CELEX: 51993PC0403
Language: en
Date: 1993-07-28
Title: Proposals for COUNCIL DECISIONS authorizing the Kingdom of Belgium, the Kingdom of Denmark, Ireland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, and the United Kingdom to apply a measure derogating from Articles 2(1) and 17 of the Sixth Directive (77/388/EEC) on the harmonization of the laws of the Member States relating to turnover taxes

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                    COM(93) 403 final
                                                                    Brussels, 28 July 1993
                                                 Proposals for
                                            COUNCIL DECISIONS
                  authorizing the Kingdom of Belgium, the Kingdom of Denmark, Ireland,
                   the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of
                        the Netherlands, and the United Kingdom to apply a measure
                          derogating from Articles 2(1) and 17 of the Sixth Directive
                             (77/388/EEC) on the harmonization of the laws of the
                                    Member Slates relating to turnover taxes
                                        (presented by the Commission)
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 ---pagebreak---                                                         z
COMMISSION OF THE EUROPEAN COMMUNITIES
                           Proposal for a
                      COUNCIL DECISION
   AUTHORIZING THE KINGDOM OF BELGIUM TO APPLY A
  MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF THE SIXTH
  DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF THE LAWS OF
       THE MEMBER STATES RELATING TO TURNOVER TAXES
 ---pagebreak---                                                                      3
                                                                         I
                    EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the Kingdom of
Belgium to introduce a special measure in accordance with Article 27 of
the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the common system
of value added tax , as last amended by Council Directive 92/111/EEC of
14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the Kingdom of Belgium has submitted a         request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
goods transport services directly linked to intra-Community goods
I OJ No. L 145/1, 13.6.1977
i OJ No. L 384/47, 30.12.1992
": Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                                       V  1
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the Kingdom of Belgium to be authorized to
apply the planned special measure, but that such an authorization should
be limited in time, for a duration lasting until 31 December 1995.
 ---pagebreak---                                                                    J-
                             COUNCIL DECISION
                                of
  authorizing the Kingdom of Belgium to apply a measure derogating from
     Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the  European   Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 2 June 1993 and received by the Commission on
30 June 1993, the Kingdom of Belgium requested authorization to
introduce    a    measure    for    derogation    from    Article 17    of
Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the Kingdom of Belgium;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
 ---pagebreak---                                                                          I
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISION:
 ---pagebreak---                                                                    }     $
                                Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of Belgium is hereby authorized to exempt the supply of services
referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than Belgium in accordance with
Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of Belgium is hereby authorized to exempt the supply of services
referred to in Article 3(2) and rendered to taxable persons identified
in   a   Member State    other   than   Belgium   in   accordance   with
Article 22(1)(c), (d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 86/560/EEC if these
services had been taxed.
                                Article 3
In the circumstances provided for in Articles 1 and 2, the Kingdom of
Belgium is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                                Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
      be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
   -  be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                     s»   f
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
      mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
      provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The Kingdom of Belgium is hereby authorized to apply this simplification
measure until 31 December 1995.
                                Article 7
This Decision is addressed to the Kingdom of Belgium.
                                        Done at Brussels
                                                For the Council
                                                The President
 ---pagebreak---                                                         3
COMMISSION OF THE EUROPEAN COMMUNITIES
                           Proposal for a
                      COUNCIL DECISION
   AUTHORIZING THE KINGDOM OF DENMARK TO APPLY A
  MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF THE SIXTH
  DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF THE LAWS OF
       THE MEMBER STATES RELATING TO TURNOVER TAXES
 ---pagebreak---                                                               -7
                    EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the Kingdom of
Denmark to introduce a special measure in accordance with Article 27 of
the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the common system
of value added tax , as last amended by Council Directive 92/111/EEC of
14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not establishad within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the Kingdom of Denmark has submitted a         request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
1
  OJ No. L 145/1, 13.6.1977
2
  OJ No. L 384/47, 30.12.1992
3 Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                             11
goods transport services directly linked to intra-Community goods
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the Kingdom of Denmark to be authorized to
apply the planned special measure, but that such an authorization should
be limited in time, for a duration lasting until 31 December 1995.
