Proposal for a Council Directive laying down detailed rules for the refund of value added tax, provided for in Directive 77/388/EEC, to taxable persons not established in the territory of the country but established in another Member State
Date: 2004-10-29
Institutions: European Commission
Subjects: EU Member State, VAT, residence, tax rebate

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.10.2004 
COM(2004) 728 final 

2004/0261 (CNS) 
2004/0262 (CNS) 

 . 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 77/388/EEC with a view to simplifying value added tax obligations 

Proposal for a 

COUNCIL DIRECTIVE 

laying down detailed rules for the refund of value added tax, provided for in Directive 
77/388/EEC, to taxable persons not established in the territory of the country but 
established in another Member State 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1798/2003 as regards the introduction of administrative 
cooperation arrangements in the context of the one-stop scheme and the refund 
procedure for value added tax 

. 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

INTRODUCTION 

In October 2003, the Commission presented a communication reviewing the VAT strategy it 
launched  in  June  2000  and  setting  out  new  initiatives  to  be  taken  in  the  future  under  that 
strategy1. This strategy provided for an action programme, geared to four main objectives: the 
simplification,  modernisation  and  more  uniform  application  of  current  rules  and  closer 
administrative co-operation arrangements between Member States to combat fraud. 

In the communication, the simplification of tax obligations was identified as one of the key 
areas for future work. Simplification can notably be achieved through greater use of electronic 
means  of  communication  between  taxable  persons  and  tax  authorities  and  between  national 
tax authorities. 

The  objective  of  simplifying  business  obligations  in  the  field  of  VAT  is  in  line  with  the 
request of the European Council of 25 and 26 March 2004 to identify areas for simplification. 
As a response to this request, the Competitive Council adopted at its meeting on 17 and 18 
May 2004 conclusions on better regulation.  

Following these conclusions, the Irish and incoming Dutch Presidencies invited in June 2004 
other  Member  States  to  submit  concrete  suggestions  for  simplification,  based  on  their  own 
national  experiences.  Several  Member  States  suggested  simplification  of  the  Sixth  VAT 
Directive, but it was decided not to take into account this suggestion within the context of the 
Competitiveness  Council  since  it  was  already  part  of  the  Commission's  VAT  simplification 
program. 

At the informal ECOFIN meeting of 11 September 2004, the Dutch Presidency also raised the 
issue  of  "Fostering  growth  by  reducing  administrative  burdens".  The  present  proposal  fits 
perfectly within this objective.  

Moreover, the recently published European Tax Survey2 conducted by the Commission in the 
second half of 2003 confirmed that taxable persons who have VAT obligations in a Member 
State  where  they  are  not  established  are  those  for  which  the  burden  of  compliance  is  the 
highest.  A  substantial  part  of  those  taxable  persons  even  seem  to  abstain  from  having  VAT 
activities in another Member States because of the burden imposed by having to comply with 
VAT  obligations  there.  This  is  confirmed  by  a  document  produced  by  the  European 
Consumer  Center  Network  in  2003  on  e-commerce.  This  report  identifies  the  current  VAT 
regime as one of the reasons why operators refuse to sell goods to consumers who are living 
in  a  Member  State  other  than  the  Member  State  of  establishment  of  the  company.  The 
simplification  of  the  VAT  regime  will  therefore  benefit  businesses  but  also  consumers  who 
will have access to a wider range of goods throughout the Internal Market. 

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2 

COM(2003) 614 final 
http://europa.eu.int/comm/taxation_customs/publications/official_doc/com/com.htm 
SEC(2004) 1128  
http://europa.eu.int/comm/taxation_customs/publications/working_doc/working_doc.htm 

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In  addition,  the  present  refund  procedure  under  the  Eighth  VAT  Directive3  seems  to  be  so 
burdensome  that  more  than  an  estimated  53.5%  of  large  companies  have  not  requested 
refunds to which they were entitled at some point due to these problems. 

The main objective of the present proposal is therefore to introduce simplification measures 
aimed at easing the burden of VAT compliance on taxable persons who have no establishment 
in the Member State where they are carrying out activities. 

The proposal contains six concrete measures to achieve the objective: 

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the introduction of the one stop scheme for non-established taxable persons; 

the  introduction  of  a  one-stop  scheme  to  modernise  the  Eighth  Directive  refund 
procedure; 

a harmonisation of the scope of the goods and services for which Member States may 
apply restrictions to the right to deduct; 

an  extension  of  the  use  of  the  reverse  charge  mechanism  for  certain  business-to-
business (B2B) transactions carried out by non-established taxable persons; 

a review of the special scheme for small traders; 

 a simplification of the distance selling arrangements. 

This  is  done  through  three  different  legislative  proposals:  a  modification  of  the  Sixth  VAT 
Directive4,  the  replacement  of  the  Eighth  VAT  Directive  and  a  modification  to  Council 
Regulation (EC) No 1798/2003 on VAT administrative cooperation5. 

This initiative has already been extensively discussed with Member States and has been the 
subject of a wide consultation process on the Internet. 

2. 

THE INTRODUCTION OF THE ONE-STOP SCHEME 

Under the current rules, a taxable person having taxable transactions for which he is liable to 
pay  the  tax  in  more  than  one  Member  State,  will  have  to  fulfil  VAT  obligations 

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Eighth  Council  Directive  79/1072/EEC  of 6  December  1979  on  the harmonization  of the  laws  of  the 
Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable 
persons  not  established  in  the  territory  of  the  country  OJ L 331,  27.12.1979,  p.11.Directive  as  last 
amended  by  the  Act  concerning  the  conditions  of  accession  of  the  Czech  Republic,  the  Republic  of 
Estonia,  the  Republic  of  Cyprus,  the  Republic  of  Latvia,  the  Republic  of  Lithuania,  the  Republic  of 
Hungary,  the  Republic  of  Malta,  the  Republic  of  Poland,  the  Republic  of  Slovenia  and  the  Slovak 
Republic and the adjustments to the Treaties on which the European Union is founded - Annex II: List 
referred to in Article 20 of the Act of Accession - 9. Taxation. 
Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member 
States  relating  to  turnover  taxes  –  Common  system  of  value  added  tax:  uniform  basis  of  assessment  
(OJ  L  145,  13.6.1977,  p.  1).  Directive  as 
last  amended  by  Directive  2004/66/EC 
(OJ L 168, 1.5.2004, p. 35). 
Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of 
value added tax and repealing Regulation (EEC) No 218/92(OJ L 246, 15.10.2003, p. 1). Regulation as 
last amended by Council Regulation (EC) No 885/2004(OJ L 168, 1.5.2004, p. 1). 

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(identification, returns, payment) in each of these Member States. Since Member States have 
considerable  discretion  in  defining  VAT  obligations  (the  content  of  the  return  and  its 
frequency), a taxable person may be faced with a raft of different obligations to be discharged 
in several Member States. 

The special scheme for non-established persons supplying electronic services to non-taxable 
persons provided for under Article 26c of the Sixth VAT Directive constitutes at this stage the 
only exception to this principle. In its proposal on services supplied by electronic means (e-
commerce)6,  the  Commission  considered  that  compliance  for  non-EU  e-commerce  operators 
should be made as easy and simple as possible. To this end, the Commission proposed that non-
EU  e-commerce  operators  should  be  required  to  register  only  in  a  single  Member  State.  They 
would then charge VAT at the rate applicable in that Member State and would only have to 
deal with a single tax administration within the EU. 

During  the  negotiations  in  the  Council,  this  proposal  was  amended  in  order  to  ensure  that 
VAT  would  be  charged  at  the  rate  applicable  in  the  Member  State  where  the  customer  is 
resident.  However,  Council  Directive  2002/38/EC7  adopted  in  June  2002  maintained  the 
principle according to which non-EU e-commerce operators only had to deal with one VAT 
authority in the Member State of their choice (a one-stop scheme). 

The  Commission  is  convinced  that  the  one-stop  model  could  simplify  tax  obligations  for  a 
considerable larger number of traders than it does today. On the basis of information received 
from  Member  States,  the  Commission  estimates  that  there  are  currently  in  the  region  of 
250,000 VAT registrations in the European Union which relate to traders established in other 
Member  States.  In  particular,  EU  businesses  carrying  out  cross-border  activities  for  which 
they become liable to pay VAT in Member States where they have no physical presence could 
benefit  from  the  more  extensive  use  of  such  a  system.  Taxable  persons  covered  by  the 
distance  selling  arrangements  are  certainly  one  of  the  main  categories  of  businesses 
concerned.  However  it  could  also  be  used  for  other  transactions,  in  particular  supplies 
involving  installation  or  assembly,  work  on  immovable  property,  removals,  sales  at 
exhibitions, fairs or markets, etc. 

Given  the  proposed  extension  of  the  use  of  the  reverse  charge  to  supplies  involving 
installation  or  assembly,  work  on  immovable  property  and  9(2)(c)  services,  the  one-stop 
scheme  would,  for  these  types  of  transactions,  only  cover  B2C  transactions.  On  the  other 
hand, B2B transactions for which the reverse charge is not applicable, would be covered by 
the one stop scheme. 

As a result, when an EU trader carries out taxable transactions in a Member State where he is 
not established: 

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either the customer accounts for the VAT under the reverse charge mechanism and 
the  non-established  trader  has  no  declarative  obligations  in  the  Member  State  of 
taxation; 

COM(2000) 349 final. 
Council  Directive  2002/38/EC  of  7  May  2002  amending  and  amending  temporarily  Directive 
77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting 
services and certain electronically supplied services (OJ L 128, 15.5.2002, p. 41). 

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– 

or the non-established trader is the person liable to pay the tax, and he could comply 
with his declarative obligations under the one stop scheme. 

Consequently, this trader would, if he opts for the use of the one-stop scheme, only need to be 
identified for VAT purposes in his Member State of establishment. 

