CELEX: 51988PC0846
Language: en
Date: 1988-02-03
Title: Proposal for a COUNCIL DIRECTIVE supplementing the common system of value added tax and amending Articles 32 and 28 of Directive 77/388/EEC - special arrangements for second-hand goods, works of art, antiques and collector's items (presented by the Commission)

ARCHIVES HISTORIQUES
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DOCUMENTS "COM"
COM (88) 846
Vol. 1988/0275
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
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2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                          COM(88 ) 846 final
                                          Brussels , 3 February 1989
                                          Revised Version
                               Proposai for a
                              COUNCIL DIRECTIVE
     supplementing the common system of value added tax and amending
  Articles 32 and 28 of Directive 77 / 388 / EEC - special arrangements for
     second-hand goods , works of art , antiques and collector 's items
                       ( presented by the Commission )
                          sr î>
                                                  ai
 ---pagebreak---                           Explanatorv Mémorandum
Introduction
The attached proposal is intended to complete , for second hand goods ,
works of art , antiques and collector 's items , the common system of value
added tax . In doing this it closed a particularly important gap in
relation to the requirements of neutrality in the common VAT system as
prescribed in the first VAT Directive , a principle confirmed and
clarified by the Court of Justice in a series of important judgements .
However the reintroduction of second hand goods , works of art , antiques
and collector 's items into commercial channels and their subjection to
VAT in that case raises a number of very sensitive questions to which any
proposal must try and give a coherent answer . Also it should be said that
the reintroduction of goods acquired from a non-taxable person , or from a
taxable person who has no right of deduction , would be made easier by
right from the start situating the proposal in the perspective of
creating the internal market as defined in Article 8A and by introducing
accordingly the measures necessary for the functioning of a real market -
interior and exterior - for second hand goods , works of art , antiques and
collectors items .
In addition the special regime to be put in place must • also be as
neutral , simple and controllable as possible ; it must be accepted that it
is not possible in this respect to achieve characteristics and results
equal to those of the normal VAT regime . Consequently compromises have
had to be made on a number of aspects and the overall situation must
always be kept in mind , especially when the detailed provisions are
examined .
The aim of this special regime must be extremely clear : it consists of
systematically taking into account the value added by the taxable-dealer
in the goods concerned in the course of his professional activities .
This leads to excluding from the scope of application all value added at
 ---pagebreak--- the previous stages by the private ( non-taxable ) person or the taxable
                                          -    v«
persons who does not have the right to deduct when he cedes the goods to
the dealer .
The special regime must also be neutral in regard to all kinds of
intermediaries who are liable to act as taxable dealer .
Lastly , insofar as non-taxable persons are outside the scope of the
application of this special system , the obvious consequence should be the
full application to them , until the abolition of fiscal frontiers , of the
principles deduced by the Court in the " Schul " jurisprudence .
I      Subject of the proposai
The eurrent proposal is founded on the logic which is the basis of a
number of rulings of the Court of Justice concerning second-hand goods .
The first judgement concerned , the Schul Judgement ( 1 ), the case of a
second-hand good bought by a private eitizen in a Member State and
imported by him into his Member State of residence .
In the judgement the Court referred to Article 95 and concluded that
"Value added tax which a Member State levies on the importation of
produets from another Member State supplied by a private person , where no
such tax is levied on the supply of similar products by a private person
within the territory of the Member State of importation ,             constitutes
internal taxation in excess of that imposed on similar domestic products
to the extent to whieh the residual part of the value added tax paid to
the Member State of exportation whieh is still contained in the value of
the product on importation is not taken into account ".
In other judgements ( 2 ), the Court has covered most of the possibilities
of import of second-hand goods by private persons .
The Commission gave       its   interpretation of   the   scope   of    the  Schul
judgements     in  a  Communication    in  January 1986    (3 ) :    " the  double
 ( 1 ) Judgement of the Court of 5 May 1982
 ( 2 ) Judgments of the Court of 21 May 1985 ( Schul ), 11 December 1984
 ( 3 ) OJ n°C 13 of 21.1.1986 , p. 2
 ---pagebreak--- imposition of VAT on goods exported from one Member State to another is
contrary to Community law and to the achievement of a genuine common
market ." The Commission drew from this an operational solution for
second-hand goods imported by private persons . This proposal takes this
as given . Moreover the field covered by that solution is limited : it
only concerns imports by private citizens , even if the principle of
avoiding double taxation is of general application .
