CELEX: 51990PC0183
Language: en
Date: 1990-06-19
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) CONCERNING ADMINISTRATIVE COOPERATION IN THE FIELD OF INDIRECT TAXATION

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 C0MC90) 183 final - SYN 275
                                                 Brussels, 19  June 1990
                                Proposal for a
                          COUNCIL REGULATION (EEC)
           concerning administrative cooperation in the field of
                              indirect taxation
If:                    (presented by the Commission)
1:;:-
 ---pagebreak---                             - 2-
                   EXPLANATORY MEMORANDUM
INTRODUCTION
1. The creation of an internal market and the elimination
of fiscal frontiers, as provided for by the Treaty will
require closer administrative co-operation between Member
States' fiscal administrations.      This is because Member
States will no longer be able to control intra-Community
goods for fiscal purposes by means of customs procedures
linked directly to the crossing of an internal frontier.
Instead they will need to base their controls of traders'
accounts principally on standard procedures supported by
transaction verification systems as they do currently for
the collection of domestic VAT. This implies that they must
have the ability to cross check information concerning
purchases or sales made in other Member States. This can
only be achieved through enhanced administrative co-
operation.
The    need    to  strengthen    existing   provisions    for
administrative co-operation or mutual assistance in the
field of indirect taxes was explicitly recognized in the
Commission's fiscal approximation package of 1987.        For
instance, in document COM(87) 323 of 5 August 1987 it was
proposed "that the existing system of mutual assistance
should be supplemented by a much more developed and
comprehensive system of co-operation" (paragraph 9.1). More
recently, the Member States themselves have publicly
recognized    the  need    for   strengthened   systems    of
administrative co-operation, as the conclusions of the
ECOFIN   Council  of   13 November demonstrate:      "Control
arrangements must effectively prevent the risk of evasion
and will be based primarily on the use by national
administrations of business returns, regular exchanges of
information and the provision of supporting documents, drawn
up by the administration.     Such standing co-operation at
administrative level must not give rise to any obstacle on
grounds of national legislation and will supplement existing
mutual assistance procedures" (Council doc. 9543/89, para.
3).
 ---pagebreak---                           -3 -
CURRENT SITUATION
2. At present there is no provision in Community legislation
for mutual assistance in the administration of excise
duties. As far as VAT is concerned, the legal framework is
provided by Council Directive 79/1070 EEC which simply
extends the direct tax provisions of Directive 77/799 EEC to
VAT.
3. In addition in the customs and agricultural field,
Community mutual assistance provisions exist in the form of
Regulation (EEC) 1468/81 as modified by Regulation (EEC)
945/87.   There are also additional provisions for mutual
assistance between customs administrations under the Naples
Convention of 1967, an international treaty between the
Governments of the Member States which does not form part of
Community legislation.
4. The existing legal provisions for mutual assistance at
Community level provide a good starting point for co-
operation, at least insofar as VAT is concerned. However,
these provisions have been little used so far because Member
States have considered that their national fiscal control
measures, based as they are on import/export documentation,
could operate satisfactorily in isolation. This situation
will necessarily change for the reasons indicated in
paragraph 1 above, and the Commission has concluded that the
best way of carrying out the Council's mandate to strengthen
administrative co-operation between Member States in the
indirect tax field is by means of a new legal instrument.
This is the subject of the present proposal.
BASI8 OF THE NEW INSTRUMENT
5. The new instrument builds on the existing provisions of
Directive 79/1070 and modifies them where appropriate in
light of customs experience gained in the operation of
Regulation 1468/81. The coverage includes excise duties for
the first time. Where relevant, the provisions of the as
yet unratified OECD/Council of Europe Convention on Mutual
Administrative Assistance in tax matters have been taken
into account.
