e)  of 
Directive 77/388/EEC.  

Article 9 

The  seventh  indent  of  Article  9(2)(e)  of  Directive  77/388/EEC  shall  cover  the  services  of 
agents acting either in the name and for the account of the buyer, or in the name and for the 
account of the supplier.  

Trailers and semi-trailers shall be regarded as forms of transport for the purposes of the eighth 
indent of Article 9(2)(e) of Directive 77/388/EEC. 

Article 10 

5 

OJ L 331, 27.12.1979, p. 11. 

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Article 11 

Radio  and  television  broadcasting  services,  as  referred  to  in  the  eleventh  indent  of 
Article 9(2)(e)  of  Directive  77/388/EEC,  shall  mean  transmissions  by  wire  or  air,  including 
via  satellite,  intended  for  reception  by  the  public,  even  when  they  are  simultaneously 
broadcast over the Internet or similar electronic networks. 

Those  services  shall  exclude  the  assignment  of  broadcasting  or  transmission  rights,  and  the 
leasing of technical equipment or facilities utilised in providing a broadcast. 

Article 12  

1. 

2. 

Electronically supplied services, as referred to in the twelfth indent of Article 9(2)(e) 
of Directive 77/388/EEC, shall include services which are delivered over the Internet 
or  an  electronic  network  and  the  nature  of  which  renders  their  supply  essentially 
automated  and  involving  minimal  human  intervention,  and  in  the  absence  of 
information technology having no viability.  

The  following  services,  in  particular,  shall,  where  delivered  over  the  Internet  or  an 
electronic network, be covered by paragraph 1:  

(a) 

(b) 

(c) 

the supply of digitised products generally, including software and changes to or 
upgrades of software; 

services  providing  or  supporting  a  business  or  personal  presence  on  an 
electronic network such as a web site or a web page; 

services  automatically  generated  from  a  computer  via  the  internet  or  an 
electronic network, in response to specific data input by the customer; 

(d)  on-line  auction  services,  including  on-line  market  places  or  on-line  shopping 
portals,  that  are  dependent  on  automated  databases  and  data  input  by  the 
customer and requiring little or no human intervention; 

(e) 

Internet Service Packages of information or interactive activities, going beyond 
mere Internet access and in which the telecommunications component forms an 
ancillary and subordinate part.  

3. 

The  services  listed  in  Annex  I  shall  be  regarded  as  covered  by  Annex  L  to 
Directive 77/388/EEC.  

The following, in particular, shall not be covered by the twelfth indent of Article 9(2)(e) of 
Directive 77/388/EEC: 

Article 13  

(1) 

(2) 

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radio  and  television  broadcasting  services  as  referred  to  in  the  eleventh  indent  of 
Article 9(2)(e) of Directive 77/388/EEC; 

telecommunications  services,  within 
Article 9(2)(e) of Directive 77/388/EEC; 

the  meaning  of 

the 

tenth 

indent  of 

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(3) 

supplies of the following:  

(a) 

goods, where the order and processing is done electronically; 

(b)  CD-ROMs, floppy discs and similar tangible media; 

(c) 

printed matter, such as books, newsletters, newspapers or journals; 

(d)  CDs, audio cassettes; 

(e) 

video cassettes, DVDs; 

(f) 

games on a CD-ROM;  

(g) 

(h) 

services of professionals such as lawyers and financial consultants, who advise 
clients by e-mail; 

interactive teaching services, where the course content is delivered by a teacher 
over the Internet or an electronic network, such as via remote link; 

(i) 

physical repair services of computer equipment; 

(j) 

off-line data warehousing services; 

(k) 

advertising services, such as in newspapers, on posters and on television; 

(l) 

telephone helpdesk services; 

(m) 

teaching  services  purely  involving  correspondence  courses,  such  as  postal 
courses; 

(n) 

(o) 

conventional  auctioneers’  services  reliant  on  direct  human  intervention, 
irrespective of how bids are made; 

telephone  services  with  a  video  component,  otherwise  known  as  videophone 
services; 

(p) 

access to the Internet and World Wide Web; 

(q) 

telephone services provided through the Internet.  

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Chapter IV 
Taxable amount 

(Article 11 of Directive 77/388/EEC) 

Article 14 

Where a handling fee is charged by a supplier of goods or services, or by an associate of the 
supplier, as a requirement in connection with accepting payment for the supply of goods or 
services by credit or debit card, and the total price payable is unaffected irrespective of how 
payment  is  made,  the  taxable  amount  for  the  supply  of  the  goods  or  services  determined  in 
accordance with Article 11 of Directive 77/388/EEC shall not be reduced. 

Chapter V 
Exemptions 

SECTION 1 
(ARTICLE 13 OF DIRECTIVE 77/388/EEC) 

Article 15 

The  term  "vocational  training  or  retraining"  referred  to  in  Article  13(A)(1)(i)  of 
Directive 77/388/EEC  shall  include  instruction  relating  directly  to  a  trade  or  profession  as 
well  as  any  instruction  aimed  at  acquiring  or  updating  knowledge  for  vocational  purposes. 
The duration of a course shall be irrelevant for the purposes of its categorisation as vocational 
training or retraining.  