The application of the principle of avoiding double taxation has also
been confirmed by the Court in other cases concerning the sale of new
goods involving the part exchange of second-hand goods of the same kind
inside a Member State ( 4 ). In these judgements the Court said that the
second-hand goods whieh had already borne VAT when they were first
introduced into commerce , could not be , when resold by a taxable person ,
submitted to a VAT whieh had been calculated on a base which included the
VAT already paid .
On that occasion the Court also said that when a Member State had a
national system for second-hand goods , this was only limited in that it
could not interfere with the system applicable to new goods . The
fundamental principle of no double taxation and neutrality applies , and
this is essential , also to trade inside a Member State .
In spite of the principles set out , on several occasions , the economic
problems posed by the application of the VAT to goods put back into
commercial channels by professionals who sell second-hand goods , works of
art , antiques or collectors items , rest : no community law exists which
avoids double taxation at this stage .
According to Article 32 of Directive 77/388/EEC ( 6th Directive ) a
Community taxation seheme for this seetor should have been adopted by the
Council before 31 December 1977 . To this effect the Commission presented
a proposal on 1 1 January 1978 ( Proposal for a 7th Directive , O.J. n°C 26
of 1 February 1978 amended on 14 May 1979 O.J. n°C 136 of 31 May 1979 )
whieh was the subject of long discussions in Gouneil . In view of the
 faet that the discussions gave rise to a formulation whieh accentuated
 the differences between Member States and which did not create a
 ( 4 ) Court Judgements of 10 July 1985 in the cases 16/84 and 17/84
 ---pagebreak---    permanent taxation system nor dealt with eross-frontier operations , the
   Commission deeided to withdraw the proposal .
   At its meeting of 16 November 1987 , the Council acknowledged the
   withdrawal and took note of the Commission 's intention to submit to it a
   new proposal on this subject shortly .
  The whole of the various provisions which make up the present proposal
  are intended to deal with this deficiency and to tackle , in a coherent
  manner the problem of goods whieh come back into the economic circuit
  through dealers in second-hand goods , works of art , collector 's items and
  antiques : it is thus a special regime applicable only to those traders
  speeiali2ed in these markets .
 II    Analysis of thp proposai
The proposal takes the form of two articles amending the current text of
 the 6th Directive :
a ) a new text to be substituted for the current text of Article 32 in
     order to insert the appropriate Community provisions on the taxation
     of the goods in question within the framework of the 6th Directive .
     In this fashion , the provisions of the 6th Directive are directly
     applicable to the new Article 32 , except for explicitly mentioned
     derogations , and modifications which in the future will be made to the
     6th Directive    - for example because    of  the abolition of    fiscal
     frontiers - will apply in the same way directly to Article 32 . In
     addition it has been possible to draft the text in the perspective of
     the abolition of fiseal frontiers ( see ad Article 1 below )
b ) an addition to the present Article 28 of Title XVI " transitional
     provisions" whose objeet is to allow the application of the taxation
     provisions even before the abolition of fiseal frontier ( see ad
     Article 2 )
 ---pagebreak---                                  Ad . article 1
A. Scope
   As this is a special system it is extremely important to carefully
   define the field of application both in terms of the goods and the
   persons concerned .
   In this respect it is necessary to make the assumption that the
   special regime is only an exception to the normal system , it should be
   reserved for those cases where the normal system is manifestly not
   applicable . This means that where the conditions permit it is the
   normal system which applies ( see A4 ).
   1 . Goods covered by this proposal
       The  scope   therefore  i3   very  wide . This reflects the  idea of
       avoiding , by use of a specific regime , the double taxation which
       can arise when a person resells goods the value of which includes
       non-deductible VAT .   Indeed , most used goods as well as a certain
       number of works of art whieh are resold by specialist dealers are
       originally purchased by those dealers from non-taxable or taxable
       persons who do not themselves have the right to deduct VAT on the
       acquisition of goods . However , other goods have never been subject
       to VAT because of their age ( for example certain works of art or
       antiques ) .