This one-stop scheme should be an option for taxable persons as it may be the case that some 
businesses  who  are  already  directly  identified  in  another  Member  State  than  their  own  will 
wish to maintain this situation. For example, a trader having to submit an annual return in a 
single Member State where he is not established might not be interested in the use of the one-
stop scheme. On the other hand, a trader opting for the special scheme would have to comply 
with  a  single  and  harmonised  set  of  obligations  covering  all  its  supplies  taxable  in  the 
Member  States  where  he  is  not  established.  These  obligations  would  be  fulfilled  through 
electronic means, in order for the information to be easily transmitted to each Member State 
of consumption. 

Responsibility  for  the  assessment  and  control  of  the  tax  would  remain  in  the  hands  of  the 
Member State of consumption, whose own VAT legislation (particularly in respect of rates) 
would continue to apply. However, the non-established taxable person would benefit from the 
ability to contact (for registration and returns) only his national administration and to apply a 
harmonised set of compliance rules (covering registration form, content and frequency of the 
tax return, and payment and refund rules).  

It should however be noted that: 

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transfers of money will have to be done directly between the taxable person and each 
Member  State  of  consumption.  Experience  with  the  existing  electronic  commerce 
special  scheme  has  shown  that  dealing  with  the  re-distribution  of  money  received 
from taxable is very burdensome for the Member State of identification. Developing 
the  kind  of  major  treasury  function  needed  to  handle  the  volume  of  money  flows 
which would be inherent to a much wider application would not be a realistic option. 
It  is  however  probable  that  financial  intermediaries  or  other  trusted  third  party 
service  providers  might  offer  a  payment  handling  function  to  operators  under  this 
scheme  which  would  relieve  them  from  the  burden  of  multiple  payments.  Such  a 
commercial  service  would  be  particularly  attractive  to  smaller  operators  but  would 
have to be based on commercial realities. 

national  obligations  would  not  be  part  of  the  special  scheme  and  the  domestic 
compliance  rules  (such  as  declaration  periods,  payment  and  refund  rules)  would 
continue  to  apply.  Those  Member  States  that  wish  to  do  so  may  include  these 
obligations into the  one-stop scheme.  The reason for this exclusion is that the one-
stop  scheme  is  not  intended  to  lead  to  a  complete  harmonisation  of  national 
obligations, which the Commission considers to be neither realistic nor necessary at 
this stage. 

Discussions with the Member States made it clear that since the number of potential traders 
under an intra-Community one-stop system will be far greater than the number today covered 
by the electronic commerce special scheme (potentially over 200,000 traders as compared to 
well  under  1,000  identified  under  the  e-services  arrangements),  a  mere  duplication  of  this 
system is not a realistic approach. 

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Under  the  current  arrangements,  businesses  which  have  obligations  in  Member  States  in 
which  they  are  not  established  are  obliged  to  make  direct  payment  to  the  Members  States 
where the transactions are subject to VAT. This situation applies both for traders established 
within the EU and traders established outside the EU. Similarly, as regards repayments of tax, 
Member  States  may  either  make  a  refund  or  carry  forward  the  excess  to  the  following  tax 
period.  The  Commission  believes  that  the  current  arrangements  for  the  payment  and 
repayment of the tax should be continued for traders availing of the one-stop scheme. 

The supplies of electronic services by non-established taxable persons to non-taxable persons 
constitute  an  exception  to  the  normal  principle  regarding  payments  and  repayments.  Non-
established traders making use of the special scheme for electronically supplied services make 
a  single  payment  to  the  Member  State  of  identification,  which  then  re-distributes  the 
appropriate amount to the Member States of consumption. There are special arrangements for 
the  recovery  of  input  tax  incurred  by  non-established  taxable  persons  providing  electronic 
services. The Commission is of the opinion that, at this stage, that special scheme should not 
be affected by the current proposal. 

Under Article 5 of Council Directive 2002/38/EC, the Council on the basis of a report from 
the  Commission  shall  review  before  30  June  2006  the  current  special  scheme  for  electronic 
supplied  services.  The  relation  between  the  proposed  one-stop  scheme  and  the  e-commerce 
arrangements,  and  the  possibility  to  subsume  the  latter  into  the  one-stop  scheme  will  be 
examined within that context.  

3. 

REVIEW OF THE EIGHTH VAT DIRECTIVE 

The  malfunctioning  of  the  Eighth  Directive  refund  procedure  has  posed  considerable 
problems  for  many  years  to  both  traders  and  the  national  administrations  of  the 
Member States.  Complaints  have  been  received  from  traders  and  their  representative 
organisations deploring the length of time taken to receive refunds due. 

Therefore,  the  Commission  put  forward  in  June  19988  a  proposal  for  a  Directive  with  the 
objective of replacing the VAT refund procedure laid down in the Eighth VAT Directive with 
a new system for recovering VAT paid in another Member State. Under the proposed system, 
taxable persons would recover VAT directly through VAT declarations they submitted in the 
Member  State  where  they  were  established  (the  so-called  cross-border  deduction).  This 
system  would  substantially  simplify  matters  for  traders  since  they  would  be  able  to  recover 
VAT charged to them in any other Member State in the same way as their national VAT. 

This  proposal  obtained  large  support  from  traders  and  a  favourable  opinion  from  the 
Parliament  and  the  Economic  and  Social  Committee.  However,  the  Council  has  not  yet 
managed to agree on the proposal. 

One of the key issues which has prevented the Council from agreeing was the fact that under 
the  proposed  system,  the  trader  would  recover  the  VAT  in  accordance  with  the  deduction 
rules (in particular the tax blocking rules) of the Member State of establishment, while under 
the  current  procedure  VAT  is  recovered  in  accordance  with  the  deduction  rules  of  the 
Member  State  where  the  expenses  are  incurred.  This  would  have  had  a  negative  impact  on 

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COM(1998) 377 final. 

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VAT receipts for those Member States where VAT has been paid where they currently have a 
more restrictive deduction regime. 

The Commission remains convinced that the proposal from 1998 is conceptually the best way 
of reforming the current refund procedure. However, it also has to acknowledge that after 6 
years the Council has been unable to agree on the proposal, despite the considerable effort of 
some Council Presidencies to look for a compromise. As a result, traders remain confronted 
with the current unsatisfactory situation. 

The  Commission  therefore  proposes  an  alternative  way  of  modernising  the  current  refund 
procedure laid down in the Eighth Directive, but without changing its fundamental principles. 
Under  the  proposed  procedure,  requests  for  refunds  would  continue  to  be  dealt  with  by  the 
Member State where the VAT was paid, the amount refundable would be determined under 
the deduction rules of the Member State where the expenses are incurred, and the repayments 
made directly by that Member State to the requesting taxable person.  

The  proposed  changes  firstly  concern  the  use  of  modern  technology  for  presenting  the 
requests  for  a  refund.  In  a  similar  way  to  the  envisaged  one-stop  scheme,  a  taxable  person 
would present his requests for a refund by electronic means via a portal website managed by 
the  fiscal  administration  where  the  taxable  person  is  established.  Originals  of  invoices  or 
import  documents  would  no  longer  have  to  be  submitted;  only  the  relevant  information 
concerning these documents would be submitted electronically. 

This  portal  would  then  ensure  that  the  request  is  directed  to  the  Member  State  where  the 
expenses  were  incurred.  The  Member  State  of  establishment  would  carry  out  an  initial 
verification of its database of taxable persons. This  initial  verification would in fact replace 
the current certificate by which the Member State of establishment confirms the status of the 
taxable person. The transmission of the data from the Member State of establishment to the 
Member  State  of  refund  would  be  the  confirmation  that  the  request  is  made  by  an  active 
taxable person. 

Transforming  the  current  procedure  into  an  electronic  one  would  mean  less  work  by  the 
refunding Member States and accordingly, the Commission believes that the processing time 
for  requests  should  be  reduced  from  6  to  3  months.  Within  this  interval,  the  Member  State 
where the expenses  were  incurred  should take a decision on the application. In some  cases, 
this decision could be a request for additional information. In that case, a final decision on the 
application  should  be  taken  within  three  months  from  the  date  the  requested  information  is 
provided.  

In order to improve the legal position of the taxable persons under the procedure, it is foreseen 
in  addition,  that  once  the  deadline  is  exceeded,  the  application  can  no  longer  be  refused. 
Moreover,  interest  of  1%  a  month,  calculated  on  the  amount  refunded,  would  be  due  on 
unpaid refunds. This interest would run from the day on which the refund was due to the day 
it was actually made to the taxable person. 

4. 

EXCLUSIONS FROM THE RIGHT TO DEDUCT 

The  abovementioned  proposal  presented  by  the  Commission  in  1998  contains,  beside  the 
section  on  the  replacement  of  the  Eighth  VAT  Directive  refund  procedure,  a  section  on 
expenditure  not  eligible  for  a  full  deduction  of  VAT.  The  objective  was  to  approximate  the 

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national rules that are currently very divergent in this area. This was an essential prerequisite 
to  enable  deductions  to  be  made  under  the  rules  prevalent  in  the  Member  State  of 
establishment. 

The  Commission  proposed  an  alignment  of  the  rules  in  respect  of  passenger  cars, 
accommodation, food and beverages, luxury goods, amusements and entertainment.  

The budgetary impact for some Member States of the Commission's proposal was, however, a 
major  issue  in  the  discussion.  Member  States  insisted  in  the  Council  for  a  more  flexible 
approach. As indicated above, the Council has not managed to agree on this proposal. 

Such  approximation  of  the  rules  on  the  right  to  deduct  would  not  be  necessary  under  the 
revised  approach  which  the  Commission  is  now  putting  forward.  However,  in  order  to 
facilitate the functioning of the proposed refund procedure, it would be desirable to harmonise 
at least the scope of the expenses for which exclusions of the right to deduct may apply. 

By doing so, traders presenting requests for a refund under the procedure set out above would 
know  exactly  for  which  goods  and  services  there  might  be  some  specific  rules  in  each 
Member  State.  The  normal  deduction  rules  would  apply  to  all  goods  and  services  not 
specifically referred to in the Sixth VAT Directive. 

