Opinion of the European Economic and Social Committee on the Proposal for a Council Directive amending VAT Directive 2006/112/EC of 28 November 2006 on the common system of value added tax COM(2007) 677 final
Date: 2008-03-12
Institutions: European Economic and Social Committee
Subjects: VAT, basis of tax assessment, delivery, distributive trades, provision of services, tax exemption, tax harmonisation, tax on consumption, tax relief

9.8.2008

EN

Official Journal of the European Union

C 204/119

Opinion of the European Economic and Social Committee on the Proposal for a Council Directive
amending VAT Directive 2006/112/EC of 28 November 2006 on the common system of value added
tax

COM(2007) 677 final

(2008/C 204/24)

On 22 November 2007 the Council decided to consult the European Economic and Social Committee,
under Article 93 of the Treaty establishing the European Community, on the

Proposal for a Council Directive amending VAT Directive 2006/112/EC of 28 November 2006 on the common
system of value added tax

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 20 February 2008. The rappor-
teur working alone was Mr Burani.

At its 443rd plenary session, held on 12 and 13 March 2008 (meeting of 12 March), the European
Economic and Social Committee adopted the following opinion by 123 votes to one with six abstentions.

1. Introduction

The VAT Directive (1)

1.1
that came into force in 2007
brought together VAT provisions introduced and amended over
the years into a single text. Implementation has thrown up a
number of practical difficulties or aspects on which businesses
and some Member States have commented or made proposals.
The Commission has examined these and has decided to present
some suggestions for amendment in the present proposal.

1.2
Since the amendments vary in kind and concern different
issues, and in order to reduce red tape and accelerate proce-
dures, the Commission has chosen — rightly, in the Commit-
tee's view — to group them under a single proposal.

2. Contents of the proposal

Certain amendments concern the energy sector, whose
2.1
tax scheme was originally based on a 2003 directive (2) and
subsequently transposed into the VAT Directive. As a result of
the technical terms used, its scope proved to be too narrow, and
failed to reflect economic realities. More specifically, among the
‘energy products’ subject to excise duty it included natural gas
supplied by pipeline and vessels for transporting gas, electricity
and heat or refrigeration supplied by heat and refrigeration
networks (‘remote supply’). The Commission proposes that
these products be exempted from the scope of the duty.

2.2
Under the proposal, these sources of energy would be
taxed in the Member States where the service is provided in
terms of supply or access.
It also simplifies the procedure
whereby the Member States may apply a reduced VAT rate.

Brussels, 12 March 2008.

In the area of derogations, at

the time of accession
2.3
Bulgaria and Romania were authorised to grant tax exemptions
to small businesses, and to continue exempting international
passenger transport from VAT. Nothing has changed in this
respect:
it has simply been considered helpful to incorporate
these derogations into the text of the VAT Directive, as was
done previously for other Member States.

2.4
Regarding the right of deduction, the proposal introduces
— or rather clarifies — a prominent principle, inherent to the
original thinking behind VAT: to restrict the initial exercise of
the deduction to the proportion of effective business use when
mixed-use immovable property is included in a company's
assets and liabilities. Provision is also made for an adjustment
system to reflect the varying proportions over time of business
and non-business use.

3. Comments and conclusions

3.1
The proposals mentioned in points 2.3 and 2.4 above
require no particular comment: regarding the former, the aim is
to correct a previous omission, and in the latter, to spell out —
necessarily, albeit obviously — a basic principle which is widely
known and implemented.

3.2
The EESC approves the proposal as described in points
2.1 and 2.2, aiming to bring legislation into line with economic
realities, and ensuring equal
for different energy
sources.

treatment

3.3

The EESC therefore supports the Commission's proposal.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(1) Council Directive 2006/112/EC of 28 November 2006 on the

common system of value added tax.

(2) Council Directive 2003/92/EC of 7 October 2003.