       To isolate those goods which continue to contain an element of
       residual tax from all those goods purchased by a taxable dealer for
       resale could be a difficult if not impossible task .
       The inclusion of all these goods in the scope of the application of
       the proposal is thus explained by the wish to avoid an exposure ,
       whieh might be sensitive , of the detail of the activities of the
       taxable-dealer . However it is clearly specified in the proposed
       directive that goods acquired by the dealer under the normal system
 ---pagebreak--- Defined as " taxable-dealer", they may however use the special
system only insofar as the goods , which are to be resold , have been
got from private persons or from a taxable person who did not have
the right of deduction when he acquired the goods concerned -
following the definition of the goods given under 1 above . This
means that the special regime is applicable to the resale of goods
acquired by a taxable-dealer from an " exempt taxable person " or
from another taxable dealer .
Although strictly not necessary , the reference to Article 5 para . 4
( c ) of the Sixth Directive is intended to remove all doubt about
the regime applicable to auctioneers where they do not act as
commission agents . In those eases the scheme that is appropriate is
the normal scheme for supplies of services . This regime does not
give rise to competitive distortions in relation to the commission
operations envisaged under article 5.4 ( e ) which are considered as
supplies of goods . Indeed , it is of little significance that the
taxable   base  is  theoretically  made  up   in  the   first case  by
" everything which constitutes the consideration for the supply of
the service " and in the second ease by the "difference between the
sales price- and the purchase price ",      beeause   in practice  the
economic result is the same .
Also , the fact that the special scheme is not applicable when the
goods have been obtained by the taxable-dealer under the normal
system from a taxable-person who has the right of deduction or
imported and taxed may imply , for the dealer , the need to be able
to use the normal system for some goods and the special scheme for
others in the same accounting period . In this case the joint use of
both schemes must involve keeping separate accounts so that the
operations under the one or the other ean be identified with the
corresponding rights to deduction . The definition of the
administrative details in this respeet has been left to the Member
States so that they ean take account of specific national needs .
In order to avoid the risk of fraud involved in the use of the
right of deduction when the normal regime is applied , the Member
States may , in a way analogue to the provisions of Article 18(2 ),
make the taxable-dealers exercise their right only at the moment of
 ---pagebreak---    sale . The decision to use this addition to the control methods
   available to the Member States is left to their appreciation .
   Lastly , in contrast this regime does not apply to persons who are
   not taxable dealers . This is the ease for example for an
   entrepreneur who , having used an item in his business , subsequently
   resells it . In this case it is the normal regime of the Sixth
   Directive which applies ( taxation or exemption according to Article
   13(B ) ( c ) ) .
B. General method of application
   1 . Faced by       the well-known  technical problems ,  which have been
       widely discussed , posed by the application of value-added tax to
       supplies of second-hand goods by taxable-dealers , the search for
       a harmonized solution which respeets the general system of VAT
       and      which   facilitates  as  much  as  possible   cross-frontier
       operations led to the proposal that the margin realized by the
       taxable dealer when he sells should be retained as the taxable
       base for all categories of goods concerned here .
       Oertafnly other methods could achieve the same economic and
       fiseal results . Indeed , the method of reconstructing the tax
       remnant in order to be able to deduet it at resale would give an
       equivalent result . However it does not give any technical
       advantages and , above all , it is more complicated to apply
 ---pagebreak---     ( especially for the SME who are particularly concerned by the
    special seheme ).
    In economic terms , the amount to be taken into consideration is
    made up of the difference between the seller 's tax exclusive
    price and the real cost to the latter of the acquisition of the
    goods . In the ease where the goods have been subject to VAT
    whieh is non-deductible at the time of their acquisition , that
    tax constitutes an element of        the cost which should also be
    taken into account in calculating the margin .
    In this context , it is relevant to recall that a taxable dealer
    may not deduct the tax actually charged on a purchase of the
    goods   ( this tax is in theory treated as deductible by the
    taxation of      the  margin  only ,  under    the   definition     of  the
    latter ) .
    The   general    provisions  of  Article    17   ( right    to   deduction )
    however , remain applicable to other purchases , even though there
    is no explicit mention of this fact in the text , because as has
    been said above the current proposal forms part of the text of
    the Sixth Directive .
