CELEX: 51979PC0694
Language: en
Date: 1979-11-28
Title: Proposal for a FIFTH COUNCIL DIRECTIVE on the harmonization of provisions laid down by law, regulation or administrative action relating to the rules governing turnover tax and excise duty applicable in international travel (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79) 694
Vol. 1979/0237
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 COM(79)694 final.
                                                Brussels , 28 November 1979
                              Proposal for a
                         FIFTH COUNCIL DIRECTIVE
on the harmonization of provisions laid down by law , regulation or
administrative action relating to the rules governing turnover tax
           and excise duty applicable in international travel
              ( submitted to the Council by the Commission )
                                                        QL
  C0MC79 ) 694 final
 ---pagebreak---                                EXPLANATORY MEMORANDUM
             In accordance with the commitment entered into at the time of
adoption of the Third Council Directive 78/ 1032 / EEC of 19 December 1978 on
the harmonization of provisions laid down by law, regulation or administra­
tive action relating to the rules governing turnover tax and excise duty
applicable in international travel ( 1 ), the Commission has examined the
problems arising from implementation of the Directive and , in particular , the
changes which have occurred in the level of the tax-free allowance for intra-
Community travellers expressed in national currencies and the real value of
such allowances .
 I.    Level of the intra-Community tax-free allowance                    '
             The Commission would point out that , on the basis of national
 currency equivalents for the European unit of account as at 1 October 1979 ,
 if the automatic adjustment procedure provided for in Article 7 of Direc­
tive 69 / 169 / EEC ( as inserted by Article 4 of Directive 78 / 1032 / EEC ) is fol­
 lowed , some Member States could reduce their allowances by amounts of up to
2.8        However , in view of the non-adjustment option provided for under
paragraph 4 of the aforementioned Article , such adjustments are not compul­
 sory .
             The Commission has found , however , that there has been a fall in
the'real value of the allowances .      Recent information shows that the fall for
the Community as .a whole has been about 10.4 % over the Last twelve months .
             The Commission regards it as unacceptable that the people of the
 Community should have to see the real value of the tax-free allowances re­
 duced ; they should rather be granted a gradual increase in such allowances
 so as to achieve the objectives laid down in the Directives .
              In this connection , the Commission would underline the role which
 tax-free allowances can play in the interpenetration of Member States * eco­
 nomies .                                           '                         ~
 ( 1 ) 0J n° L 366 of 28.12.1978, p. 28
 ---pagebreak---         %
             It was also with this in mind that the principle of a progressive
extension of tax-free concessions was envisaged in the Council Resolution of
22 March 1971 on the attainment by stages of economic and monetary union ( 1 ).
             Similarly , the fourth medium-term economy policy programme , adopted
by Council Decision on 14 March 1977 ( 2 ), states that , as part of the measures
to be taken to fight inflation in the Community , consumers should be given
increased opportunities of purchasing where they want to , in other Community
countries in particular , in view of the price differences which exist from one
country to another for indentical or similar products , going considerably
beyond variations in taxation or the structure of trade .
              In the light of all the factors set out above, the Commission there­
fore proposes that intra- Community tax-free allowances should be . increased as
follows in 1980 :
- an increase from 180 EUA to 210 EUA in the allowance granted to travellers
    of fifteen years of age or older ;
- an increase from 50 EUA to 60 EUA in the minimum allowance granted to tra­
     vellers under fifteen years of age .
II .     Derogations
              Derogations granted to Denmark and Ireland      under Article 5 of
Directive 78/ 1032 / EEC'allow them, within given time limits , to exclude from
tax exemption goods whose unit value is in excess of 135 EUA and 77 EUA respec­
tively .
              Unless appropriate adjustments are made to the unit value limits in
these derogations granted to Denmark and Ireland , their real value will be
altered , and they should therefore be increased in the same proportion as
 intra-Community tax-free allowances .                                ,
              Moreover , in the case of Ireland , the recent increase in the stan­
dard rate of VAT in the United Kingdom and the reduction , from 1 March 1979 ,
of the Irish rate of VAT applicable to certain electrical goods must be taken
into account .     The effect of these measures has been to considerably reduce
 ( 1 ) 0J n° C 28 of 27.3.1971 , point III , paragraph 2 , last indent .
 ( 2 ) 0J n° L 101 of 25.4.1977 , Part Three , B , < d ), paragraph 104, p. 23
 ---pagebreak---                                        - 3 -
the gap between retail prices of certain sensitive goods liable to the
standard rates of tax in both countries and , in consequence , the incentive
which may have existed hitherto for travellers to buy goods in the United
Kingdom rather than in Ireland .