Under this approach, Member States could only apply exclusions from the right to deduct to: 

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motorised road vehicles, boats and aircraft; 

travel, accommodation, food and drink; 

luxuries, amusements and entertainment; 

Under the standstill provision of Article 17(6), there is no definition of goods and services to 
which  Member  State  can  apply  tax  blockings.  The  current  proposal  would  oblige  Member 
States  to  abolish  the  tax  blockings  applied  to  goods  and  services  not  identified  within  the 
proposed Article 17a. On the other hand, for the goods and services identified within Article 
17a, it provides  Member States full flexibility  of reviewing  their national restrictions which 
they do not have under the current rules. 

5. 

AN EXTENSION OF THE USE OF THE REVERSE CHARGE MECHANISM 

For B2B transactions subject to VAT in the Member State where the customer is established, 
making  the  business  customer  the  person  liable  to  pay  the  tax  (reverse  charge  mechanism) 
implies that taxation occurs in the place of consumption without the supplier being subject to 
tax obligations in the Member State of consumption.  

For  certain  transactions,  this  mechanism  is  already  obligatory.  Moreover,  where  the  taxable 
supply  of  goods  or  services  is  effected  by  a  non-established  taxable  person,  Member  States 
have  the  option  to  lay  down  in  their  national  legislation  the  transactions  for  which  this 
mechanism should be used for the payment of the VAT. 

The  Commission  is  now  proposing  to  broaden  the  scope  of  the  obligatory  reverse  charge 
mechanism  in  cases  where  a  non-established  taxable  person  is  making  supplies  of  goods 
which  are  installed  or  assembled  by  or  on  behalf  of  the  supplier,  supplies  of  services 

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connected with immovable property and services covered by Article 9(2)(c) of the Sixth VAT 
Directive and the customer is a taxable person identified for VAT purposes. 

The  use  of  the  reverse  charge  discharges  the  non-established  trader  from  certain  VAT 
obligations,  such  as  submitting  VAT  returns.  Consequently,  when  that  trader  has  been 
charged VAT on expenses incurred in the Member State where the transaction takes place, he 
will have to claim this VAT back via the refund procedure, since he cannot deduct the input 
VAT  via  a  VAT  return.  This  is  why  this  part  of  the  proposal  is  clearly  connected  to  that 
concerning the introduction of a one-stop scheme for the refund procedure. 

In cases where it is clear that the non-established trader will be regularly charged substantial 
amounts  of  input  VAT  in  order  to  carry  out  his  activities,  however,  the  use  of  the  reverse 
charge  mechanism  results  in  an  additional  administrative  burden  for  the  reclaim  of  input 
VAT. This is for instance the case when non-established taxable persons intervene in a chain 
of  domestic  supplies  of  goods  on  the  national  territory  of  a  Member  State.  These  types  of 
transactions are therefore not covered by the Commission's proposed extension of the reverse 
charge. 

Article 21 of the Sixth VAT Directive needs to be amended accordingly. 

6. 

SIMPLIFICATION  OF  VAT  OBLIGATIONS  OF  SMALL  AND  MEDIUM  SIZED 
ENTERPRISES 

At present, the Sixth VAT Directive lays down some fairly strict arrangements under which 
Member States may grant small enterprises an exemption to tax. Numerous derogations from 
these  provisions  have  been  granted  in  successive  enlargements,  creating  a  situation  where 
Member States are not at all on an equal footing. Furthermore, Member States which already 
had an exemption threshold higher than that provided by the Sixth VAT Directive at the time 
of  the  adoption  of  that  Directive  were  permitted  to  maintain  these  thresholds  and  even 
permitted to increase them so as to maintain their value in real terms. 

The  Commission  considers  that  Member  States  should  have  more  flexibility  in  determining 
the threshold under which taxable persons can be exempt. Therefore, a maximum of 100.000 
euro  is  proposed,  which  should  give  Member  States  the  autonomy  to  set  up  a  regime  they 
consider the most appropriate in view of the structure of their national economy.  

Nevertheless, this new threshold would not have any impact on the current methodology used 
for calculating Member States’ contributions to the Community budget as regards VAT own 
resources. 

Moreover, it should be clarified in the legal text that Member States are able to apply different 
thresholds, for instance in order to differentiate between taxable persons making supplies of 
goods and those making supplies of services. This differentiation would be applied on a non-
discriminatory basis taking objective criteria into account. 

The  threshold  of  100.000  euro  would  apply  on  the  date  of  entry  into  force  of  the  present 
Directive.  This  amount  could  be  exceeded  at  a  later  stage  but  only  in  order  to  maintain  its 
value in real terms in the Member States. 

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7. 

DISTANCE SELLING ARRANGEMENTS 

When  the  Single  Market  came  into  being  on  1  January  1993,  special  arrangements  were 
incorporated into the common system of VAT to provide for taxation at destination in the case 
of  intra-Community  sales  of  new  means  of  transport,  intra-Community  sales  to  exempt 
taxable  persons  or  non-taxable  legal  persons  whose  purchases  exceeded  a  certain  threshold, 
and  distance  sales  to  private  consumers.  It  is  clear  that  the  rationale  for  setting  up  these 
special  schemes  in  1993  -  i.e.  the  risk  of  insufficiently  harmonised  tax  rates  leading  to 
distortion of competition - still exists. The Commission is therefore not proposing to abolish 
these schemes but instead to simplify their application. 

The VAT arrangements applicable to distance selling are laid down in Article 28b(B) of the 
Sixth VAT Directive which provides for a twofold system of taxation. Distance sales of goods 
are normally taxable in the Member State of arrival of goods dispatched by the vendor. There 
is, however, an exception: distance sales remain taxable in the Member State of departure if 
two conditions are fulfilled: 

– 

– 

the  total  value  of  the  supplies  of  goods  to  the  Member  State  of  arrival  in  the 
previous  calendar  year  did  not  exceed  100  000  euro,  a  sum  which  may  be 
reduced to 35 000 euro by the Member State of destination where it fears that 
the  threshold  of  100  000  euro  would  lead  to  serious  distortions  of  the 
conditions of competition; 

the supplies must not involve excise goods. This means that distance sales of 
excise  goods  are  always  taxed  in  the  country  of  destination  without  applying 
the above thresholds. 

Member States must nevertheless allow the taxable person carrying out distance sales to opt 
for  taxation  in  the  Member  State  of  destination  where  the  35 000/100 000  euro  threshold  is 
not reached. 

The current arrangements are complicated for taxable persons. Unless they opt for taxation in 
the  Member  State  of  destination,  operators  have  to  monitor  their  turnover  in  each  Member 
State, keeping track of the different thresholds applicable, to know the place of taxation of the 
supplies  they  make.  The  current  system  could  therefore  be  simplified  by  applying  a  single 
threshold,  calculated  globally  for  all  Member  States  rather  than  Member  State  by  Member 
State, as is currently the case.  

The  threshold  should  be  set  at  a  level  which excludes  businesses  which  are  not  involved  in 
distances  sales  on  a  regular  basis.  On  the  other  hand,  the  threshold  should  not  be  a  simple 
multiplication of the current thresholds and the number of Member States. The Commission 
instead proposes a threshold of 150.000 euro on the basis of the following considerations: 

A threshold set at 150.000 euro should exclude from the distance selling arrangements those 
traders  who,  on  an  occasional  basis  transport  goods  to  their  customers  in  another  Member 
State. On the other hand, traders involved on a regular basis in distance sales will be liable to 
pay  VAT  in  Member  States  where  they  are  not  established.  By  making  use  of  the  one-stop 
system,  which  constitutes  the  main  part  of  this  proposal,  these  traders  can  considerably 
simplify the  VAT  obligations to be  fulfilled in each Member State where they have taxable 
transactions. 

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The  Commission  further  considers  that  the  taxable  person  should  continue  to  have  the 
possibility to opt for taxation in the Member State of destination. Indeed, while deleting the 
option would simplify the special scheme from a legal point of view, it can put businesses in a 
disadvantageous competitive position, especially when trading products subject to a low VAT 
rate in the Member State of arrival of the goods. 

The  Commission  considers  that  the  taxable  person  should  be  allowed,  as  it  is  currently  the 
case, to make use of the option separately for each Member State. As long as he did not reach 
the proposed threshold of 150.000 euro, a taxable person can opt for taxation of his supplies 
in Member State A, while his transactions in other Member States are taxed in the Member 
State of establishment. Of course, both the distance sales taxed in the Member State of arrival 
(as a result of the use of the option) as well as the distance sales taxed in the Member State of 
establishment would be taken into account for the calculation of the threshold. 

8. 

MODIFICATION OF REGULATION (EC) NO 1798/2003 TO SUPPORT THE EXCHANGE 
OF  INFORMATION  WHICH  IS  NECESSARY  TO  THE  INTRODUCTION  OF  A  ONE-STOP 
SCHEME  MECHANISM  AND  OF  THE  REFUND  PROCEDURE  (REVIEW  OF  EIGHTH 
DIRECTIVE) 

In  order  to  make  it  possible  for  taxable  persons  to  have  a  single  point  of  contact  for  VAT 
compliance  in  their  Member  State  of  identification  (both  for  the  VAT  one-stop  scheme  and 
for the procedure which will replace the Eighth Directive refund procedure), it is necessary to 
build a system of exchange of information between tax administrations. 

In  the  same  way  as  for  the  special  scheme  which  has  been  set  up  for  electronic  commerce 
supplies, such an exchange of information should be built within the legal framework on VAT 
administrative  cooperation  (Council  Regulation  (EC)  No  1798/2003)  and  should  be  based 
exclusively on electronic communications. 