    In addition , it is proposed that taxable dealers should not be
    authorized to show VAT on the invoices which they issue . In that
    way the tax on the margin will not be deductible at the next
    stage .    Moreover  these provisions    correspond      to    the  general
    commercial practice , which is not to reveal profit margins .
2 . A variation of the principle establishing the taxable base has
    however been introduced with the possibility of using a global
    margin , that is to say the difference during a declaration
    period between the total amount of sales of goods and the total
    amount of purchases .
    This variation , as against the system of the margin per
    transaction , avoids having to calculate an "a posteriori "
    purchase price at the time of sale of the goods , which is almost
 ---pagebreak---      impossible in the ease of goods purchased in lots , goods of low
     value    whieh    are   difficult to   identify , etc . Globalisation
     provides an answer to the difficulties encountered by certain
     professions in the operation of a system of margin per
     transaction .   It   also allows a certain parallelism with the
     normal value added tax regime with notably the possibility to
     take   into   account   the  situation  of  sales  at   a loss . This
     possibility , and the constraints which result from it intended
     to reduce as much as possible the risks of fraud and distortions
     of competition , led to the introduction of a control provision
     which allows the VAT Committee to evaluate the risks .        In this
     way the methods of application of the system of globalisation in
     the national VAT systems should be subject to the consultation
     procedure provided for in Article 29 of the Sixth Directive .
3 . Furthermore the question of the techniques to be used in the
     context of cross-frontier operations gives rise to the need for
     specific provisions . In this context the notion of the abolition
     of fiscal frontiers must be taken into consideration . Indeed , in
     the context of a system of taxation of the margin of taxable
     dealers , it is impossible to tax imports for obvious reasons . It
     was therefore judged preferable , in order to avoid the risks of
     double taxation or of no taxation , to have a method which
     ensures that the margin is taxed regardless of the Community
     destination of the goods . It is therefore proposed that the
     margin on goods subject to the specific regime should be taxed
     at exportation to other Member States and should not be subject
      to taxation at importation . In this way a certain equivalence is
      established with the type of system that will result from the
     proposals for the elimination of fiscal frontiers ( see
      explanatory memorandum ad . Art 2 on the transitional measures to
      be introduced ) .
Methods of application to certain goods
 1 . Although the principle which has been adopted should allow a
      single treatment for all goods sold by taxable dealers and
      should also allow the application of value added tax under the
      same general conditions , the characteristics and the development
 ---pagebreak---     of international commerce in work3 of art , collectors items and
    antiques requires speeial provisions . In order , as much as to
    avoid double taxation , or non-taxation , as to avoid competitive
    distortions , the proposed system should provide for taxation of
    the margin on these particular goods at exportation regardless
    of their destination ( intra- community or third country ). Indeed ,
    the general provision which has been adopted , which involves the
    taxation of intra-Gommunity exportations for all categories of
    goods implies that for trade with third countries the normal
    system of taxation at importation on the total value of the
    goods will remain in force . However the particular nature of
    works of art , collector 's items and antiques , and notably the
    fact that their value evolves in relation to factors which are
    not connected with the notion of value-added , ought to be taken
    into account .  In this context it is necessary to avoid ,        in
    relations with third countries :
    - a simple exemption at importation , which in the context in
      which Article 32 has been placed ( that is to say the Sixth
      Directive whieh at present contains the general principle of
      exemption at exportation ) would result in a situation where
      such goods would not finally be taxed either at importation or
      at exportation .
    - taxation at importation according to the normal system which ,
      for all goods already subjected to VAT in the past , would have
      the inevitable consequence of double taxation and which would ,
      more generally , result in the imposition of a considerable
      fiseal burden on these      goods , with no relation with      the
      concept of added value .
    In this context the best solution which ean be adapted on a
    economic basis is to extend the mechanism provided for in intra ¬
    community trade to trade with third countries : i.e. taxation of
    the margin at exportation and exemption at importation . Such a
    mechanism is also compatible with the encouragement of the
    repatriation of works of art and the conservation of the
    European cultural heritage .