 ---pagebreak---                                                                ^4
                             COUNCIL DECISION
                                Of
 authorizing the Kingdom of Denmark to apply a measure derogating from
    Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the  European   Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 19 May 1993 and received by the Commission on
30 June 1993, the Kingdom of Denmark requested authorization to
introduce    a    measure    for    derogation    from    Article 17    of
Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the Kingdom of Denmark;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
 ---pagebreak---                                                                03
                                                                         f
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISION:
 ---pagebreak---                                                                          I
                                                                  ^
                               Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of Denmark is hereby authorized to exempt the supply of services
referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than Denmark in accordance with
Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of Denmark is hereby authorized to exempt the supply of services
referred to in Article 3(2) and rendered to taxable persons identified
in   a   Member State    other   than   Denmark   in   accordance   with
Article 22(1)(c), (d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 86/560/EEC if these
services had been taxed.
                                Article 3
In the circumstances provided for in Articles 1 and 2, the Kingdom of
Denmark is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                               Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
      be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
   -  be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                     *\S
                                                                         I
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
   -  mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
      provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The Kingdom of Denmark is hereby authorized to apply this simplification
measure until 31 December 1995.
                                Article 7
This Decision is addressed to the Kingdom of Denmark.
                                        Done at Brussels
                                                For the Council
                                                The President
 ---pagebreak---                                                        /?6
COMMISSION OF THE EUROPEAN COMMUNITIES
                           Proposal for a
                      COUNCIL DECISION
      AUTHORIZING IRELAND TO APPLY A           MEASURE
      DEROGATING FROM ARTICLES 2(1) AND 17 OF THE SIXTH
  DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF THE LAWS OF
       THE MEMBER STATES RELATING TO TURNOVER TAXES
 ---pagebreak---                                                                n 2j      ™
                     EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes Ireland to
introduce a special measure in accordance with Article 27 of the Sixth
VAT Directive 77/388/EEC of 17 May 1977 on the common system of value
added tax , is last amended by Council Directive 92/111/EEC of 14
December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth   Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, Ireland has submitted a request for authorization on the
basis of Article 27 of the Sixth VAT Directive, to introduce special
measures derogating from Article 2(1) and 17. The purpose of such
measures would be to exempt the services rendered in the third and forth
indents of Article 9(2)(c) and the supply of domestic goods transport
1
  OJ No. L 145/1, 13.6.1977
2
  OJ No. L 384/47, 30.12.1992
3
  Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
4
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                                    -7 S
services directly linked to intra-Community goods transport services,
provided that those services are supplied to taxable persons not
established within the Member State of performance of the services and
who in any case qualify for a refund of VAT on those services by means
of the procedures laid down in the Eighth and Thirteenth Directives.
Given this proviso, such a derogation would in no way affect the amount
of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for Ireland to be authorized to apply the
planned special measure, but that such an authorization should be
limited in time, for a duration lasting until 31 December 1995.
 ---pagebreak---                                                                /)<$
                            COUNCIL DECISION
                               Of
         authorizing Ireland to apply a Measure derogating from
    Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
         on the harmonization of the laws of the Member States
                       relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the  Treaty   establishing  the  European    Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 11 May 1993 and received by the Commission on
30 June 1993, Ireland requested authorization to introduce a measure for
derogation from Article 17 of Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by Ireland;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
 ---pagebreak---                                                                          20
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISION:
 ---pagebreak---                                                                       21
                                Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, Ireland
is hereby authorized to exempt the supply of services referred to in
Article 3(1) and (2) rendered to taxable persons identified in a
Member State other than Ireland in accordance with Article 22(l)(c),(d)
and (e) of Directive 77/388/EEC who would have qualified for a refund in
accordance with Directive 79/1072/EEC if these services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, Ireland
is hereby authorized to exempt the supply of services referred to in
Article 3(2)   and  rendered   to   taxable  persons  identified   in a
Member State other than Ireland in accordance with Article 22(1)(c), (d)
and (e) of Directive 77/388/EEC who would have qualified for a refund in
accordance with Directive 86/560/EEC if these services had been taxed.