This  electronic  system  to  support  the  exchanges  of  information  required  under  the  one-stop 
scheme  and  the  procedure  replacing  the  Eighth  Directive  is  to  be  integrated  within  a 
modernised VIES (VAT Information Exchange System) in order to make it possible to ease 
the burden on tax administrations. The Commission has, at the beginning of 2004, launched a 
feasibility  study  for  a  new  improved  VIES  (VIES  II),  which  includes  the  necessary 
requirements  for  the  one-stop  scheme.  In  particular,  it  will  be  necessary  to  ensure  that 
information  supplied  electronically  by  taxable  persons  to  their  own  Member  State  can  be 
captured and processed. The information thus captured would have to be passed automatically 
to the relevant Member State where supplies take place or refunds are requested without any 
intervention by the Member State of identification. 

9. 

PROPOSED CHANGES 

9.1. 

Amendments to the Sixth VAT Directive (simplification of obligations) 

9.1.1.  Amendment of Article 17(4) 

Point  (a)  of  the  second  subparagraph  of  Article  17(4)  is  deleted.  This  provision  is  now 
integrated in Article 1 of the proposed Directive reviewing the refund procedure for taxable 
persons who are not established within the territory of the country. 

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9.1.2.  Deletion of Article 17(6) 

Article  17(6)  is  repealed,  thus  eliminating  the  provision  under  which  Member States  may 
retain all the exclusions provided for under their national law when the Sixth VAT Directive 
came into force. 

As a result, the normal rules laid down in Article 17(1) to (5) apply to all expenditure that is 
not explicitly referred to by the new Article 17a. 

9.1.3. 

Insertion of Article 17a 

This  Article  gives  Member  States  the  flexibility  to  apply  total  or  partial  restrictions  (for 
example  flat  rate  deductions)  to  the  right  to  deduct  input  VAT.  This  flexibility  is  however 
limited to the expenses which are specifically quoted in the Article. 

A  definition  of  "motorised  road  vehicles"  and  "expenditure  relating  to  motorised  road 
vehicles" is provided in order to ensure that the scope of the potential restrictions applied by 
the Member States is harmonised. 

Moreover,  the  Article  also  provides  a  list  of  motorised  road  vehicles  for  which,  given  their 
use, Member State may not restrict the right to deduct. 

Besides motorised road vehicles, this Article provides also the possibility for Member States 
to  apply  total  or  partial  restrictions  to  the  right  to  deduct  for  boats  and  aircraft,  travel, 
accommodation, food and drink, luxuries, amusements and entertainment. 

9.1.4.  Amendment of Article 21(1)(b) 

The  amendment  makes  it  compulsory  for  all  Member  States  to  designate  the  client  as  the 
person liable to pay the tax for supplies of goods which are installed or assembled by or on 
behalf of the supplier, supplies of services connected with immovable property, and services 
covered by Article 9(2)(c) such as work on movable tangible property, where the supplier is 
not established within the territory of the country and where the client is identified for VAT 
purposes in the Member State where the supply takes place. 

It should be noted that the option provided to Member States under Article 21(1)(a), to require 
that the client is the person liable to pay the tax for the cases not covered by Article 21(1)(b) 
and (c), is maintained.  

9.1.5. 

Insertion of Article 22b 

This Article lays down all the rules relating to the functioning of the one-stop scheme.  

9.1.5.1.  Point A 

This point defines what is, for the purpose of this Article, a "Member State of identification" 
and a "Member State of consumption". 

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9.1.5.2.  Point B 

This point defines  the  scope of  the  special scheme,  which  concerns  taxable  persons  making 
supplies of goods or services for which they are liable to pay the tax in one or several Member 
State(s) where they have no establishment. However, the special scheme for non established 
traders  supplying  electronic  services  to  non-taxable  persons  provided  for  under  Article  26c 
remains in place. Therefore, the traders which make use of that special scheme are excluded 
from the one-stop scheme. 

The scheme is optional for the taxable persons concerned and they can continue to fulfil their 
VAT obligations under the normal rules laid down by each Member State if they consider this 
to be more appropriate in their situation. 

9.1.5.3.  Point C 

This  point  deals  with  the  registration  procedure  under  the  special  scheme.  The  primary 
responsibility  for  registering  taxable  persons  in  the  special  scheme  belongs  to  the  Member 
State of identification, on request from the taxable person. 

The  point  also  lays  down  procedures  for  the  communication  of  any  modification  of  the 
registration data, as well as for deregistration. These procedures are entirely electronic. 

This point also lays down specific provisions for taxable persons established in more than one 
Member  State.  Its  main  objective  is  to  specify  that  each  establishment  may  qualify  on  a 
separate basis for the special scheme for its own supplies. 

9.1.5.4.  Point D 

This point lays down rules according to which the Member States of consumption shall not 
identify for VAT purposes, and therefore not give any VAT number in the meaning of Article 
22(1)(c), to those taxable persons that are registered in the special scheme. 

9.1.5.5.  Point E 

This point lays down the obligation for taxable persons registered under the special scheme to 
submit a VAT return by electronic means. 

This  VAT  return  is  a  single  VAT  return  with  a  specific  part  for  each  Member  State  of 
consumption. 

It also introduces a special rule regarding recapitulative statements whereby a separate VAT 
identification  number  would  not  be  necessary  for  the  purpose  of  submitting  recapitulative 
statements  where  these  statements  are  required  in  cases  such  as  the  transfer  by  a  taxable 
person of his own goods to another Member State. The non-established taxable person using 
the  scheme  would  use  his  own  VAT  identification  number  issued  in  his  Member  State  of 
establishment  and  identify  the  Member  States  into  which  the  goods  were  transferred  on  the 
recapitulative statement. 

9.1.5.6.  Point F 

This point lays down the rules for payments and repayments. All transfers of money will be 
made directly between the taxable person and the Member State of consumption. 

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Where  for  a  tax  period  the  amount  of  deductible  tax  exceeds  the  amount  of  tax  due,  the 
Member State of consumption will deal with the excess, under the same conditions it has laid 
down in accordance with Article 18(4) for taxable persons not applying the one stop scheme. 

9.1.5.7.  Point G 

This point lays down specific provisions for taxable persons established outside the European 
Union (including the ones currently subject to the electronic commerce special scheme). 

9.1.6.  Amendment of Article 24 

The amended paragraph 2 defines the framework in which Member States may, if they wish 
to, define an exemption regime for small traders. 

Paragraphs 3 and 4 are amended in order to clarify which transactions shall be excluded from 
the exemption and which transactions are to be taken into account for the calculation of the 
taxable  person's  turnover.  This  is  largely  a  presentational  rather  than  a  substantive 
amendment. 

Paragraphs 8 and 9 are deleted because they are no longer up-to-date. 

9.1.7.  Deletion of Article 24a 

Article  24a  which  provides  for  thresholds  for  the  10  new  Member  States  is  deleted,  as  the 
provisions will be superseded by the new drafting of Article 24. 

9.1.8.  Amendment of Article 28b (B) (2) 

Paragraph  2  of  Article  28b(B)  is  amended  in  order  to  introduce  within  the  distance  sales 
arrangements  a  global  threshold  applicable  to  sales  to  all  Member  States  other  than  the 
Member State of establishment, instead of a threshold per Member State. 

9.1.9.  Article 2 

This Article specifies that the Directive will enter into force after 1 July 2006.  

9.2. 

New Directive replacing the Eighth Directive on VAT refunds 

9.2.1.  Article 1 

This article defines the scope of the Directive, which is not different from the existing Eighth 
Directive. 

9.2.2.  Article 2 

This  Article  defines  the  taxable  person  eligible  for  refund  under  this  Directive.  It  also 
excludes transactions which are exempted, or which could be exempted, under Articles 15 or 
28c(A). This exclusion should ensure that VAT is not recovered twice, once by the supplier as 
a correction of the VAT initially charged on a supply which could be exempted, and once by 
the purchaser via the refund procedure. 

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9.2.3.  Article 3 

This  Article  defines  which  transactions  are  eligible  for  a  refund  and  is  not  significantly 
different from the current drafting of Article 2 of Directive 79/1072/EEC. 

9.2.4.  Article 4 

This article lays down the rules for determining the amount refundable. 

Firstly,  a  taxable  person  must  carry  out  taxable  transactions  in  the  Member  State  of 
establishment  in  order  to  be  eligible  for  refund.  When  the  taxable  person  carries  out  both 
taxable and exempt transactions, he will have a partial right of refund in relation to the former 
transactions. 

Secondly,  the  deduction  rules,  and in  particular  the  exclusions  from  the  right  to  deduct  laid 
down by the Member State where the expenses where incurred are to be applied. 

This  Article  sets  out  in  a  legal  provision  the  principles  already  laid  down  by  the  European 
Court of Justice in Case C-302/93 (Etienne Debouche) and Case C-136/99 (Société Monte dei 
Paschi di Siena). 

9.2.5.  Article 5 

Article 5 lays down the procedure under which a taxable person can introduce a request for a 
refund. This request is to be introduced electronically in the Member State of establishment of 
the taxable person. 

The Member State of establishment will ensure transmission of the data to the Member State 
where the expenses where incurred. 

This  Article  also  lays  down  which  information  a  taxable  person  submitting  a  request  has  to 
provide. 

9.2.6.  Article 6 

This Article stipulates the periodicity under which a refund application can be presented, as 
well  as  the  deadlines  under  which  invoices  and  import  documents  can  be  presented  for  a 
refund. It also lays down the minimum amount of the refund to be claimed. 

9.2.7.  Article 7 

This Article determines that competent authorities of the Member State where the request for 
refund  is  presented  shall  inform  the  applicant  of  its  decision  within  three  months.  Refunds 
shall be made within the same period. 

In specific cases, that Member State could ask for additional information. A decision should 
then be taken within 3 months from the date the requested information is provided. Once the 
interval of 3 months is exceeded, the refund can no longer be refused. 

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9.2.8.  Article 8 

This Article stipulates that an interest of 1% a month is due when the Member State of refund 
fails to respect the deadlines laid down in the previous Article. 

9.2.9.  Article 9 

The proposed Directive should replace the current Eighth Directive. This Directive is then to 
be repealed. 