2 . However a relationship has to be established with the fiscal
    treatment of creators of works of art .     Indeed , to the extent
 ---pagebreak---        that original works of art should be taxed under the normal
       regime when they are sold by their author or his representative
       ( whether on the internal market or at inport ) so as to avoid
       distortions of competition with art galleries , it is right to
       prevent the specific system under which works of art will
       benefit from becoming a source of fraud . In particular , it is
       necessary to avoid the situation in which an original work of
       art exempted at the time of exportation by the artist could be
       immediately reimported by a taxable dealer and benefit from the
       exemption applied at importation as is provided for in the
       present proposal . To this effeet a provision was introduced
       whieh allows the national authorities to demand that , for all
       reimportations within a time period of thirty-six months , proof
       should be given that the goods were definitively taxed before
       exportation from the Community . This risk doesn't exist in
       traffic between Member States because , before the abolition of
       fiseal frontiers , works of art , although exempt at export to
       another Member State , will be taxed at import on their total
       value ( Article 11(3 ) of the 6th Directive ).
   3 . By virtue of an express provision , the speeifie seheme applied
       to imports of works of art , collectors items and antiques biT
       taxable dealers is to apply under the same conditions equally to
       importations by cultural organisations recognized as such by the
       Member States .
D. Option
   In general , the taxable-dealer authorized to apply to special
   seheme will supply the goods covered by the scheme to non- taxable
   persons . However if the taxable dealer sells to other taxable
   persons the margin seheme has some drawbacks . Actually the taxation
   of the margin realised by the taxable dealer allows the avoidance
   of double taxation at his level , but it gives rise to double
   taxation at the following stage , i.e. that of the taxable
 ---pagebreak--- purchaser ,  because  in  principle  the  right   to   deduction is
prohibited under the margin system ( as it is not possible to show
the amount of VAT on the invoice ).
In order to avoid a situation in which for the taxable buyer the
remnant of the initial tax is added to the remnant of the tax on
the dealers margin , it is proposed that for sales to such taxable
persons the taxable dealer may opt for the normal system .
Insofar as the taxable-dealer is thus led to use the normal and the
special systems at the same time because of      the nature of his
business , the same conditions are applied as in the case in A4 :
the keeping of separate accounts and the possibility for the Member
States only to allow deduction at the moment of sale .
 ---pagebreak---                                   Ad . Article 2
1 . This Article roust be read in conjunction with Article 1(c ). The two
     provisions provide in intra-Community traffic for taxation in the
     Member State of departure , which anticipates the date of the abolition
     of fiscal frontiers for all the goods covered by this proposal .
     When fiscal frontiers are abolished , the provisions of Article 2 will
     become redundant , like the other transitional provisions in Article
     28 , and all intra-Community trade will be governed by taxation in the
     Member State of departure , in accordance with the general principal to
     be introduced by another draft directive . Article 1(c ), which concerns
     works of art , antiques and collectors items , will on the contrary
     maintain    its value  even  after   the  abolition of fiscal  frontiers
     because it will serve as a legal basis for taxing exports to third
      countries and exempting importations into the Community .
2 . During the transitional period ,       as  the general principle of   the
      6 th Directive of taxation at import continues , the technical solution
      whieh results from the Sehul Judgements and set out in the Commission
      communication in 1986 ( 1 ) must continue to be applicable to imports
      made by private persons .     Thus the invoice made out by a taxable
      dealer , tax inclusive but without the possibility of mentioning the
      tax apart , constitutes evidence that the VAT has been paid on the
      goods in one of the other Member States and consequently the method of
      working out the VAT put forward in the Commission communication can
      also be applied to them . In order to facilitate the application of
      this solution it is necessary to apply the tax to goods under the
      special ««ystem at the same rate as applied to new goods of the same
      kind . It is also neeessary that the rate of tax applied is stated on
      the invoice to allow for the calculation of the remnant of tax .
