Commission Regulation (EC, Euratom) No 116/2005 of 26 January 2005 on the treatment of repayments of VAT to non-taxable persons and to taxable persons for their exempt activities, for the purposes of Council Regulation (EC, Euratom) No 1287/2003 on the harmonisation of gross national income at market prices
Date: 2005-01-26
Institutions: European Commission
Subjects: European accounting system, VAT, accounting entry, domestic product, redemption, tax exemption, tax harmonisation

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EN

Official Journal of the European Union

27.1.2005

COMMISSION REGULATION (EC, Euratom) No 116/2005

of 26 January 2005

on the treatment of repayments of VAT to non-taxable persons and to taxable persons for their
exempt activities, for the purposes of Council Regulation (EC, Euratom) No 1287/2003 on the
harmonisation of gross national income at market prices

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

Having regard to the Treaty
Community,

establishing the European

Having regard to the Treaty establishing the European Atomic
Energy Community,

to

regard

Council

Having
Euratom)
No 1287/2003 of 15 July 2003 on the harmonisation of
income at market prices (GNI Regulation) (1),
gross national
and in particular Article 5(1) thereof,

Regulation

(EC,

Whereas:

(1)

(2)

(3)

Article 2(7) of Council Decision 2000/597/EC, Euratom
of 29 September 2000 on the system of the Commu-
nities’ own resources (2)
lays down that gross national
product at market prices (GNP)
is to be considered
equal to gross national
income at market prices (GNI)
as provided by the Commission in application of the
European System of Accounts (ESA). The ESA of 1995
(ESA95), superseding two earlier systems of 1970 and
1979 respectively, was established by Council Regulation
(EC) No 2223/96 of 25 June 1996 on the European
in the
system of national
Community (3), and was set out in the Annex thereto.
GNI, as used in ESA95, replaced GNP as a criterion for
own resource purposes with effect
from budget year
2002.

and regional

accounts

Council Regulation (EC, Euratom) No 1287/2003 lays
down the procedures for the forwarding of GNI data
by Member States and the procedures and checks on
the
the GNI
Committee.

calculation of GNI,

and establishes

ESA95 does not explicitly specify the treatment of
repayments of VAT to non-taxable persons, and to
taxable persons for their exempt activities.

(1) OJ L 181, 19.07.2003, p. 1.
(2) OJ L 253, 7.10.2000, p. 42.
(3) OJ L 310, 30.11.1996, p. 1. Regulation as last amended by Regu-
lation (EC) No 1267/2003 of the European Parliament and of the
Council (OJ L 180, 18.7.2003, p. 1).

the purpose of

For
the definition of gross national
income at market prices (GNI) pursuant to Article 1 of
Regulation (EC, Euratom) No 1287/2003 it is necessary
to clarify the treatment of repayments of VAT to non-
taxable persons, and to taxable persons for their exempt
activities.

(5)

(6)

The Sixth 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 assessment (4), defines the
notions of taxable person, of non-taxable person and
of exempt activities.

the purpose of

implementing Council Directive
For
89/130/EEC, Euratom of 13 February 1989 on the
harmonisation of
the compilation of gross national
at market prices (5), Commission Decision
product
Euratom of 8 September 1999 (6)
1999/622/EC,
clarifies the treatment of repayments of VAT to non-
taxable units and to taxable units for
their exempt
activities. The equivalent clarification should now be
provided in respect of GNI.

(7)

The measures provided for in this Regulation are in
accordance with the opinion of the GNI Committee,

HAS ADOPTED THIS REGULATION:

Article 1

1.
In compiling national accounts aggregates for the purpose
of Regulation (EC, Euratom) No 1287/2003, repayments of
VAT incurred on purchases, made to non-taxable persons or
to taxable persons for their exempt activities, shall be treated in
ESA95 as other current transfers (D7) or capital transfers (D9),
and not as if they were deductible VAT.

(4) 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).

(5) OJ L 49, 21.02.1989, p. 26. Directive as amended by Regulation
(EC) No 1882/2003 of the European Parliament and of the Council
(OJ L 284, 31.10.2003, p. 1).
(6) OJ L 245, 17.09.1999, p. 51.

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Official Journal of the European Union

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For the purposes of paragraph 1, the term ‘taxable person’
2.
shall have the meaning given to it by Article 4 of the Sixth
Directive 77/388/EEC, Euratom, and the notion of exempt
activities shall be understood as being the activities listed in
Article 13 of that Directive.

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.

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

Done at Brussels, 26 January 2005.

For the Commission

Joaquín ALMUNIA
Member of the Commission