CELEX: 52004PC0692
Language: en
Date: 2004-10-25
Title: Proposal for a Council Decision amending Council Decision 2000/746/EC authorising the French Republic to apply a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (presented by the Commission)

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   Brussels, 22.10.2004
                                                   COM(2004) 692 final
                                      Proposal for a
                                COUNCIL DECISION
   amending Council Decision 2000/746/EC authorising the French Republic to apply
   a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on
     the harmonisation of the laws of the Member States relating to turnover taxes
                             (presented by the Commission)
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 ---pagebreak---                              EXPLANATORY MEMORANDUM
   1.  Pursuant to Article 27(1) of the Sixth Council Directive of 17 May 1977 on the
       harmonisation of the laws of the Member States relating to turnover taxes – Common
       System of valued added tax: uniform basis of assessment1-, the Council, acting
       unanimously on a proposal from the Commission, may authorise any Member State
       to introduce or extend 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.
   2.  As a rule such authorisations are given on a temporary basis, so that an assessment
       can be made after a few years as to whether the special measures are appropriate and
       effective.
   3.  Council Decision 2000/746/EC2 authorised the French Republic, by way of
       derogation from Article 11(A)(1)(a), to include in the taxable amount of a supply of
       goods or a supply of services, the value of any gold used by the supplier and
       provided by the recipient in the case where the supply of the gold to the recipient was
       exempt in accordance with the provisions in Directive 98/80/EC3.
   4.  This derogation has enabled France to counter a reduction in the taxable amount in
       certain transactions in the jewellery sector in which the client will provide the
       jeweller with gold which he has acquired "for investment purposes" and thus VAT-
       exempt in order for the jeweller to supply a good (e.g. supply a gold-mounted
       diamond jewel) or a service (e.g. by smelting the gold into a ring).
   5.  By letter registered with the Secretariat-General of the Commission on 6 July 2004,
       the French Government requested the extension of Decision 2000/746/EC
       authorising France to apply special tax measures regarding the taxable amount of
       certain supplies of goods and services involving the working of gold.
   6.  In accordance with Article 27(2) of the Sixth Directive, the Commission informed
       the other Member States by letter on August 10th of the request made by France and
       the French Republic that it had all the information it considered necessary for
       appraisal of the request.
   7.  The Commission accepts that this derogation counters abuse in the VAT system. It
       also notes that two other Member States have obtained similar derogations. The
       Commission has already started its work towards the rationalisation of Article 27
       derogations and these derogations may be included in that exercise. Therefore, the
       present request for an extension of the derogation should be granted until the date of
       entry into force of a Directive rationalising the Article 27 derogations which
       currently counter these types of VAT avoidance linked to the exemption for
       investment gold but no later than the 31st December 2009.
   1
      OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/7/EC (OJ L 30.1.2004, p. 44).
   2
      OJ L 302, 1.12.2000, p. 61.
   3
      OJ L 281, 17.10.1998, p. 31.
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 ---pagebreak---                                                    Proposal for a
                                            COUNCIL DECISION
       amending Council Decision 2000/746/EC authorising the French Republic to apply
       a measure derogating from Article 11 of the sixth Council Directive 77/388/EEC on
         the harmonisation of the laws of the Member States relating to turnover taxes
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty establishing the European Community,
   Having regard to the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the
   harmonisation of the laws of the Member States relating to turnover taxes –Common system
   of value added tax: uniform basis of assessment4, and in particular Article 27(1) thereof,
   Having regard to the proposal from the Commission5,
   Whereas:
   (1)     By Decision 2000/746/EC the Council authorised the French Republic, by way of
           derogation from Article 11(A)(1)(a) of Directive 77/388/EEC to include in the taxable
           amount of a supply of goods or a supply of services, the value of any gold used by the
           supplier and provided by the recipient in the case where the supply of the gold to the
           recipient was exempt in accordance with Article 26b of Directive 77/388/EEC.
   (2)     The aim of that derogation was to avoid abuse of the exemption for investment gold
           and thus to prevent certain types of tax evasion or avoidance.
   (3)     By letter registered with the Secretariat-General of the Commission on 6 July 2004,
           the French Government requested an extension of Decision 2000/746/EC6 which
           expires on 31st December 2004.
   (4)     In accordance with Article 27(2) of the Sixth Directive, the Commission informed the
           other Member States by letter dated August 10th of the request made by the French
           Republic and notified the French Republic that it had all the information it considered
           necessary for appraisal of the request.
   (5)     According to the French authorities, the derogation authorised by Decision
           2000/746/EC has been effective in achieving the aims stated above.
   4
           OJ L 145, 13.6.1977, p.1. Directive last amended by Directive 2004/7/EC (OJ L 30.1.2004, p. 44).
   5
           JO C du , p. .
   6
           OJ L 302, 1.12.2000, p. 61.
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 ---pagebreak---    (6)     The derogations pursuant to Article 27 of Directive 77/388/EEC which counter VAT
           avoidance linked to the exemption for investment gold may be included in a future
           proposal for a directive rationalising some of the derogations pursuant to that article.
   (7)     It is therefore necessary to extend the validity of the derogation granted under
           Decision 2000/746/EC until the entry into force of a directive rationalising the
           derogations pursuant to Article 27 of Directive 77/388/EEC which covers the
           avoidance of value added tax linked to the exemption for investment gold or until 31st
           December 2009, whichever is the earlier.
   (8)     The derogation will have no negative impact on the European Communities own
           resources provided from value added tax.
   HAS ADOPTED THIS DECISION:
                                                Article 1
   Article 2 of Decision 2000/746/EC is replaced by the following:
   "Article 2
   The authorisation granted under Article 1 shall expire on the date of entry into force of a
   directive rationalising the derogations pursuant to Article 27 of Directive 77/388/EEC which
   counter avoidance of value added tax linked to the exemption for investment gold or on the 31
   December 2009 whichever is the earlier."
                                                Article 2
   This Decision is addressed to the French Republic.
   Done at Brussels,
                                                  For the Council
                                                  The President
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