                                Article 3
In the circumstances   provided   for  in Articles 1 and  2,  Ireland  is
authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                                Article 5
In order to be eligible for exemption from tax in accordance         with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
      be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
   -  be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
      severally liable for payment of the tax due on any operation which
 ---pagebreak---                                                                   ^      f
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
      mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
      provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                               Article 6
Ireland is hereby authorized to apply this simplification measure until
31 December 1995.
                               Article 7
This Decision is addressed to Ireland.
                                        Done at Brussels
                                                For the Council
                                                The President
 ---pagebreak---                                                         ^3
COMMISSION OF THE EUROPEAN COMMUNITIES
                           Proposal for a
                      COUNCIL DECISION
     AUTHORIZING THE ITALIAN REPUBLIC TO APPLY A
  MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF THE SIXTH
  DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF THE LAWS OF
       THE MEMBER STATES RELATING TO TURNOVER TAXES
 ---pagebreak---                                                                     2M
                    EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the Italian
Republic to introduce a special measure in accordance with Article 27 of
the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the common system
of value added tax , as last amended by Council Directive 92/111/EEC of
14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the Italian Republic has submitted a           request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
1
  OJ No. L 145/1, 13.6.1977
  OJ No. L 384/47, 30.12.1992
  Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                                   25
goods transport services directly linked to intra-Community goods
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the Italian Republic to be authorized to
apply the planned special measure, but that such an authorization should
be limited in time, for a duration lasting until 31 December 1995.
 ---pagebreak---                                                                     ^c
                             COUNCIL DECISION
                                Of
   authorizing the Italian Republic to apply a Measure derogating from
     Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the European   Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 22 May 1993 and received by the Commission on
30 June 1993, the Italian Republic requested authorization to introduce
a measure for derogation from Article 17 of Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the Italian Republic;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
 ---pagebreak--- Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISIONS
 ---pagebreak---                                                                          a^
                               Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Italian Republic is hereby authorized to exempt the supply of services
referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than Italy in accordance with
Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                               Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Italian Republic is hereby authorized to exempt the supply of services
referred to in Article 3(2) and rendered to taxable persons identified
in a Member State other than Italy in accordance with Article 22(1)(c),
(d) and (e) of Directive 77/388/EEC who would have qualified for a
refund in accordance with Directive 86/560/EEC if these services had
been taxed.
                                Article 3
In the circumstances provided for     in Articles 1 and  2, the  Italian
Republic is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                               Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                                Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
      be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
   -  be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                         si
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
   -  mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
   -  satisfy the requirements referred to in point 1;
   -  provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The Italian Republic is hereby authorized to apply this simplification
measure until 31 December 1995.
                                Article 7
This Decision is addressed to the Italian Republic.
                                         Done at Brussels
                                                 For the Council
                                                 The President
 ---pagebreak---                                                      3 O
COMMISSION OF THE EUROPEAN COMMUNITIES
                         Proposal for a
                    COUNCIL DECISION
  AUTHORIZING THE GRAND DUCHY OF LUXEMBOURG TO APPLY A
           MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF
   THE SIXTH DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF
    THE LAWS OF THE MEMBER STATES RELATING TO TURNOVER
                              TAXES
 ---pagebreak---                                                                      M   I
                    EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the Grand Duchy
of Luxembourg to introduce a special measure in accordance with Article
27 of the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the common
system of value added tax , as last amended by Council Directive
92/111/EEC of 14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth   Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders       but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the Grand Duchy of Luxembourg has submitted a request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
1
  OJ No. L 145/1, 13.6.1977
  OJ No. L 384/47, 30.12.1992
  Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                                      3^  I
goods transport services directly linked to intra-Community goods
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the Grand Duchy of Luxembourg to be
authorized to apply the planned special measure, but that such an
authorization should be limited in time, for a duration    lasting until
31 December 1995.
 ---pagebreak---                                                                        ^3
                             COUNCIL DECISION
                               of
 authorizing the Grand Duchy of Luxembourg to apply a measure derogating
                                   from
     Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the  European   Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 4 June 1993 and received by the Commission on
30 June 1993, the Grand Duchy of Luxembourg requested authorization to
introduce    a    measure    for    derogation    from    Article 17    of
Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the Grand Duchy of Luxembourg;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
 ---pagebreak--- Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISIONt
 ---pagebreak---                                                                  3J      •
                               Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Grand Duchy of Luxembourg is hereby authorized to exempt the supply of
services referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than Luxembourg in accordance with
Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Grand Duchy of Luxembourg is hereby authorized to exempt the supply of
services referred to in Article 3(2) and rendered to taxable persons
identified in a Member State other than Luxembourg in accordance with
Article 22(1)(c), (d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 86/560/EEC if these
services had been taxed.
