CELEX: 51982PC0870
Language: en
Date: 1983-01-25
Title: PROPOSAL FOR A TWELFTH COUNCIL DIRECTIVE ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES RELATING TO TURNOVER TAXES - COMMON SYSTEM OF VALUE ADDED TAX: EXPENDITURE NOT ELIGIBLE FOR DEDUCTION OF VALUE ADDED TAX

No C 37/8                            Official Journal of the European Communities                                 10.2.83
                                                             II
                                                      (Preparatory Acts)
                                               COMMISSION
               Proposal for a Twelfth Council Directive on the harmonization of the laws of the
               Member States relating to turnover taxes — Common system of value added tax:
                                 expenditure not eligible for deduction of value added tax
                            (Submitted by the Commission to the Council on 25 January 1983)
THE COUNCIL OF THE EUROPEAN                                       aforementioned Directive is not intended to affect the
COMMUNITIES,                                                      general arrangements governing the right to deduct
                                                                  that result from First Council Directive 67/227/EEC (2)
Having regard to the Treaty              establishing   the       and from Sixth Council Directive 77/388/EEC or the
European Economic Community,                                      other cases of non-deductibility that result from the
Having       regard    to    Sixth   Council      Directive       Sixth Directive, and in particular from Articles 17 (7),
77/388/EEC of 17 May 1977 on the harmonization                    24 (5), 25 (5) and 26 (4) thereof;
of the laws of the Member States relating to turnover            Whereas it is necessary to achieve greater uniformity
taxes — Common system of value added tax: uniform                 of the basis of assessment for the collection of own
basis of assessment ('), and in particular Article 17 (6)         resources as provided for in Council Decision
thereof,                                                          70/243/ECSC, EEC, Euratom of 21 April 1970 on
Having regard to the proposal from the Commission,                the replacement of financial contributions from
                                                                  Member States by the Communities' own resources (3);
Having regard to the opinion of the              European
Parliament,
                                                                 Whereas the harmonization of national provisions
Having regard to the opinion of the Economic and                  relating to exclusion of the right to deduct
Social Committee,                                                 contributes at the same time to the harmonization of
Whereas Article 17 (6) of Sixth Directive                        the arrangements for the refund of value added tax to
77/388/EEC stipulates that the Council shall decide              taxable persons not established in the territory of the
what expenditure shall not be eligible for a deduction            country as provided for in Eighth Council Directive
of value added tax;                                               79/1072/EEC (4),
Whereas some items of expenditure, even where
incurred in connection with the normal operation of a
business, nevertheless have the characteristics of final          HAS ADOPTED THIS DIRECTIVE:
consumption and apportionment of such expenditure
between business and private use cannot be accurately
                                                                                           Article 1
verified;
Whereas the nature of such expenditure presents the                1.    Value added tax shall not be deductible in
risk of abuse or tax evasion, not only on the part of              respect of expenditure on the purchase, manufacture,
resident taxable persons, but also on the part of non-             importation, leasing or hire, use, modification, repair
resident taxable persons who are entitled to the                   or maintenance of passenger cars, pleasure boats,
refund of tax in a Member State other than that in                 private aircraft or motor cycles.
which they are resident;
                                                                   Nor shall value added tax be deductible in respect of
Whereas Article 17 (6) of Sixth Directive                          expenditure on supplies (fuels, lubricants, spare parts,
77/388/EEC stipulates that value added tax shall in                etc.) for, or services performed in relation to, such
no circumstances be deductible on expenditure which                vehicles and craft.
is not strictly business expenditure, such as that on              'Passenger car' means any road vehicle (including any
luxuries, amusements or entertainment;                             trailer) other than one which, by its design and
Whereas the establishment of common rules on the
expenditure referred to in Article 17 (6) of the
                                                                   O OJ No 71, 14. 4. 1967, p. 1301.
                                                                   O OJ No L 94, 28. 4. 1970, p. 19.
(') O J N o L 145, 13.6. 1977, p. 1.                               O OJ No L 331, 27. 12. 1979, p. 11.
 ---pagebreak---  10. 2. 83                         Official Journal of the European Communities                            No C 37/9
equipment, is intended solely for the transport of            on hospitality extended to business contacts or, more
goods or is intended for industrial or agricultural use       generally, persons outside the business or in respect
or has a seating capacity of more than nine persons           of expenditure relating to buildings, parts of buildings
including the driver.                                         or their fittings intended primarily for such enter-
                                                              tainment.
2.     The exclusions of the right to deduct referred to
in paragraph 1 shall not apply to vehicles or craft
which are:                                                                            Article 5
(a) used for carriage for hire or reward;                     Value added tax shall not be deductible in respect of
(b) used for driving training or instruction;                 expenditure on amusements and luxuries.
(c) hired out;                                                'Expenditure on luxuries' means expenditure which,
                                                              by its nature and amount, does not constitute normal
(d) part of the stock in trade of a business.
                                                              operating expenditure, or which relates to items
                                                              which are not normally installed as fittings in
                         Article 2                            buildings.
1.     Value added tax shall not be deductible in
respect of transport expenses incurred on business                                    Article 6
travel by a taxable person or by members of his staff;
'business travel' means a journey undertaken by a             The words 'Article 17 (6)' in Article 13B (c) of Sixth
taxable person or by a member of his staff for                Directive 77/388/EEC are hereby replaced by the
business reasons away from the place of establishment         following: 'the provisions of Twelfth Directive . . . /
or away from the place at which the traveller's               . . . ./EEC.
functions are exercised.
2.     The exclusion of the right to deduct referred to                               Article 7
in paragraph 1 shall not apply to transport expenses
relating to the movement of an undertaking's staff            Member States shall bring into force the provisions
between particular places of work or to those relating        necessary to comply with this Directive not later than
to transport of staff to and from their homes.                 1 January 19 . . .
                                                              This Directive shall apply only with respect to value
                                                              added tax charged on the purchase of goods or
                         Article 3                            services invoiced, and on imports effected, from that
                                                              date.
 1.    Value added tax shall not be deductible in
respect of expenditure on accommodation, food and             Member States shall communicate to the Commission
drink.                                                        the texts of the main provisions of national law which
                                                              they adopt in the field covered by this Directive. The
2.     The exclusion of the right to deduct referred to        Commission shall inform the other Member States
in paragraph 1 shall not apply:                                thereof.
 (a) to expenditure incurred by a taxable person in
     respect of the supply of accommodation, meals,
     food or drink for consideration;                                                 Article 8
 (b) to expenditure on accommodation provided free            The second subparagraph of Article 17 (6) of Sixth
     of charge for security or caretaking staff on             Directive 77/388/EEC shall cease to have effect in
     works, sites or business premises.                        each Member State as from the date of
                                                               implementation of this Directive.
                         Article 4
                                                                                      Article 9
Value added tax shall not be deductible in respect of
 expenditure on entertainment, including expenditure           This Directive is addressed to the Member States.