 ---pagebreak---                             - 4-
6. The instrument is cast in the form of a regulation rather
than a directive. This is to ensure greater uniformity in
the application of the new provisions, and a more rapid
implementation of its provisions. The proposed regulation is
based on Article 100a of the Treaty, and therefore requires
the cooperation of the European Parliament. The opinion of
the Economic and Social Committee should also be sought.
UNDERLYING ASSUMPTIONS
7. It is important from the outset to recognize that after
1992 administrative co-operation will have a new dimension
which must be adequately reflected in the new legislative
instrument. In fact, in the future system there will be two
distinct but related categories of co-operation.
8. On the one hand there will be a need to continue and
extend existing procedures for dealing with cases of fraud
or serious irregularity.    These procedures will continue to
operate largely on a bilateral basis but will now need to be
firmly placed in a Community framework and to be legally
based on a Community instrument. The maintenance of the
destination principle in the VAT field for a transitional
period will increase the opportunity for certain types of
frauds and it is likely that there will be a greater volume
of fraud-related requests for co-operation.
9. On the other hand, there will be a requirement for a new
type of administrative co-operation resulting from the need
to exchange information on intra-Community VAT and excise
operations, as indicated in paragraph 1. As far as VAT is
concerned the point of departure will be the normal control
procedures using risk assessment techniques and assessment
of traders' systems that are currently widely employed in
domestic control.      These procedures will need to be
supplemented insofar as intra-Community trade is concerned
by techniques for verifying, on a sampling basis, the
validity of the regular declarations submitted by traders.
Such verification procedures will form an essential
component of the control mechanism required for the
definitive origin-based VAT system after the end of the
transitional period. Under the transitional system these
procedures will be equally necessary, to ensure that goods
for which zero-rating is claimed are duly shipped across
frontiers and brought under fiscal control in the Member
State of destination.       The temporary retention of a
destination-based VAT system also requires, in the case of
triangular traffic, confirmation of the ultimate destination
 ---pagebreak---                            - 5-
of goods, to ensure that tax accrues to the appropriate
Member State. Similar co-operation will be required in the
excise field to ensure the proper functioning of the inter-
linked control system for excise goods on which duty has
been suspended.
10. In order to provide an acceptable level of control this
second type of administrative co-operation will need to be
organised on a more regular and routine basis and have the
capacity to handle larger volumes of requests than the
existing mutual assistance arrangements. In this connection
the Commission will carry out a feasibility study for an
inter-active computer and telematics network linking the
national and Community administrations concerned. A balance
must be struck in order to take account of the fundamental
requirement laid down by ECOFIN in November 1989 that the
burden borne by businesses and administrations must be
lessened by comparison with the present situation.       The
overall aim is to enable each Member State to have
reasonable confidence that the tax brought to account by its
traders on purchases in other Member States is correct, that
goods intended for export are not diverted to the home
market, and that invoices or registration numbers are not
false.   It is important to stress that this would not in
itself be a fraud investigation exercise, although of course
indications of fraud might emerge as a result of the
checking process.
11. The operational details of these systems are a matter
for subsequent consultation and co-ordination under the
procedure provided for in the present proposal (Article 19).
But it is essential at the outset to establish a legal
framework   capable  of   providing   adequately   for  both
categories of co-operation mentioned above.      Such is the
purpose of the present proposal.
ARTICLE 1
12. This article defines the scope of the Regulation. The
scope is deliberately broad, and involves co-operation in
all aspects of compliance with the law on indirect tax
matters and in the process of correctly assessing the taxes
in question.
ARTICLE 2
13.   Paragraph 1 defines the principal terms used in the
Regulation.
Paragraph 2 requires each Member State to define the
authority or authorities which will be responsible for
administrative co-operation within its territory and to
communicate a list of these authorities to the other Member
States and to the Commission. The authorities so defined
will in effect be the principal operators of the provisions
 ---pagebreak---                              - 6-
 of this Regulation. Paragraph 2 also requires each Member
 State to nominate a central office with responsibility for
 liaison with other Member States and with the Commission in
matters covered by the present proposal [see also Article
 19(3)].