                                Article 3
In the circumstances provided for in Articles 1 and 2, the Grand Duchy
of Luxembourg is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                                Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
   -  be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
      be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                     3£
                                                                         I
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
   -  mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
   -  provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The Grand Duchy of Luxembourg is hereby authorized        to  apply this
simplification measure until 31 December 1995.
                                Article 7
This Decision is addressed to the Grand Duchy of Luxembourg.
                                        Done at Brussels
                                                For the Council
                                                The President
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                         Proposal for a
                    COUNCIL DECISION
  AUTHORIZING THE KINGDOM OF THE NETHERLANDS TO APPLY A
           MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF
   THE SIXTH DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF
    THE LAWS OF THE MEMBER STATES RELATING TO TURNOVER
                              TAXES
 ---pagebreak---                                                                    3s    \
                    EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the Kingdom of
the Netherlands to introduce a special measure in accordance with
Article 27 of the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the
common system of value added tax f as last amended by Council Directive
92/111/EEC of 14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the Kingdom of the Netherlands has submitted a request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
  OJ No. L 145/1, 13.6.1977
  OJ No. L 384/47, 30.12.1992
  Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                              ^9          I
goods transport services directly linked to intra-Community goods
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the Kingdom of the Netherlands to be
authorized to apply the planned special measure, but that such an
authorization should be limited in time, for a duration    lasting until
31 December 1995.
 ---pagebreak---                                                                 Mo
                             COUNCIL DECISION
                               of
authorizing the Kingdom of the Netherlands to apply a measure derogating
                                   from
    Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the  European  Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 8 June 1993 and received by the Commission on
30 June 1993, the Kingdom of the Netherlands requested authorization to
introduce    a    measure    for    derogation    from   Article 17    of
Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the Kingdom of the Netherlands;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
 ---pagebreak---                                                                    4-1   \
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISION:
 ---pagebreak---                                                                    V '
                                Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of the Netherlands is hereby authorized to exempt the supply of
services referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than the Netherlands in accordance
with Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
Kingdom of the Netherlands is hereby authorized to exempt the supply of
services referred to in Article 3(2) and rendered to taxable persons
identified in a Member State other than the Netherlands in accordance
with Article 22(1) (c), (d) and (e) of Directive 77/388/EEC who would
have qualified for a refund in accordance with Directive 86/560/EEC if
these services had been taxed.
                                Article 3
In the circumstances provided for in Articles 1 and 2, the Kingdom of
the Netherlands is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                               Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
      be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
      be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                      M3
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
   -  mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
   -  provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The Kingdom of the Netherlands is hereby authorized        to  apply this
simplification measure until 31 December 1995.
                                Article 7
This Decision is addressed to the Kingdom of the Netherlands.
                                         Done at Brussels
                                                 For the Council
                                                 The President
 ---pagebreak---                                                        H4
COMMISSION OF THE EUROPEAN COMMUNITIES
                           Proposal for a
                      COUNCIL DECISION
     AUTHORIZING THE UNITED KINGDOM TO APPLY A
  MEASURE DEROGATING FROM ARTICLES 2(1) AND 17 OF THE SIXTH
  DIRECTIVE (77/388/EEC) ON THE HARMONIZATION OF THE LAWS OF
       THE MEMBER STATES RELATING TO TURNOVER TAXES
 ---pagebreak---                                                                   Mr
                     EXPLANATORY MEMORANDUM
The present proposal for a Council Decision authorizes the United
Kingdom to introduce a special measure in accordance with Article 27 of
the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the common system
of value added tax , as last amended by Council Directive 92/Ill/EEC of
14 December 1992 .
With the completion of the Single Market, the arrangements for the
taxation of services supplied within the European Community have been
modified. The exemptions related to the exportation of goods and to the
placing of certain goods under a customs procedure have been
discontinued, as have the arrangements for including the value of
services in the taxable amount in the case of imported goods.