9.3. 

Amendments to Regulation 2003/1798 on administrative cooperation in the field 
of value added tax 

9.3.1.  Amendment of Article 1(1) 

This is a technical amendment in order to extend the scope of the Regulation to the exchange 
of information which is necessary for the smooth functioning of the VAT One-Stop scheme. 

9.3.2.  New Chapter VIa 

A new chapter is included to deal specifically with the exchange of information on the One-
Stop-Scheme, as from 1 July 2006. 

9.3.2.1.  Article 34a 

This Article defines the scope of the exchange of information under Chapter VI. It also lays 
down that the definitions relating to the One-Stop-Scheme ("Member State of identification", 
"Member  State  of  consumption"),  which  are  listed  in  the  amendments  to  the  Sixth  VAT 
Directive, shall also apply to Regulation 1798/2003. 

9.3.2.2.  Article 34b 

This  Article  lays  down  the  rules  for  the  exchange  of  information  on  registration  (including 
modification  of  registration  data  and  deregistration)  of  taxable  persons  under  the  special 
scheme. 

This  exchange  of  information  shall  take  place  without  delay,  which  means  that  a  proper 
electronic system of communication needs to be put in place. 

All Member States shall receive this information, even if no supply is or will be made on their 
territory. 

In addition, it imposes an obligation on the Member State of establishment to monitor that its 
taxable  persons  are  complying  with  the  distance  selling  thresholds,  and  to  advise  the  other 
Member States where it appears that the distance selling threshold has been exceeded. 

All details relating to the definition of the technical messages will be decided according to the 
Comitology procedure. 

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9.3.2.3.  Article 34c 

This Article lays down the obligation for each Member State to keep an updated database of 
all taxable persons registered within the special scheme. 

9.3.2.4.  Article 34d 

This  Article  lays  down  the  rules  for  the  exchange  of  information  relating  to  VAT  returns 
(including their modification). 

This exchange of information shall also take place without delay. 

The  information  will  be  sent  only  to  those  Member  States  for  which  tax  is  declared.  Each 
Member State will therefore only receive the part of the return which deals with the supplies 
made under its own jurisdiction. 

All details relating to the definition of the technical messages will be decided according to the 
Comitology procedure. 

9.3.2.5.  Article 34e 

This  Article  lays  down  the  obligation  for  the  Member  State  of  identification  to  keep  the 
information relating to the tax returns which have been sent to the other Member States. 

This  information  should  be  kept  during  a  minimum  time  period  which  is  necessary  for  the 
technical functioning of the system (for example to enable the system to detect that a taxable 
person has already made a tax return for a specific period and that only a modification of this 
data  can  subsequently  be  made).  This  time  period  will  need  to  be  fixed  according  to  the 
Comitology procedure. 

Member  States  will  of  course  be  able  to  store  this  information  during  a  longer  time  period, 
which may be a very useful source of information for their own future audit controls. 

9.3.2.6.  Article 34f 

This Article deals with the information which will need to be made available to the taxable 
persons  on  the  Website  of  each  tax  administration  in  order  to  help  businesses  comply  with 
their obligations. 

The information will deal with the rules applying to the One-Stop Scheme as well as with the 
different national rules applying in each Member State (such as tax rates). 

The  Commission  will  be  responsible  for  the  coordination  of  this  task,  as  well  as  for 
translation. Detailed rules will be fixed according to the Comitology procedure. 

9.3.2.7.  Article 34g 

This  Article  lays  down  specific  rules  on  control  of  the  taxable  persons  registered  under  the 
special  scheme.  According  to  these  rules,  Member  States  of  consumption  will  be  able  to 
participate in a control initiated by the Member State of identification. The latter will have an 
obligation of information the former with regard to such controls. 

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In  cases  where  Member  States  of  consumption  choose  to  participate  in  such  a  control,  the 
normal  rules  laid  down  in  Article  11  (presence  of  tax  officials  on  the  territory  of  another 
Member State) would apply. 

9.3.3.  New Chapter VIb 

A new chapter is also included to deal specifically with the exchange of information which is 
necessary to the functioning of the modernised refund scheme. 

According  to  Article  34h,  the  Member  State  of  identification  shall  transmit  the  refund 
applications immediately to the Member State of purchase. Again, the technical details will be 
fixed according to the Comitology procedure. 

Article 34i adds that information will need to be provided to taxable persons concerning the 
proposed Directive laying down the refund procedure and on specific national rules relating to 
those refunds. This will be done under the procedure laid down in Article 34f. 

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2004/0261 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 77/388/EEC with a view to simplifying value added tax obligations 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
93 thereof, 

Having regard to the proposal from the Commission9, 

Having regard to the opinion of the European Parliament10, 

Having regard to the opinion of the European Economic and Social Committee11, 

Whereas: 

(1)  Within the context of the common system of value added tax (VAT), it is necessary to 
simplify  the  obligations  on  businesses,  since  those  obligations  are  currently 
disproportionately  burdensome  and  thus  compromise  the  smooth  functioning  of  the 
internal market by unreasonably hindering the possibility for businesses to engage in 
economic activities in other Member States. 

(2) 

(3) 

(4) 

Common  definitions  of  the  goods  and  services  for  which  Member  States  may  apply 
total or partial restrictions of the right to deduct should facilitate the use by businesses 
of the VAT refund procedure in Member States where they are not established. 

For transactions between taxable persons where the supplier is not established in the 
Member  State  where  the  supply  takes  place,  an  extension  of  the  cases  for  which  the 
customer  is  liable  to  pay  the  tax  should  simplify  the  VAT  obligations  of  the  non-
established  supplier  without  creating  an  additional  administrative  burden  for  the 
customer. 

The obligations for  taxable persons liable to pay VAT in Member States where they 
are not established should be simplified by making it possible for them to use a “one-
stop scheme”, that is to say, a scheme enabling them, if they so wish, to have a single 
point of electronic contact for value added tax identification and declaration. 

9 
10 
11 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

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(5) 

(6) 

(7) 

(8) 

Such  a  scheme  should  be  open  not  only  to  taxable  persons  established  within  the 
Community but also to taxable persons who, albeit not established there, out taxable 
activities  within  the  Community.  However,  it  should  not  cover  taxable  persons 
supplying  electronic  services  to  non-taxable  persons,  leaving  in  place  the  scheme 
introduced in order to facilitate their compliance with fiscal obligations. 

No  obligation  to  appoint  a  tax  representative  should  be  imposed  on  non-Community 
operators who are registered under the one-stop scheme as such an obligation would 
cancel out all the benefits derived from the present simplification. 

Taxable persons registered under the special scheme should comply with the specific 
obligations laid down in this Directive. 

Transfers of money, by way of payments or refunds, should be made directly between 
taxable persons and Member States of consumption. 

(9)  Member  States  should  be  allowed  a  greater  measure  of  flexibility  in  fixing  the 
threshold below which small businesses may be exempt from VAT obligations. This 
flexibility  should  enable  each  Member  State  to  determine  the  exemption  taking  into 
account the structure of its national economy. 

(10)  The special distance selling arrangements should be simplified through the provision 
of a single threshold for supplies to all Member States other than the Member State of 
establishment, instead of a separate threshold for each Member State of destination. 

(11)  Since  the  objectives  of  the  proposed  action  cannot  be  sufficiently  achieved  by  the 
Member  States  and  can  therefore,  by  reason  of  the  scale  of  the  action,  be  better 
achieved  at  Community  level,  the  Community  may  adopt  measures,  in  accordance 
with  the principle of subsidiarity as set out in Article  5 of the  Treaty. In accordance 
with the principle of proportionality, as set out in that Article, this Directive does not 
go beyond what is necessary in order to achieve those objectives. 

(12)  Directive 77/388/EEC should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Directive 77/388/EEC is amended as follows: 

Article 1 

(1) 

Article 17, in the version set out in Article 28f, is amended as follows: 

(a) 

paragraph 4 is amended as follows: 

(i) 

in  the  first  indent  of  the  first  subparagraph,  the  reference  to  ‘Directive 
79/1072/EEC’ is replaced by ‘Council Directive xx/xxx/EC(*)’; 

(ii) 

in the second subparagraph, point (a) is deleted; 

(iii) 

in  point  (c)  of  the  second  subparagraph,  the  reference  to  ‘Directive 
79/1072/EEC’ is replaced by ‘Directive xx/xxx/EC 

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(*) OJ L […], […], p. […].’; 

(b)  Paragraph 6 is deleted. 

(2) 

The following Article 17a is inserted: 

‘Article 17a 
Restrictions on the right of deduction 

1. 

Member  States  may,  without  prejudice  to  Article  17(5),  apply  a  total  or  partial 
restriction on the right of a taxable person to deduct value added tax charged to him 
on the following: 

(a) 

expenditure on luxuries, amusements or entertainment; 

(b) 

(c) 

expenditure in respect of travel, accommodation, food or drink other than that 
incurred  by  the  taxable  person  in  the  course  of  his  activity  in  supplying  for 
consideration travel, accommodation, food or drink; 

expenditure  relating  to  motorised  road  vehicles  except  the  taxable  person’s 
stock-in-trade vehicles and vehicles for sale in the exercise of his activity, used 
as taxis, for instruction by driving schools or used for hire or leasing; 

(d) 

expenditure  relating  to  boats  or  aircraft  except  those  exclusively  intended  for 
use for the commercial transport of persons or goods. 

Member States may, for the purposes of paragraph 1, set a percentage for minimum 
use of motorised road vehicles for business purposes. 

Paragraphs  1  and  2  shall  apply  to  all  motor  vehicles,  other  than  agricultural  or 
forestry  tractors,  which  are  normally  used  for  carrying  persons  or  goods  by  road, 
with  a  maximum  authorised  mass  not  exceeding  3500  kilograms  and  having  not 
more than eight seats in addition to the driver’s seat. 