                            TITLE I
       Administrative co-operation - general provisions
ARTICLE 3
14. Article 3 commits the competent authorities to extend
the fullest possible co-operation to each other and to the
Commission in ensuring compliance with both national and
Community provisions in indirect tax matters.        The term
"compliance" is specifically extended to cover the need for
co-operation in control procedures. As with Article 1, the
commitment is defined in broad terms and is not limited only
to the exchange of information.
Information exchange is, however, the most important
component of administrative co-operation and this is covered
by a particular reference in the second part of Article 3.
A distinction is drawn between the Member States'
obligations to each other and to the Commission: broadly
speaking Member States will communicate between themselves
on matters relating to specific tax cases but will also
communicate with the Commission on issues likely to be of
interest at Community level. In order to ensure that such
information is transmitted effectively and securely, the
Commission will study the establishment of computer and
telematic networks linking the national and Community
administrations concerned.
ARTICLE 4
15. This Article contains a standard provision, also to be
found in Regulation 1468/81 (mutual assistance in the
customs field), which relieves the competent authorities of
their obligation to co-operate in the provision of
information on documents once a particular case or
investigation has been referred to the prosecuting
authorities for action before a criminal court.          Once
criminal     proceedings   have     begun   any    additional
investigations would have to proceed on the basis of
arrangements relating to mutual assistance in criminal
matters (see also Article 21). However, the judicial
authority in the requested Member State may consent on a
case-by-case basis to the exchange of information gathered
in connection with criminal investigations.
 ---pagebreak---                             - 7-
                           TITLE II
                    Assistance on request
16.    Administrative co-operation falls into three broad
categories - assistance on request (where the initiative
lies with the applicant authority), automatic assistance
 (where both applicant and requested authorities agree in
advance on certain types of information to be collected and
exchanged automatically), and spontaneous assistance (where
one authority takes the initiative without being requested
to do so) . Articles 5-10 deal with assistance on request,
which is at present the most important of these categories.
ARTICLE 5
17.     This lays a general obligation on all competent
authorities to communicate information, broadly defined,
when requested to do so. Because the initiative in this
matter lies with the applicant State, which may operate
certain indirect taxes which are not Community taxes, a more
precise description of the taxes to be covered by the co-
operation procedures is given at this point. The taxes in
question are VAT and the major excise duties which are
applied by all Member States and which are the subject of
rules laid down at the Community level. The possibility of
adding other taxes to the list at a later date is not
excluded.
In paragraph 2 there is a standard provision requiring the
requested authority to treat requests from another Member
State on the same footing it would treat its own enquiries
or those conducted for another authority in its own country.
ARTICLE 6
18.    This requires the requested authority to carry out
control enquiries on behalf of another Member State. This
may include validation and verification of intra-Community
transactions on a sampling basis, to ensure that goods for
which exemption or suspension of tax is claimed are duly
transferred to the territory of another Member State and
brought under fiscal control in that Member State.
ARTICLE 7
19. This is a new provision which gives the Member States
the possibility of organising coordinated tax examinations,
each on its own territory. Such a provision is particularly
important in view of the increasing integration of European
markets and the tendency for a large proportion of intra-
Community trade to be conducted by a relatively small number
of linked or closely related groups of companies. The
systematic control of such companies requires a global
 ---pagebreak---                               - 8-
 approach going beyond national boundaries, and this Article
encourages the development of such an approach.
ARTICLE 8
20. This is a standard provision covering the transmission
of official documents or attestations to an applicant
authority in respect of indirect tax matters.