Under these circumstances, the territoriality principle as applied to a
number of services, with these services being taxed in the place where
they are physically carried out, has the effect of obliging taxable
persons who are not established within the Member State of performance
of the services to pay VAT in the Member State where the services are
carried out, and subsequently to apply for refund under the Eighth or
Thirteenth   Directives. This concerns above all services supplied in
respect of work on movable tangible property and the supply of transport
services which are of a purely domestic nature but which are directly
linked to intra-Community goods transport services (the national leg of
an intra-Community movement of goods).
The resulting proliferation of cases in which a refund is applied for
under the Eighth and Thirteenth Directives is hindering the freedom to
supply services within the Single Market.
Moreover, prior systematic vetting of applications, coupled with an
increase in the number of cases, could well cause delay of VAT refunds
under the Eighth and Thirteenth Directives.
It is, therefore, most important in this context to consider measures
which can rapidly simplify matters for traders      but which will not
undermine the principles of taxation associated with the Single Market.
To that end, the United Kingdom has submitted a             request for
authorization on the basis of Article 27 of the Sixth VAT Directive, to
introduce special measures derogating from Article 2(1) and 17. The
purpose of such measures would be to exempt the services rendered in the
third and forth indents of Article 9(2)(c) and the supply of domestic
  OJ No. L 145/1, 13.6.1977
  OJ No. L 384/47, 30.12.1992
  Council Directive 79/1072/EEC OJ No. L 331 of 27.12.1979, p. 11
  Council Directive 86/560/EEC OJ No. L 326 of 21.11.1986, p. 40
 ---pagebreak---                                                                    MC
goods transport services directly linked to intra-Community goods
transport services, provided that those services are supplied to taxable
persons not established within the Member State of performance of the
services and who in any case qualify for a refund of       VAT on those
services by means of the procedures laid down in the Eighth and
Thirteenth Directives. Given this proviso, such a derogation would in no
way affect the amount of tax payable at the final consumption stage.
In order to qualify for the exemption, a person to whom these services
are supplied, but who is not established in the Member State of
performance of the services, would have to establish his status as a
taxable person in the manner laid down in the Eighth and Thirteenth
Directives, and would, in addition, have to undertake to repay the VAT
payable on any supply of services which might have been exempted in
error. It would also be necessary for the supplier who is liable to pay
tax within the territory of the country to state the actual grounds for
exemption on the invoice and the number by which his customer is
identified for VAT purposes within the Community.
However, given that the possibility of using customs procedures remains
for work carried out on movable tangible property temporarily imported
into the Community from third countries, the scope of the present
derogation does not extend to cover supplies of such services when
supplied to persons not established within the Community.
As a result of this derogation, the growth of intra-Community activity
in the service sectors concerned would not be hindered by the tax
charges resulting from difficulties in applying refund procedures, and
sufficient time would be given to consider other more permanent
solutions.
The Commission notes that the special measure proposed shall not alter
the fundamental principles of the Sixth VAT Directive, in particular
concerning the place of supply, but simplifies the arrangements for
refunding the tax which would in any case be refundable under the Eighth
and Thirteenth Directives. Consequently, the derogation in question does
not have a negative effect on the own resources of the European
Communities accruing from VAT.
The Commission is convinced that the measure in question is intended to
simplify the procedures for charging the tax. The Commission, therefore,
considers it appropriate for the United Kingdom to be authorized to
apply the planned special measure, but that such an authorization should
be limited in time, for a duration lasting until 31 December 1995.