The related expenditure shall cover the purchase of a vehicle, including contracts of 
assembly  and  the  like,  manufacture,  intra-Community  acquisition,  importation, 
leasing or hire, modification, repair or maintenance, and expenditure on supplies or 
services performed in relation to vehicles and the use thereof. 

In  Article  21,  in  the  version  set  out  in  Article  28g,  point  (b)  of  paragraph  1  is 
replaced by the following: 

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  goods  covered  by  the  arrangements  laid  down  in  the  second  sentence  of 
Article 8(1)(a) or services covered by Article 9(2)(a) and (c) or Article 28b(C), (D), 
(E) and (F) are supplied, if the supply of the goods is made or the services are carried 
out by a taxable person not established within the territory of the country;’ 

2. 

3. 

(3) 

‘(b) 

EN 

21 

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(4) 

The following Article 22b is inserted: 

‘Article 22b 
One-stop scheme for fulfilling obligations in Member States where the taxable person is not 
established 

A. 

Definitions 

For  the  purposes  of  this  Article,  and  without  prejudice  to  other  Community  provisions,  the 
following definitions shall apply: 

(1) 

‘Member State of identification’ means the Member State in which the taxable person 
established  within  the  Community  has  established  his  business  or  has  a  fixed 
establishment from which the goods or services are supplied or, if established outside 
the Community, the Member State of consumption which the taxable person chooses 
to  contact  to  state  when  his  activity  as  a  taxable  person  within  the  Community 
commences; 

(2) 

‘Member State of consumption’ means the Member State in which the supply of the 
goods or services is deemed to take place in accordance with Articles 8, 9 and 28b. 

B. 

Scope 

Member States  shall permit any taxable person supplying goods or services for which he is 
liable to pay value added tax in one or several Member States of consumption where he has 
not  established  his  business  nor  has  a  fixed  establishment  to  fulfil  his  obligations  using  the 
special  scheme  provided  for  under  this  Article,  except  for  those  non-established  taxable 
persons  supplying  electronic  services  to  non-taxable  persons  who  make  use  of  the  special 
scheme provided for under Article 26c. 

C. 

1. 

2. 

Registration  

Every taxable person shall state to the Member State of identification when he wants 
to  start  to  make  use  of  the  one-stop  scheme.  This  statement  shall  be  made  by 
electronic means. 

The taxable person shall provide the information necessary for his registration under 
the  one-stop  scheme.  He  shall  also  state  whether  he  is  already  identified  for  value 
added  tax  purposes  in  Member  States  where  he  is  not  established  nor  has  a  fixed 
establishment  and,  if  so,  indicate  the  identification  number  under  which  he  is 
registered. 

The  Member  State  of  identification  shall  register  the  taxable  person  referred  to  in 
paragraph 1 within a reasonable period of time. For that purpose the Member State 
shall use the individual number already allocated to the taxable persons in respect of 
his obligations under the internal system. 

Taxable  persons  who  have  an  establishment  in  more  than  one  Member  State  may 
request that each establishment be registered under the one-stop scheme in respect of 
their supplies made in Member States where the taxable person has no establishment. 

EN 

22 

   EN 

 
3. 

4. 

5. 

Every  taxable  person  shall  notify  the  Member  State  of  identification  of  any 
modification  of  the  registration  data  provided  pursuant  to  paragraph  1.  That 
notification shall be made by electronic means 

Every taxable person shall state to the Member State of identification when he wants 
to cease to make use of the scheme or when his activity changes to the extent that he 
no  longer  qualifies  for  the  one-stop  scheme.  This  statement  shall  be  made  by 
electronic means 

The Member State of identification shall without delay strike from the identification 
register any taxable person who no longer meets the conditions necessary to qualify 
for the one-stop scheme. 

In particular, the Member State of identification shall exclude taxable persons from 
participating in the one-stop scheme in the following cases: 

(a) 

(b) 

(c) 

(d) 

if  the  taxable  person  notifies  the  Member  State  of  identification  that  he  no 
longer supplies goods or services in any Member State or Member States other 
than the Member State of identification; 

if it otherwise can be assumed that the taxable activities of the taxable person 
have ended; 

if the taxable person no longer fulfils the requirements necessary to be allowed 
to use the scheme; 

if the taxable person persistently fails to comply with the rules governing use 
of the scheme. 

D. 

Identification 

A taxable person who is registered under the one-stop scheme shall not be identified, within 
the meaning of Article 22(1)(c), other than in the Member State where he is established. 

E. 

1. 

2. 

Returns and recapitulative statements 

Every  taxable  person  registered  under  the  one-stop  scheme  shall  submit  to  the 
Member  State  of  identification  a  value  added  tax  return  for  each  calendar  quarter 
setting out all the supplies of goods and services for which he is liable to pay value 
added tax in Member States where he has not established his business nor has a fixed 
establishment.  If  the  taxable  person  is  not  established  within  the  Community,  the 
return shall also include the supplies made in the Member State of identification.  

The return, which shall be made by electronic means, shall be submitted within 20 
days following the end of the period to which it refers. 

The  return  referred  to  in  paragraph  1  shall  set  out,  for  each  Member  State  of 
consumption where value added tax  has become due, all the information needed to 
calculate  the  amount  of  tax  that  has  become  chargeable  and  the  deductions  to  be 
made during the period covered by the return. 

EN 

23 

   EN 

 
3. 

4. 

F. 

1. 

2. 

The return referred to in paragraph 1 shall be made in euro. The Member States of 
consumption  which  have  not  adopted  the  euro  may  require  the  part  of  the  return 
concerning  supplies  of  goods  and  services  on  their  territory  to  be  made  in  their 
national currency. 

Where,  pursuant  to  Article  28a(5)(b),  a  taxable  person  is  obliged  to  submit  data  in 
accordance with Article 22(6)(b), the number referred to in the second indent of the 
third  subparagraph  of  Article  22(6)(b)  shall  be  the  number  referred  to  in  the  first 
indent  of  that  subparagraph.  The  taxable  person  shall  indicate  the  Member  State  in 
which the acquisition was made in a clear way on the recapitulative statement. 

Payments and repayments 

The  taxable  person  shall  pay  the  value  added  tax  when  submitting  the  value  added 
tax return. Payment shall be made directly on the bank account and in the currency of 
each Member State of consumption concerned. 

When the amount of value added tax to be deducted in a specific calendar quarter is 
greater than the amount of tax due, the Member States may either make a refund or 
carry  the  excess  forward  to  the  following  period  in  accordance  with  the  conditions 
which they have determined pursuant to Article 18(4). 

G. 

Specific provisions for taxable person established outside the Community 

The  Member  State  of  identification  shall  identify,  within  the  meaning  of  Article 
22(1)(c), a taxable person who is not established within the Community at the same 
time as it takes the action referred to in Part C(2) of this Article." 

(5) 

Article 24 is amended as follows: 

(a)  Paragraphs 2, 3 and 4 are replaced by the following: 

‘2. 

Member States may exempt taxable persons whose annual turnover does not exceed 
a  threshold  which  may  be  set  no  higher  than  EUR  100 000  or  the  equivalent  in 
national  currency  at  the  conversion  rate  on  1 July  2006.  They  may  apply  one  or 
several thresholds, which may not in any case exceed EUR 100.000 or the equivalent 
in national currency on 1 July 2006. 

Member  States  may  revise  annually  the  thresholds  they  apply  .  Under  that  annual 
review,  the  maximum  threshold  of  EUR  100  000,  or  the  equivalent  in  national 
currency applicable on 1 July 2006, may be raised only in order to maintain the value 
in real terms of these thresholds. 

Member  States  which  have  exercised  the  option  under  Article  14  of  Directive 
67/228/EEC to introduce exemptions or graduated tax relief may retain them and the 
arrangements for applying them if they conform to the VAT system. 

3. 

The  exemption  provided  for  under  paragraph  2  shall  not  apply  to  the  following 
transactions: 

(a) 

transactions carried out on an occasional basis, as referred to in Article 4(3); 

EN 

24 

   EN 

 
 
 
 
(b) 

(c) 

supplies  of  new  means  of  transport  carried  out  in  accordance  with  the 
conditions specified in Article 28c(A);  

supplies  of  goods  and  services  carried  out  by  a  taxable  person  who  is  not 
established in the Member State in which the value added tax is due. 

4. 

The  turnover  serving  as  a  reference  for  the  purposes  of  applying  the  arrangements 
provided  for  in  paragraph  2  shall  consist  of  the  following  amounts,  exclusive  of 
value added tax: 

(a) 

the  value  of  goods  and  services,  in  so  far  as  they  are  taxed,  including 
transactions which are exempt, with deductibility of the value added tax paid at 
the preceding stage, pursuant to Article 28(2); 

(b) 

the value of transactions which are exempt pursuant to Article 15; 

(c) 

the  value  of  real  estate  transactions,  financial  transactions  as  referred  to  in 
Article 13(B)(d) and insurance services, unless those transactions are ancillary 
transactions. 

However, disposals of the tangible or intangible capital assets of an enterprise shall 
not be taken into account for the purposes of calculating the turnover.’ 

(6) 

(7) 

(b)  Paragraphs 8 and 9 are deleted. 

Article 24a is deleted. 

In Article 28b(B), paragraph 2 is replaced by the following: 

‘Paragraph  1  shall  not  apply  to  supplies  of  goods  dispatched  or  transported  to  a 
Member State other than that of the supplier, if the following conditions are met: 

(a) 

the goods supplied are not products subject to excise duty; 

(b) 

(c) 

the total value of such supplies, exclusive of value added tax, does not exceed 
EUR 150 000 or the equivalent in national currency in one calendar year; 

the total value, exclusive of value added tax, of the supplies of goods other than 
products subject to excise duty, in the previous calendar  year, did not exceed 
EUR 150 000 or the equivalent in national currency.’ 

Article 2 

1. 

Member  States  shall  adopt  and  publish,  by  30  June  2006  at  the  latest,  the  laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They  shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions 
and a correlation table between those provisions and this Directive. 

They shall apply those provisions from 1 July 2006. 