Article 13(B)(d)(4) of Directive 77/388/EEC shall not cover platinum nobles. 

Article 16 

SECTION 2 
(ARTICLE 15 OF DIRECTIVE 77/388/EEC) 

Article 17 

The  term  "means  of  transport  for  private  use"  in  the  first  subparagraph  of  point  (2)  of 
Article 15  of  Directive  77/388/EEC  shall  include  means  of  transport  used  for  non-business 
purposes by persons other than natural persons, such as associations and bodies governed by 
public law within the meaning of Article 4(5) of that Directive. 

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Article 18  

In  order  to  determine  whether  the  threshold  provided  for  in  the  third  indent  of  the  second 
subparagraph  of  point  (2)  of  Article  15  of  Directive  77/388/EEC  has  been  exceeded,  the 
calculation shall be based on the invoice value including value added tax. The aggregate value 
of several goods may be used only if all those goods are included on the same invoice.  

Article 19 

Air traffic control services provided in the airport zones  defined by Member States shall be 
regarded as supplies of services covered by point (9) of Article 15 of Directive 77/388/EEC 
provided that the supply is to meet the direct needs of the aircraft specified in point (6) of that 
Article. 

Chapter VI 
Deductions 

(Article 18 of Directive 77/388/EEC) 

Article 20 

Where  the  importing  Member  State  has  introduced  an  electronic  system  for  completing 
customs  formalities,  the  term  "import  document"  in  point  (b)  of  Article  18(1)  of 
Directive 77/388/EEC  shall  cover  electronic  versions  of  such  documents,  provided  that  it 
allows for the exercise of the right of deduction to be checked.  

Chapter VII 
Special schemes 

(Articles 25 to 26c of Directive 77/388/EEC) 

Article 21 

For  the  purposes  of  fixing  the  flat-rate  compensation  percentages  pursuant  to  the  first 
subparagraph  of  Article  25(3)  of  Directive  77/388/EEC,  Member  States  shall  use  average 
percentages. 

These  average  percentages  shall  be  based  on  macro-economic  statistics  for  the  three  years 
preceding the year for which the flat-rate compensation percentage is being fixed. Where such 
data is not yet available, statistics for the last three available years shall be used.  

Article 22 

1. 

The  reference  to  "weights  accepted  by  the  bullion  markets"  in  point  (i)  of  the  first 
paragraph of Part A of Article 26b of Directive 77/388/EEC shall at least cover the 
units and the weights traded as set out in Annex II to this Regulation.  

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2. 

1. 

2. 

3. 

4. 

For  the  purposes  of  establishing  the  list  referred  to  in  the  third  subparagraph  of 
point (ii) of Part A of Article 26b of Directive 77/388/EEC, the reference to “price” 
and “open market value” in the fourth indent of that point shall be to the price and 
open market value on 1 April of each year. If 1 April does not fall on a day on which 
those  values  are  fixed,  the  values  of  the  next  day  on  which  they  are  fixed  shall  be 
used. 

Article 23 

Where, in the course of a calendar quarter, a non-established taxable person using the 
special scheme provided for in Article 26c(B) of Directive 77/388/EEC meets at least 
one  of  the  criteria  for  exclusion  laid  down  in  Art  26c(B)(4),  that  person  may 
subsequently  be  excluded  from  the  identification  register  at  any  time  during  that 
quarter.  

In  respect  of  supplies  made  prior  to  exclusion  but  during  the  calendar  quarter  in 
which  exclusion  occurs,  the  person  shall  submit  a  return  in  accordance  with 
Article 26c(B)(5). The requirement to submit this return shall have no effect on the 
requirement, if any, to register under the normal rules in a Member State. 

Where the Member State of identification has received an overpayment in relation to 
the  return  under  Article  26c(B)(5)  of  Directive  77/388/EEC,  it  shall  reimburse  the 
overpaid amount directly to the taxable person concerned.  

Where  an  overpayment  due  to  an  incorrect  return  has  been  distributed  among  the 
Member  States  of  consumption,  those  Member  States  shall  reimburse  the  taxable 
person and inform the Member State of identification of the overpayment.  

Once  a  return  under  Article  26c(B)(5)  of  Directive  77/388/EEC  is  rendered,  any 
subsequent  changes  to  the  figures  contained  therein  shall  be  accomplished  only  by 
means  of  an  amendment  to  that  return  and  not  by  an  adjustment  to  a  subsequent 
return. 

Amounts of value added tax paid under Article 26c(B)(7) of Directive 77/388/EEC 
shall be specific to that return. Any subsequent amendments to the amounts paid may 
be effected only by reference to that return and may not be allocated to another return 
or adjusted on a subsequent return.  

Amounts on value added tax returns made under the special scheme provided for in 
Article  26c(B)  of  Directive  77/388/EEC  shall  not  be  rounded  up  or  down  to  the 
nearest whole monetary unit. The exact amount of value added tax shall be reported 
and remitted.  