 ---pagebreak---                                                                      ^
                             COUNCIL DECISION
                                Of
    authorizing the United Kingdom to apply a measure derogating from
     Article 2(1) and Article 17 of the sixth Directive (77/388/EEC)
          on the harmonization of the laws of the Member States
                        relating to turnover taxes
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard    to  the   Treaty  establishing   the European   Economic
Community,
Having regard to the 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, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of Directive 77/388/EEC, the Council,
acting unanimously on a proposal from the Commission, may authorize any
Member State to introduce 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;
Whereas, by letter dated 10 May 1993 and received by the Commission on
22 June 1993, the United Kingdom requested authorization to introduce a
measure for derogation from Article 17 of Directive 77/388/EEC;
Whereas the other Member States were informed on 14 July 1993 of the
request made by the United Kingdom;
Whereas implementation of the transitional VAT arrangements leads to VAT
being charged on certain work on movable tangible property and certain
services relating to the transport of goods at the place where these
services are supplied, irrespective of the place where the taxable
person to whom these services are supplied is able to exercise his
rights of deduction, and whereas this results in growing use of the
refund procedures provided for by Directives 79/1072/EEC and 86/560/EEC;
Whereas the increasing use of the refund procedures provided for by
Directives 79/1072/EEC and 86/560/EEC may impede the development of
intra-Community trade in certain services;
Whereas the measure for derogation in question aims to introduce a
simplification consisting in the exemption of certain services supplied
to taxable persons not established in the territory of the country but
identified in the Community, for which these taxable persons would in
any event be entitled to a refund;
 ---pagebreak---                                                                          I
                                                                       H8
Whereas certain requirements should be imposed on taxable persons with a
view to preventing tax evasion or avoidance;
Whereas it is desirable for this derogation to be limited to the time
necessary to enable the Council, acting on a proposal from the
Commission, to adopt a definitive solution;
Whereas the measure for derogation in question has no effect on the
European Communities' own resources accruing from value added tax,
HAS ADOPTED THIS DECISIONS
 ---pagebreak---                                                                        ^3
                                                                         I
                                Article 1
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
United Kingdom is hereby authorized to exempt the supply of services
referred to in Article 3(1) and (2) rendered to taxable persons
identified in a Member State other than the United Kingdom in accordance
with Article 22(l)(c),(d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 79/1072/EEC if these
services had been taxed.
                                Article 2
By way of derogation from Article 2(1) of Directive 77/388/EEC, the
United Kingdom is hereby authorized to exempt the supply of services
referred to in Article 3(2) and rendered to taxable persons identified
in a Member State other than the United Kingdom in accordance with
Article 22(1)(c), (d) and (e) of Directive 77/388/EEC who would have
qualified for a refund in accordance with Directive 86/560/EEC if these
services had been taxed.
                                Article 3
In the circumstances provided for     in Articles 1 and   2, the  United
Kingdom is authorized to exempt:
1. the supply of services referred to in the third and fourth indents of
   Article 9(2)(c) of Directive 77/388/EEC;
2. the transport services located in the territory of the country,
   directly linked to the intra-Community transport of goods as defined
   in Article 28bC(l) of Directive 77/388/EEC.
                                Article 4
By way of derogation from Article 17 of Directive 77/388/EEC, the
services referred to in Article 3 and supplied in the circumstances laid
down in Articles 1 and 2 shall be eligible for deduction of input tax.
                                Article 5
In order to be eligible for exemption from tax in accordance        with
Articles 1 and 2, a taxable person shall in particular:
1. In the case of the supplies of services referred to in Article 3(1):
   -  be in possession of a certificate establishing that the person to
      whom the services have been supplied is a taxable person and
      issued in the form laid down by Directives 79/1072/EEC and
      86/560/EEC;
      be in possession of a declaration in which the person to whom the
      services have been supplied acknowledges that he is jointly and
 ---pagebreak---                                                                           I
                                                                         •To
      severally liable for payment of the tax due on any operation which
      may have been exempted in error and undertakes to repay this tax
      to the supplier of the service;
   -  mention, on his invoice, the grounds for exemption and the
      identification number of the person to whom the services have been
      supplied.
2. In the case of the supplies of services referred to in Article 3(2):
      satisfy the requirements referred to in point 1;
   -  provide proof that the transport service is directly linked to an
      intra-Community transport within the meaning of Article 28bC(l) of
      Directive 77/388/EEC.
                                Article 6
The United Kingdom is hereby authorized to apply this simplification
measure until 31 December 1995.
                                Article 7
This Decision is addressed to the United Kingdom.
                                        Done at Brussels
                                                For the Council
                                                The President
 ---pagebreak---                                                                                    ^1
                                                                      ISSN 0254-1475
                                                               COM(93) 403 final
                                                      DOCUMENTS
EN                                                                          06 09
                                 Catalogue number : CB-CO-93-434-EN-C
                                                             ISBN 92-77-58758-X
Office for Official Publications of the European Communities
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