 ( 1 ) O.J. n° C 13 of 21.01.1986 , p. 2
 ---pagebreak---                         Proposai for a Council Directive
        supplementing the common system of value added tax and amending
    Articles 32 and 28 of Directive 77 / 388 / EEC - special arrangements for
        second-hand goods , works of art , antiques and collector 's items
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 in accordance with Article 32 of 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 assessement (1 ) , as last amended by the Act of Accession of Spain and Portugal,
 the Council is to adopt a Community taxation system to be applied to used
 goods , works of art , antiques and collector 's items ;
Whereas the present situation , in the absence of Community legislation ,
continues to be marked by the application of very different
systems which cause distortion of competition and deflection of trade
both internally and between Member States ; whereas these differences also
Include 9 lack of harmonization in the levying of the own resources of the
Community ; whereas consequently it is necessary to bring this situation to
an end as soon as possible ;
 ( 1 ) OJ n°L 145 , 13.6.1977 , p. 1
 ---pagebreak---                                      -2-
Uhereas the Court of Justice has , in a number of judgments , noted the
need to attain a degree of harmonization which allows double taxation in
intra-Community trade to be avoided ;
Uhereas the objective of achieving a single market by 31 December
1992 means that Community rules with the purpose of avoiding as far as possible
double taxation and distortion of competition between taxable persons ,
must be adopted before that date ;
Uhereas the aim of the elimination of double taxation and distortion of
competition may be achieved by providing for the same system both for the
period before and for the period after the realization of the single
market , which would in any event be a simpler solution ;
Uhereas , for certain items of a cultural nature , a special measure should
be envisaged to promote the conservation and enrichment of the cultural
heritage of the Community ,
HAS ADOPTED THIS DIRECTIVE :
 ---pagebreak---                                       ARTICLE 1
Directive 77 / 388 / EEC is hereby amended as follows :
1 . Article 32 is replaced by the following :
                                    " ARTICLE 32
                 Special arrangements for second-hand goods ,
                  works of art , antiques and collector's items .
A. Scope
1 . Member States shall apply value added tax to supplies of second-hand
     goods , works of art , antiques and collector 's items ,     in accordance
     with the following provisions .
     The special arrangements shall not cover precious metals
     and precious stones .    However , they shall apply to supplies
    of objects as referred to in the previous subparagraph
     made of gold or any other precious metal           or containing precious
     stones , where the value of such materials incorporated does not exceed
     50 v. of the selling price of those objects .
2 . For the purposes of this Directive :
   ( a ) " second-hand goods" shall mean movable property that has been used
                               and is   suitable for  further use as  it  is or
                               after repair , including all means of transport ;
   ( b ) "works of art " shall mean the objects listed at 1 in Annex H , with
                         the exception of those supplied by their creator or
                         his successors in title ;
 ---pagebreak---   (c)     -'collector ' s items " shall mean the objects listed at 2 of Annex H ,
                                  except  when first supplied ;
  ( d ) " antiques" shall mean the objects listed at 3 of Annex H.
3 . The special arrangements shall apply to supplies of goods as referred
      to in paragraph 1 where they are effected by a taxable person (" taxable
      dealer ") who acquires such goods in the course of his business from a
      private person or from a taxable person who was not entitled to deduct
      VAT when he acquired them , with a view to resale . Any taxable person
     engaged in the occupation of intermediary shall also be deemed to be a
      taxable dealer if , in accordance with Article 5(4 ) ( c ) , he dispatches
     goods as referred to in paragraph 1 under a sales or purchase conrmission contract .
4 . The special arrangements shall not apply to supplies of goods by a
     taxable dealer where he has acquired them from a taxable person who
     has invoiced the VAT in accordance with Article 22(3 ) or where they
     have been imported by taxable dealer and        were subject to value added tax on
      importation .
      Where his activities lead him to use the normal arrangements at the same time
     as the special arrangements , the taxable dealer shall keep separate
     accounts , according to the         rules    laid down by the Member States ,
      for operations coming under one or other arrangement .
     Member States may oblige taxable dealers to exercise their right to
     deduction for operations carried out under the normal arrangements only at
      the moment of supply .
 ---pagebreak--- B. General rules of application
1 . The taxable amount shall be the difference , for each transaction ,
     between the selling price and the purchase price . The selling price shall be
     the price charged by the taxable dealer without value added tax . The
     purchase price shall be the tax-inclusive price paid by the taxable dealer
     However , Member States may , in order to simplify the procedure for
      levying    the tax and subject to the consultation provided for in
     Article 29 , take as the taxable amount the difference recorded over
     each tax period between the total amount of supplies before tax and
      the total amount of purchases after tax . The application of this
     provision must not have the effect of giving rise to distortions of
     competition .
