Proposal for a Council Decision amending Decision 2000/256/EC authorising the Kingdom of the Netherlands to apply a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2005-01-06
Institutions: European Commission
Subjects: Netherlands, VAT, derogation from EU law, tax harmonisation, tax system

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 06.01.2005 
COM(2004) 854 final 

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Proposal for a 

COUNCIL DECISION 

amending Decision 2000/256/EC authorising the Kingdom of the Netherlands to apply a 
measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on the 
harmonisation of the laws of the Member States relating to turnover taxes 

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(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Pursuant  to  Article  27(1)  of  the  Sixth  Council  Directive  of  17  May  1977  on  the 
harmonisation of the laws of the Member States relating to turnover taxes – Common 
System  of  value  added  tax:  uniform  basis  of  assessment1-,  the  Council,  acting 
unanimously on a proposal from the Commission, may authorise any Member State 
to introduce or extend special measures for derogation from that Directive in order to 
simplify the procedure for charging the tax or to prevent certain types of tax evasion 
or avoidance. 

As a rule such authorisations are given on a temporary basis, so that an assessment 
can be made after a few years as to whether the special measures are appropriate and 
effective.  

Council Decision 2000/256/EC2 authorised the Kingdom of the Netherlands, by way 
of derogation from Article 11(A)(1)(a), to include in the taxable amount of a supply 
of  goods  or  a  supply  of  services,  the  value  of  any  gold  used  by  the  supplier  and 
provided by the recipient in the case where the supply of the gold to the recipient was 
exempt in accordance with the provisions in Directive 98/80/EC3. 

This  derogation  has  enabled  the  Netherlands  to  counter  a  reduction  in  the  taxable 
amount in certain transactions in the jewellery sector in which the client will provide 
the  jeweller  with  gold  which  he  has  acquired  "for  investment  purposes"  and  thus 
VAT- exempt in order for the jeweller to supply a good (e.g. supply a gold-mounted 
diamond jewel) or a service (e.g. by smelting the gold into a ring). 

letter  registered  with 

the  Secretariat-General  of 

the  Commission  on 
By 
8 September 2004,  the  Dutch  Government  requested  the  extension  of  Decision 
2000/256/EC authorising the Netherlands to apply special tax measures regarding the 
taxable  amount  of  certain  supplies  of  goods  and  services  involving  the  working  of 
gold. 

In  accordance  with  Article  27(2)  of  the  Sixth  Directive,  the  Commission  informed 
the other Member States by letter on 22 November 2004 of the request made by the 
Kingdom  of  the  Netherlands  and  by  a  letter  dated  24  November  2004  the 
Commission notified the Kingdom of the Netherlands that it had all the information 
it considered necessary for appraisal of the request.  

The Commission accepts that this derogation counters abuse in the VAT system. It 
also  notes  that  two  other  Member  States  have  obtained  similar  derogations.  The 
Commission  has  already  started  its  work  towards  the  rationalisation  of  Article  27 
derogations  and  these  derogations  may  be  included  in  that  exercise.  Therefore,  the 
present request for an extension of the derogation should be granted until the date of 
entry  into  force  of  a  Directive  rationalising  the  Article  27  derogations  which 
currently  counter  these  types  of  VAT  avoidance  linked  to  the  exemption  for 
investment gold but no later than the 31st December 2009. 

OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/66/EC (OJ L 168, 1.5.2004, p. 35). 
OJ L 79, 30.3.2000, p. 36. 
OJ L 281, 17.10.1998, p. 31. 

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Proposal for a 

COUNCIL DECISION 

amending Decision 2000/256/EC authorising the Kingdom of the Netherlands to apply a 
measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on the 
harmonisation of the laws of the Member States relating to turnover taxes 

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 harmonisation of the 
laws  of  the  Member  States  relating  to  turnover  taxes  –Common  system  of  value  added  tax: 
uniform basis of assessment4, and in particular Article 27(1) thereof, 

Having regard to the proposal from the Commission5, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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By Decision 2000/256/EC6 the Council authorised the Kingdom of the Netherlands, by 
way of derogation from Article 11(A)(1)(a) of Directive 77/388/EEC to include in the 
taxable amount of a supply of goods or a supply of services, the value of any gold used 
by the supplier and provided by the recipient in the case where the supply of the gold 
to the recipient was exempt in accordance with Article 26b of Directive 77/388/EEC. 

The aim of that derogation was to avoid abuse of the exemption for investment gold 
and thus to prevent certain types of tax evasion or avoidance. 

letter 

registered  with 

By 
the  Commission  on 
8 September 2004,  the  Dutch  Government  requested  an  extension  for  the  validity  of 
Decision 2000/256/EC, which expires on 31 December 2004. 

the  Secretariat-General  of 

In accordance with Article 27(2) of Directive 77/388/EEC, the Commission informed 
the other Member States by letter dated 22 November 2004 of the request made by the 
Kingdom  of  the  Netherlands.  By  letter  dated  24  November  2004,  the  Commission 
notified the Kingdom of the Netherlands that it had all the information it considered 
necessary for appraisal of the request. 

According 
2000/256/EC has been effective in achieving the aims stated above.  

the  Dutch  authorities, 

the  derogation  authorised  by  Decision 

to 

OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/66/EC (OJ L 168, 1.5.2004, p. 35). 
OJ C […], […], p. […]. 
OJ L 79, 30.3.2000, p. 36 

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(6) 

(7) 

The derogations pursuant to Article 27 of Directive 77/388/EEC which counter VAT 
avoidance  linked  to  the  exemption  for  investment  gold  may  be  included  in  a  future 
proposal for a directive rationalising some of the derogations pursuant to that article. 

It  is  therefore  necessary  to  extend  the  validity  of  the  derogation  granted  under 
Decision  2000/256/EC  until  the  entry  into  force  of  a  directive  rationalising  the 
derogations  pursuant  to  Article  27  of  Directive  77/388/EEC  which  covers  the 
avoidance  of  value  added  tax  linked  to  the  exemption  for  investment  gold  or  until 
31st December 2009, whichever is the earlier. 

(8) 

The  derogation  will  have  no  negative  impact  on  the  Community's  own  resources 
provided from VAT. 

HAS ADOPTED THIS DECISION:  

Article 1 

Article 2 of Decision 2000/256/EC is replaced by the following: 

"Article 2 

The  authorisation  granted  under  Article  1  shall  expire  on  the  date  of  entry  into  force  of  a 
directive rationalising the derogations pursuant to Article 27 of Directive 77/388/EEC which 
counter avoidance of value added tax linked to the exemption for investment gold or on the 
31 December 2009 whichever is the earlier." 

Article 2 

This Decision is addressed to the Kingdom of the Netherlands. 

Done at Brussels, […] 

For the Council 
The President 

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