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Chapter VIII 
Transitional measures 

(Articles 28a and 28b of Directive 77/388/EEC)  

Article 24 

Where an intra-Community acquisition has incorrectly been considered as not subject to value 
added tax under Article 28a(1a), it shall be subject to value added tax in the Member State of 
acquisition irrespective of the value added tax treatment of the transaction in other Member 
States.  Any  refund  of  value  added  tax  accounted  for  by  the  supplier  shall  be  made  to  the 
supplier by the Member State of supply in accordance with its own domestic rules. 

Article 25 

The transfer to another Member State of a new means of transport by a private individual on 
transferring his habitual residence to another Member State shall not be an intra-Community 
acquisition of a new means of transport effected for consideration under Article 28a(1)(b) of 
Directive 77/388/EEC, provided that there is no evidence that such a transfer was envisaged at 
the time of purchase. 

Article 26 

Where  in  the  course  of  a  calendar  year  the  thresholds  provided  for  in  Article  28b(B)(2)  of 
Directive  77/388/EEC  are  exceeded,  Article  28b(B)  shall  not  affect  the  place  of  supply  of 
those supplies carried out in the course of the same calendar year which are made before the 
threshold  applied  by  Member  States  under  the  first  indent  of  Article  28b(B)(2)  of 
Directive 77/388/EEC  is  exceeded  and  for  which  the  supplier  has  not  exercised  the  option 
under Article 28b(B)(3) of that Directive. 

However,  Article  28b(B)  of  Directive  77/388/EEC  shall  affect  the  place  of  the  following 
supplies to the same Member State: 

(a) 

(b) 

(c) 

the supply by which the threshold applied by Member States under the first indent of 
Article 28b(B)(2) of that Directive was exceeded; 

any subsequent supplies in that calendar year; 

supplies in the calendar year following the calendar year in which the event referred 
to in point (a) occurred.  

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Chapter IX 
Final provisions 

Article 27 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the Council 
The President 

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ANNEX I 

(Article 12 of this Regulation) 

1. 

Item 1 of Annex L to Directive 77/388/EEC 

(a)  Web-site hosting and web-page hosting  

(b)  Automated, on-line distance maintenance of programmes 

(c)  Remote systems administration 

(d)  On-line  data  warehousing  where  specific  data  is  stored  and  retrieved 

electronically 

(e)  On-line supply of on-demand disc space 

2. 

Item 2 of Annex L to Directive 77/388/EEC  

(a)  Accessing  or  downloading  software 

including  procurement/accountancy 

programmes and anti-virus software plus updates 

(b)  Software to block banner adverts showing, otherwise known as Bannerblockers 

(c)  Download  drivers,  such  as  software  that  interfaces  computers  with  peripheral 

equipment such as printers 

(d)  On-line automated installation of filters on web-sites 

(e)  On-line automated installation of firewalls 

3. 

Item 3 of Annex L to Directive 77/388/EEC 

(a)  Accessing or downloading desktop themes 

(b)  Accessing or downloading photographic or pictorial images or screensavers 

(c)  The digitised content of books and other electronic-publications 

(d)  Subscription to on-line newspapers and journals 

(e)  Weblogs and website statistics 

(f)  On-line news, traffic information and weather reports 

(g)  On-line  information  generated  automatically  by  software  from  specific  data 
input by the customer, such as legal and financial data, including such data as 
continually updated stock market data 

(h)  The  provision  of  advertising  space  including  banner  ads  on  a  web  site/web 

page 

(i)  Use of search engines and Internet directories 

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4. 

Item 4 of Annex L to Directive 77/388/EEC 

(a)  Accessing or downloading of music on to computers and mobile phones 

(b)  Accessing or downloading of jingles, excerpts, ringtones, or other sounds 

(c)  Accessing or downloading of films 

(d)  Web-based  broadcasting  that  is  only  provided  over  the  Internet  or  similar 
electronic network and is not simultaneously broadcast over a traditional radio 
or television network 

(e)  Downloads of games on to computers, mobile phones and palm tops 

(f)  Accessing  automated  on-line  games  which  are  dependent  on  the  Internet,  or 

other similar electronic networks, where players are remote from one another 

5. 

Item 5 of Annex L to Directive 77/388/EEC 

(a)  Teaching that is automated and dependent on the Internet or similar electronic 
network to function, including virtual classrooms, except where the internet or 
similar electronic network is used as a tool simply for communication between 
the teacher and student  

(b)  Workbooks  completed  by  pupil  on-line  and  marked  automatically,  without 

human intervention 

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ANNEX II 

(Article 22 of this Regulation) 

Unit 

Weights traded 

Kg 
Gram 
Ounce (1oz = 31,1035 g) 
Tael (1 tael = 1,193oz.)6  
Tola (10 tolas = 3,75oz.)7 

12,5/1 
500/250/100/50/20/10/5/2,5/2 
1/4  
100/10/5/1/1/2/
10/5/1  
10  

6 

7 

Tael = a traditional Chinese unit of weight. The nominal fineness of a Hong Kong tael bar is 990 but in 
Taiwan 5 and 10 tael bars can be 999,9 fine. 
Tola = a traditional Indian unit of weight for gold. The most popular sized bar is 10 tola, 999 fineness. 

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