EN 

25 

   EN 

 
 
 
 
When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

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

Article 3 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

For the Council 
The President   

EN 

26 

   EN 

 
 
 
 
Proposal for a 

COUNCIL DIRECTIVE 

laying down detailed rules for the refund of value added tax, provided for in Directive 
77/388/EEC, to taxable persons not established in the territory of the country but 
established in another Member State 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having regard to Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the 
laws of the Member States relating to turnover taxes – Common system of value added tax: 
uniform basis of assessment12, and in particular Article 29a thereof, 

Having regard to the proposal from the Commission13, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Considerable  problems  are  posed,  both  for  the  administrative  authorities  of  Member 
States  and  for  businesses,  by  the  implementing  rules  for  Directive  77/388/EEC  laid 
down by Council Directive 79/1072/EEC of 6 December 1979 on the harmonization of 
the laws of the Member States relating to turnover taxes – Arrangements for the refund 
of value added tax to taxable persons not established in the territory of the country14. 

The  arrangements  laid  down  in  that  Directive  should  be  amended  so  that  decisions 
concerning applications for refund can be announced within three months of the date 
when  the  applications  were  submitted  and  refunds  made  within  the  same  period.  To 
that end, the procedure should be simplified and modernised by allowing for the use of 
modern technologies. 

The  new  procedure  shall  create  more  legal  certainty  for  businesses,  since  the  refund 
can no longer be refused when the imposed delays are exceeded. 

Directive  77/388/EEC  contained  a  provision  which  concerned  the  application  of 
Directive 79/1072/EEC. For clarity and better reading purposes, this provision is now 
integrated in this Directive and deleted in Directive 77/388/EEC.  

12 

13 
14 

OJ  L  145,  13.6.1977,  p.  1.  Directive  as 
(OJ L 168, 1.5.2004, p. 35). 
OJ C […], […], p. […]. 
OJ L 331, 27.12.1979, p. 11. Directive as last amended by the 2003 Act of Accession. 

last  amended  by  Directive  2004/66/EC 

EN 

27 

   EN 

 
                                                 
(5) 

Since  the  objectives  of  the  proposed  action  cannot  be  sufficiently  achieved  by  the 
Member  States  and  can  therefore,  by  reason  of  the  scale  of  the  action,  be  better 
achieved  at  Community  level,  the  Community  may  adopt  measures,  in  accordance 
with the principle  of subsidiarity  as set out in Article 5 of the Treaty. In accordance 
with the principle of proportionality, as set out in that Article, this Directive does not 
go beyond what is necessary in order to achieve those objectives. 

(16) 

In the interests of clarity, Directive 79/1072/EEC should therefore be replaced. 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

1. 

This  Directive  lays  down  the  detailed  rules  for  the  refund  of  value  added  tax, 
provided for in Article 17(3) of Directive 77/388/EEC, in the version given in Article 
28f thereof, to taxable persons, within the meaning of Article 4(1) of that Directive 
and subject to paragraph 2 of this Article, who are not established in the territory of 
the  country,  but  who  are  established  in  another  Member  State,  hereinafter  “non-
established taxable persons”. 

3. 

This  Directive  shall  apply  to  any  non-established  taxable  person,  who  meets  the 
following conditions: 

(a) 

during  the  refund  period,  he  has  not  had  in  the  territory  of  the  country, 
hereinafter “the Member State of refund”, the seat of his economic activity, or 
a fixed establishment from which business transactions were effected, or, if no 
such  seat  or  fixed  establishment  existed,  his  domicile  or  normal  place  of 
residence;  

(b)  during the refund period, he has not supplied any goods or services deemed to 
have  been  supplied  in  the  Member  State  of  refund,  with  the  exception  of  the 
following transactions:  

(i) 

(ii) 

transport  services  and  services  ancillary  thereto,  exempted  pursuant  to 
Article  14(1)(i),  Article  15  or  Article  16(1)  B,  C  and  D  of  Directive 
77/388/EEC; 

supplies of goods and services provided in cases where value added tax is 
payable  solely  by  the  person  to  whom  they  are  supplied,  pursuant  to 
Article 21(1)(a), (b), (c) and (f) of Directive 77/388/EEC. 

Article 2 

This Directive shall not apply in respect of goods the supply of which is, or may be, exempted 
under  Article  28c(A)  of  Directive  77/388/EEC  when  the  goods  supplied  are  dispatched  or 
transported by the acquirer or for his account. Nor shall it apply to goods the supply of which 
is, or may be, exempted under Article 15(2) of Directive 77/388/EEC. 

EN 

28 

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Article 3 

Member  States  shall  refund  to  any  non-established  taxable  person,  any  value  added  tax 
charged  in  respect  of  goods  or  services  supplied  to  him  by  other  taxable  persons  in  their 
territory or in respect of the importation of goods into their territory, in so far as such goods 
and  services  give  rise  to  a  right  of  deduction  there  and  are  used  for  the  purposes  of  the 
following transactions: 

(a) 

(b) 

transactions referred to in Article 17(3)(a) and (b) of Directive 77/388/EEC; 

transactions for which value added tax is payable solely by the person to whom the 
goods  or  services  are  supplied,  pursuant  to  Article  21(1)  (a),  (b),  (c)  and  (f)  of 
Directive 77/388/EEC. 

Article 4 

To be eligible for a refund under Article 3, the non-established taxable person must carry out 
transactions giving rise to a right of deduction in the Member State in which he is established. 

When  a  non-established  taxable  person  carries  out  in  the  Member  State  in  which  he  is 
established  both  transactions  giving  rise  to  a  right  of  deduction  and  transactions  not  giving 
rise to a right of deduction, only such proportion of the value added tax may be refunded in 
the Member State of deduction as it is attributable to the former transactions. 

Article 5 

1. 

2. 

To obtain a refund under Article 3, the non-established taxable person shall submit 
an application for refund, hereinafter “the application” in the Member State in which 
he is established. This application shall be made by electronic means. 

The refund application shall set out, for each Member State where the taxable person 
incurred value added tax, the following details: 

(a) 

name and full address of the supplier; 

(b) 

except in the case of importation, the value added tax identification number of 
the  supplier  or  tax  reference  number,  as  defined  by  a  Member  State  in 
accordance with Article 22(9)(e) of Directive 77/388/EEC; 

(c) 

except  in  the  case  of  importation,  the  ISO  code  of  the  Member  State  of 
purchase in accordance with Article 22(1)(d) of Directive 77/388/EEC; 

(d)  date and number of the invoice or importation document; 

(e) 

(f) 

taxable amount and amount of value added tax expressed in the currency of the 
Member State where the tax was incurred; 

the  amount  of  deductible  value  added  tax  expressed  in  the  currency  of  the 
Member State where the tax was incurred; 

EN 

29 

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(g)  nature of the goods and services acquired, described by the following code: 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

=  fuel; 

=  accommodation; 

=  restaurant services; 

=  travel expenses, such as taxi fares, short-term renting of means 
of transport, public transport fares; 

=  fairs and exhibitions; 

=  leasing of means of transport; 

=  road tolls and road user charge; 

=  other. 

For the purposes of Code 8 in point (g) of the first subparagraph, a full description of 
the goods and services shall be requested. 

Article 6 

1. 

The  application  shall  relate  to  purchases  of  goods  or  services  invoiced  or  imports 
made during a period of not less than three months and not more than one calendar 
year.  The  application  may,  however,  relate  to  a  period  of  less  than  three  months 
where the period represents the remainder of a calendar year.  

The  application  may  also  relate  to  invoices  or  import  documents  not  covered  by 
previous  applications  and  concerning  transactions  completed  during  the  calendar 
year in question. 

The application shall be submitted within six months of the end of the calendar year 
in which the tax became chargeable. 

2. 

If the application relates to a period of less than one calendar year but not less than 
three months, the amount of the refund requested may not be less than EUR 200 or 
the equivalent in national currency. 

If the application relates to a period of a calendar year or the remainder of a calendar 
year,  the  amount  of  the  refund  requested  may  not  be  less  than  EUR  25  or  the 
equivalent in national currency. 

Article 7 

1. 

The Member State where the Value added tax was incurred shall make its decision 
concerning the application for refund known to the applicant within three months of 
the date on which the application was submitted.  

EN 

30 

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2. 

Refunds  shall  be  made  before  the  end  of  the  three  month  period  referred  to  in 
paragraph 1. 

3. 

4. 

The refund shall be made in the Member State of refund or, at the applicant's request, 
in the Member State in which the applicant is established. In the latter case, any bank 
charges  for  the  transfer  shall  be  deducted  by  the  Member  State  of  refund  from  the 
amount to be repaid to the applicant. 

If  the  application  is  refused,  the  grounds  for  refusal  shall  be  notified  to  the  non-
established taxable person by the competent  authorities of the Member State where 
the tax was incurred. 

Appeals  against  such  refusals  may  be  made  to  the  competent  authorities  of  the 
Member State where the tax was incurred, subject to the same conditions as to form 
and  time  limits  as  those  governing  claims  for  refunds  made  by  taxable  persons 
established in the same Member State. 

In  specific  cases,  a  Member  State  where  value  added  tax  has  been  incurred  may 
request  additional  information  within  three  months  of  the  date  on  which  the 
application is submitted. After that period has elapsed, no additional information may 
be requested. 

In  such  cases,  the  decision  concerning  the  application  shall  be  made  known  to  the 
applicant  within  three  months  of  the  date  on  which  the  additional  information  was 
submitted. The refund shall be made within the same period. 

5. 

In the absence of an express refusal within the appropriate time-limit, as laid down in 
paragraph 2 or 4, the application shall be deemed to have been granted. 

Article 8 

Where an application for refund has not been expressly refused, but payment of the refund has 
not been made before the end of the three-month period laid down in the first subparagraph of 
Article 7(1), or in the second subparagraph of Article 7(4), as appropriate, interest of 1% per 
month, calculated from  the  date on which the refund  should  have been made to the date on 
which the refund was actually made, shall be due by the Member State on the amount of the 
refund to be made. 