             Much the same has happened with regard to the derogation granted
to Denmark , as a result of the increase in the VAT rates applicable in the
Federal Republic of Germany , though the reduction in the rate differential
between these two countries is less appreciable than in the case of Ireland
and the United Kingdom .
             In addition , account must be taken of the monetary realignment
which took place at the end of September , when the German mark was revalued
                                                                   ab.out
by 2 % and the Danish krone devalued by 3 % , making German good^ 5 % more
expensive for Danish purchasers .
             For ^ hese reasons , the Commission considers that the economic
 situation warranting these derogations has developed along favourable lines
 and proposes that , as from 1 January 1980, the levels for application of the
derogations for these two Member States should be raised and that ,, within
the time limits stipulated in Article 5 of Directive 78/ 1032 / EE£ Denmark and
 Ireland should be authorized to exclude from tax exemption goods whose unit .
value is in excess of 160 EUA and 100 EUA respectively .
 III .  Expression of alcoholic strength
             In order to comply with the provisions of Directive 76 / 766 / EEC on
alcoholometry , which must be brought into force by Member States by 1 January
 1980 at the latest , the Commission proposes that , as from that date , alco­
 holic strengths in the Directive under discussion be expressed in terms of
 "% vol " ( percentage by volume ).
             This amendment will entail only a technical change .
 ---pagebreak---                                        H
        Proposal for a Fifth Council Directive on the harmonization of
        provisions laid down by law, regulation or administrative action
        relating to the rules governing turnover tax and excise duty
                     applicable in international travel
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 99 thereof .
Having regard to the proposal from the Commission ,
Having regard to the Opinion of the European Parliament ,
Having regard to the Opinion of the Economic and Social Committee ,
Whereas intra-Community tax-free allowances contribute to the interpenetra­
tion of Member States' economies ;
Whereas , in its Decision adopting the fourth medium-terra economic policy
                                                             *
programme ( 1 ), the Council considered that , in the context of measures to
fight inflation, consumers should be given increased opportunities of pur­
chasing where they want to in the Community ;
Whereas , in order to achieve these objectives and in the interests of the
people of the Member States , the value of the exemptions laid down by
Article 2 of Directive 69 / 169 / EEC ( 2 ), as amended by Directive 78/ 1032 / EEC ( 3 ),
should be increased ;
Whereas the temporary derogations granted to the Kingdom of Denmark and to
Ireland under Article 5 ( 1 ) of the abovementioned Directive 78/ 1032 / EEC should
also be amended in view of the changes in the economic situation warranting
these derogations ;
Whereas for expressions of alcoholic strength it is necessary to take account
of the provisions of Directive 76 /766/ EEC ( 4 ) on the approximation of the
laws of the Member States relating to alcohol tables ,
HAS ADOPTED THIS DIRECTIVE :
                                                                                   ./.
 ( 1 ) OJ n° L 101 , 25.4.1977
 ( 2 ) OJ n° L 133 , 4.6.1969 , p. 6
 ( 3 ) OJ n° L 366, 28.12.1978 , p. 28
( 4 ) OJ n° L 262 , 27.9.1976, p. 149
 ---pagebreak---                                         - 2 -
                                                 P: ^       -                       1
                                       Article 1
              Article 2 of Directive 69 / 169 / EEC is hereby amended as follows :
a ) in paragraphs 1 and 3, " 180 European units of account " shall be replaced
      by "two hundred and ten European units of account ".
b ) in paragraph 2 , " 50 European units of account " shall'be replaced by
      " sixty European units of account ".
                                       Article 2
              Article 5 of Directive 78 / 1032 / EEC is hereby amended as follows :
In paragraph 1 , " 135 EUA" and " 77 EUA" shall be replaced by "one hundred
and sixty European units of account " and " one hundred European units
of account " respectively .                                                    -
                                       Article 3
              Articles 4 and 5 of Directive 69 / 169 / EEC and Article 1 of Direc­
tive 77 / 800 / EEC ( 1 ) are hereby amended as follows : .
" 22°" shall be replaced by " 22 % vol ".
                                       Article 4              -
1.      Member States shall bring into force the measures necessary to comply
        with this Directive with effect from 1 January 1980 .
2.      Member States shall inform'the Commission of the provisions which they
        adopt to implement this Directive .
                                       Article 5
              This Directive is addressed to the Member States .
                                                      ,       For the Counci I
                                                               The President
 ( 1 ) 0J n° L 336, 27.12.1977, p. 21