2 . The taxable dealer shall not have the right to deduct any tax paid at
      the time of purchase of the goods which are the subject of supply by him .
     The tax    relating to that     supply may not be stated separately on the
      invoice or any document serving as an invoice .
C. Rules for application to particular goods
      For works of art , collector's       items and antiques as referred to in
      A(2)(b)(e ) and ( d ) the following shall also apply :
    ( a ) by way of derogation from Article 15(1 ) and ( 2 ), supplies of these
          goods by a taxable dealer shall not be exempt from tax where they are
          dispatched or transported to a third country ;
    ( b ) by way of derogation from Article 2(2 ), these goods shall be exempt
          where they are imported from a third country by a taxable dealer .
 ---pagebreak---       However , works of art and collector 's items which have been exported
      with exemption from value added tax during the thirty-six months
      preceding their importation by a taxable dealer shall not qualify
      for exemption from tax on import .
( c ) these goods shall be exempt from tax where they are imported by
      cultural organizations recognized as such by the Member State
      concerned under the same conditions as those set out under ( b )
      for taxable dealers .
 ---pagebreak---                                                                                       5
D. Option
      Taxable dealers who qualify for the special arrangements may
       for each supply to taxable persons opt for application of the normal
       value added tax arrangements .    In this case the conditions set out under
      A ( 4 ) second subparagraph shall apply ."
2 . The following paragraph 6 is added to Article 28 :
" 6 . Until the date of abolition of taxation on importation and remission of
        tax on exportation in trade between Member States , the latter shall apply the
        provisions set out below :
   (a)     By way of derogation from Article 15 ( 1 ) and ( 2 ), the supply by a
           taxable dealer of goods as referred to in Article 32 A ( 2 )
           shall be taxed ,   in accordance with the provisions of that Article , where
           those goodsare dispatched or transported to another Member State .
     ( b ) By way of derogation from Article 2(2 ), goods as referred to in
           Article 32 A(2 ) shall be exempt where they are imported from
           another Member State by a taxable dealer of the Member State of
           importation .
    ( c ) Member States shall apply to the supply of goods as referred to in
           Article 32 A(2 ) a rate equal to that applied to the equivalent new
           goods .
    ( d ) The invoice supplied by the taxable dealer within the meaning of
            Article 32(B)(2 ) shall state the rate of VAT and show that it has
 ---pagebreak---           been paid so that double taxation can be avoided ."
2 . The Annex hereto is added as Annex H.
                                      ARTICLE 2
    1 . Member States shall take the measures necessary to comply with this
        Directive not later than 1 January 1990 .
    2 . Member States     shall inform the Commission of the provisions they have
        adopted for the application of this Directive .
                                       ARTICLE 3
    This Directive is addressed to the Member States .
      Done at                                           For the Council
 ---pagebreak---                                      ANNEX
                                  " ANNEX H
           DEFINITIONS OF WORKS OF ART , COLLECTOR 'S ITEMS AND ANTIQUES
1 . Works of art are those falling within the following categories :
    - paintings , collages and similar decorative plaques , drawings and pastels ,
      executed entirely by hand , other than plans and drawings for architectural ,
      engineering , industrial , commercial , topographical or similar purposes ,
      hand painted or hand decorated manufactured articles , theatrical scenery ,
       studio backcloths   or the like of painted canvas .
    - original engravings , prints and lithographs , being impressions produced
      directly in black and white or in colour of one or of several plates
      wholly executed by hand by the artist , irrespective of the process or
      of the material employed by him , but not including any mechanical or
      photomechanical process .
    - original sculptures and statuary , in any material , but not including
      mass-produced reproductions as works of conventional craftmanship of a
      commercial character .
2 . Collector 's items are those falling within the following categories :
    - postage or revenue stamps , stamp-postmarks , first-day covers , postal
      stationery ( stamped paper ), and the like , used , or if unused not of
      current or new issue in the country to which they are destined
    - collections and collector 's pieces of zoological , botanical , mineralo -
      gical ,   anatomical ,   historical ,  archaeological ,  palaeontological ,
      ethnographic or numismatic interest
3 . Antiques are items , other than works of art or collector' s items , of an
    age exceeding 100 years ."