Article 9 

Directive 79/1072/EEC is repealed with effect from 1 July 2006. 

References to that Directive shall be construed as references to this Directive. 

EN 

31 

   EN 

 
Article 10 

1. 

Member  States  shall  adopt  and  publish,  by  1  July  2006  at  the  latest,  the  laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They  shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions 
and a correlation table between those provisions and this Directive. 

They shall apply those provisions from 1 July 2006. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

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

Article 11 

Article 12 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

For the Council 
The President 

EN 

32 

   EN 

 
 
 
2004/0262 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1798/2003 as regards the introduction of administrative 
cooperation arrangements in the context of the one-stop scheme and the refund 
procedure for value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 93 thereof, 

Having regard to the proposal from the Commission15, 

Having regard to the opinion of the European Parliament16, 

Having regard to the opinion of the European Economic and Social Committee17, 

Whereas: 

(1) 

(2) 

(3) 

Under  Council  Directive  200Y/XX/EC  of  DD/MM/200X  amending  Directive 
77/388/EEC  with  a  view  to  simplifying  value  added  tax  obligations18,  a  one-stop-
scheme may be offered to all taxable persons with value added tax (VAT) obligations 
in a Member State where they are not established. 

Council Directive 200Y/YY/EC of DD/MM/200Y laying down detailed rules for the 
refund  of  value  added  tax,  provided  for  in  Directive  77/388/EEC,  to  taxable  persons 
not  established  in  the  territory  of  the  country  but  established  in  another  Member 
State19 simplifies the procedure for obtaining a VAT refund in a Member State where 
the taxable person concerned does not have any VAT registration. 

However,  both  these  Directives  entail  the  exchange  of  a  considerable  volume  of 
additional  information  between  the  various  Member  States  concerned.  It  is  therefore 
necessary to amend Council Regulation (EC) No 1798/2003/ECof 7 October 2003 on 
administrative  cooperation  in  the  field  of  value  added  tax  and  repealing  Regulation 
(EEC)  No 218/9220.  The  exchange  of  information  required  should  not  have  a 
disproportionate administrative burden on the Member States concerned. 

15 
16 
17 
18 
19 
20 

OJ C […], […], p. […]. 
OJ C […], […], p. […].. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 264, 15.10.2003, p. 1. 

EN 

33 

   EN 

 
                                                 
(4) 

(5) 

(6) 

The  exchange  of  information  should  take  place  by  electronic  means  based  on  the 
existing information exchange systems. 

It  is  necessary  to  clarify  the  respective  obligations  of  the  Member  States  of 
identification  and  consumption,  particularly  as  regards  the  deadlines  for  the 
transmission of information and the control of taxable persons. 

Since  the  objectives  of  the  proposed  action  cannot  be  sufficiently  achieved  by  the 
Member  States  and  can  therefore,  by  reason  of  the  scale  of  the  action,  be  better 
achieved  at  Community  level,  the  Community  may  adopt  measures,  in  accordance 
with  the  principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty.  In  accordance 
with the principle of proportionality, as set out in that Article, this Regulation does not 
go beyond what is necessary in order to achieve those objectives. 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 1798/2003 is amended as follows: 

(1) 

In Article 1(1), the following fifth subparagraph is added: 

‘This Regulation also lays down rules and procedures for the exchange by electronic means of 
value  added  tax  information  on  goods  and  services  supplied  by  taxable  persons  who  have 
opted for the special scheme provided for in Article 22b of Directive 77/388/EEC, or who are 
using  the  VAT  refund  procedure,  provided  for  in  Council  Directive  200Y/YY/EC*,  for 
taxable  persons  not  established  in  the  territory  of  the  country  but  who  are  established  in 
another Member State. 

(*) OJ L […], […], p. […].’; 

 (2) 

The following Chapters VIa and VIb are inserted: 

‘CHAPTER VIa 

Provisions concerning the exchange and conservation of information in the context of 
the ‘one-stop scheme’ provided for in Article 22b of Directive 77/388/EEC 

Article 34a 

The  definitions  contained  in  point  A  of  Article  22b  of  Directive  77/388/EEC  shall 
apply for the purpose of this Chapter. 

1. 

The  Member  State  of  identification  shall  transmit  the  following  information  by 
electronic means to the competent authorities of the other Member States: 

Article 34b 

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(a) 

in  respect  of  taxable  persons  becoming  registered  under  the  special  scheme 
provided for in Article 22b of Directive 77/388/EEC, hereinafter “the one-stop 
scheme”,  the  information  referred  to  in  Article  22b(C)(1)  of  that  Directive, 
within 10 days of the end of the calendar month during which the registration 
has been effected; 

(b)  details  of  any  modification  of  data,  as  referred  to  in  Article  22b(C)(3)  of 
Directive 77/388/EEC, or of withdrawal or change of activity, as referred to in 
Article 22b(C)(4) thereof, within 10 days of being so notified; 

(c) 

details  of  any  decision  taken  pursuant  to  Article  22b(C)(5)  of  Directive 
77/388/EEC to strike a taxable person from the register of those using the one-
stop scheme, within 10 days of the end of the calendar month during which it 
has taken that decision; 

(d)  details of all taxable persons in its territory who have not opted for the one-stop 
scheme,  but  who  carry  out  supplies  of  goods  which,  pursuant  to  Article 
28b(B)(2)  of  Directive  77/388/EEC,  are  subject  to  value  added  tax  in  a 
Member State other than the Member State of establishment. 

The technical details relating to the provision of information pursuant to paragraph 1, 
in particular as regards the content and format of common electronic messages, shall 
be determined in accordance with the procedure referred to in Article 44(2).  

Article 34c 

Each Member State shall establish and keep updated a database which stores the list 
of  taxable  persons  supplying  goods  or  services  in  accordance  with  the  one-stop 
scheme. 

2. 

1. 

2. 

Article 22 shall apply. 

Article 34d 

1. 

2. 

The Member State of identification shall, within five days of the day of receipt and 
by  electronic  means,  transmit  to  the  competent  authorities  of  the  Member  States 
concerned  the  details,  received  pursuant  to  Article  22b(E)(1)  of  Directive 
77/388/EEC, relating to the quarterly returns of each taxable person registered under 
the one-stop scheme as well as any information relating to a modification of such a 
return. 

The technical details relating to the provision of information pursuant to paragraph 1, 
in particular as regards the content and format of common electronic messages, shall 
be determined in accordance with the procedure referred to in Article 44(2). 

The  Member  State  of  identification  shall,  for  the  minimum  period  necessary  for  control 
purposes,  keep  the  details  received  pursuant  to  Article  22b(E)(1)  of  Directive  77/388/EEC, 

Article 34e 

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relating  to  the  quarterly  returns  of  each  person  registered  under  the  one-stop  scheme.  That 
period shall be determined in accordance with the procedure referred to in Article 44(2). 

1. 

Each Member State shall make available on a web site detailed information relating 
to the following: 

Article 34f 

(a) 

the functioning of the one-stop scheme; 

(b) 

(c) 

the  rules  of  national  law  applying  to  transactions  made  in  the  other  Member 
States; 

the relevant bank account number and accounting details to be submitted with 
the payment to be made by the taxable persons using the one-stop scheme. 

The electronic address for each Member State’s web site will be notified to taxable 
persons  at  the  same  time  as  registration  is  effected  in  accordance  with  Article  n 
accordance with Article 22b(C)(2) of Directive 77/388/EEC. 

Each  Member  State  shall  transmit  to  the  Commission  its  rules  of  national  law 
applying  to  the  relevant  transactions  and  the  Commission  shall  provide  for 
translation  of  this  information  into  all  the  official  languages  of  the  European 
Community. 

The  details  and  format  of  the  information  referred  to  in  paragraph  1  shall  be 
determined in accordance with the procedure referred to in Article 44(2). 

Article 34g 

Control  of  taxable  persons  who  have  opted  for  the  one-stop  scheme  shall  as  far  as 
possible be coordinated by the Member States. 

If the Member State of identification decides to carry out an audit of a taxable person 
who has registered for the one-stop scheme in its territory, it shall inform in advance 
the competent authorities of the other Member States concerned. 

If the Member State of consumption decides to carry out an audit of a taxable person 
who  is  registered  under  the  one-stop  scheme  and  has  carried  out  supplies  in  its 
territory,  it  shall  inform  in  advance  the  competent  authorities  of  the  other  Member 
States concerned. 

Any Member State concerned may participate in an audit carried out by the Member 
State  of  identification  or  consumption.  For  this  audit,  the  procedures  referred  to  in 
Articles 11 and 12 may be used. 

2. 

3. 

1. 

2. 

3. 

4. 

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CHAPTER VIb 

Provisions concerning the exchange and conservation of information in the context of 
the procedure provided for in Directive 200Y/YY/EC for the refund of value added tax 
to taxable persons not established in the territory of the country but who are established 
in another Member State 

Article 34h 

1. 

2. 

Where the competent authority of a Member State receives an application for refund 
of value added tax under Article 3 of Directive 200Y/YY/EC, it shall, within 10 days 
of the end of the calendar month during which the application was received and by 
electronic  means,  inform  accordingly  the  competent  authorities  of  each  Member 
State of purchase concerned, confirming whether or not the applicant is identified for 
value added tax purposes in its territory.  

The technical details relating to the provision of information pursuant to paragraph 1, 
in particular as regards the content and format of common electronic messages, shall 
be determined in accordance with the procedure referred to in Article 44(2). 

Article 34i 

Details about the operation of the refund procedure laid down in Directive 200Y/YY/EC and 
about  the  relevant  national  rules,  particularly  in  respect  of  the  restrictions  to  the  right  to 
deduct applied in accordance with Article 17a of Directive 77/388/EEC, shall be included on 
the web site referred to in Article 34f.’ 

Article 2 

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

It shall apply from 1 July 2006. 

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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