ARTICLE 9
21.   This, again, is a standard provision relating to the
service of documents.       There could be difficulties for
Member States in serving documents (for example in the case
of a tax claim against a non-resident or a resident who has
moved to another Member State) and this Article provides for
administrative co-operation in such cases. The increased
mobility of taxpayers in the internal market will render
such a provision more important in the future.      Although
assistance in the servicing of documents may be requested at
all phases of indirect tax proceedings prior to judicial
proceedings, assistance will in practice relate mainly to
the assessment phase.      The aim is to ensure as far as
possible that documents such as notices of assessment or
reminders actually reach the taxable person, in order to
avoid enforcement steps being taken, or penalties imposed,
against a person who is genuinely ignorant of a tax claim or
liability.
ARTICLE 10
22. Once again this is a standard provision providing for
transmission on request of information relating to indirect
tax operations which are suspected of being fraudulent. It
covers in particular the transmission of reports or
documents from the archives of the requested authority.
                           TITLE III
              Automatic exchange of information.
ARTICLE 11
23.    Article 11 deals with the automatic exchange of
information between the Member States. Although not used at
present this type of information exchange could be of real
value in the future, as co-operation between fiscal
administrations develops and expands. Accordingly, the
methods of co-operation to be employed under this Article
are left to be defined in the context of the meetings of
representatives of Member States to be organised under
Article 19.
 ---pagebreak---                             -9
                          TITLE IV
                   Spontaneous assistance
ARTICLE 12
24. This Article lays a general obligation on the Member
States to provide spontaneous assistance to each other.
This type of assistance is supplied without either previous
request from another Member State or prior agreement on
items to be transmitted automatically.           Spontaneous
information exchanges are likely to prove particularly
useful in fraud control because they generally concern data
specifically detected and selected by an indirect tax
official of the sending Member State during a domestic audit
or investigation.
ARTICLE 13
25.   This Article sets out various instances where the
competent authorities of the Member States exchange
information, without prior request, in the general field of
tax control and compliance. As with Article 7, these
provisions have particular relevance to the control of
taxable activities by closely related trading groups.
The second paragraph permits the Member States, meeting
under the procedures laid down in Article 19, to add new
categories to the list of cases where spontaneous exchange
of information is appropriate.
As the efficiency of spontaneous exchanges depends almost
exclusively on the initiative of the supplying State, it is
important that the competent authorities of the latter
should take the necessary administrative steps to ensure
that information likely to be of interest to another State
is brought to its own attention.     A requirement to this
effect is laid down in the third paragraph of this Article.
ARTICLE 14
26. This Article is a parallel provision to Article 13, in
the fraud field. Spontaneous transmission of information is
to take place immediately and, given the wide scope of
potential fraudulent activity, no attempt is made to limit
the transmission to particular categories; all information
of use in connection with fraudulent operations is to be
transmitted.
 ---pagebreak---                           - 10 -
                           TITLE V
               Conditions governing assistance
ARTICLE 15
27. This Article establishes the general principle that the
competent authorities of the Member States should take steps
to ensure that their obligations to furnish information are
carried out swiftly. Provision is made for the laying down
of more precise time limits for particular categories of
information, in accordance with the procedures of Article
19.   Requested information sent under the provisions of
Articles 5 to 10 is subject in any case to a maximum time
limit of three months unless the applicant authority itself
proposes a longer period. Three months is the time limit to
which Member States felt able to commit themselves during
earlier discussions on administrative co-operation. The
second paragraph requires a competent authority to keep its
interlocutor informed if any obstacles arise which prevent
it from furnishing the requested information on time.
Obstacles in this context clearly mean obstacles beyond the
control of the authority in question.
ARTICLE 16
28. In this Article, rules are laid down governing direct
collaboration between the officials of Member States. In
the first instance the Article envisages such contact taking
place between duly authorized officials of the applicant
authority and the requested authority at the offices of the
latter. The official from the applicant authority is to be
given full access to whatever documentation the staff of the
requested authority have available to them.
29.    The second paragraph takes the process of direct
collaboration a stage further by permitting officials from
the applicant authority to be present, by agreement, at a
specific tax examination in the requested Member State.
The justification for this further stage of collaboration
must always be both practical and specific.           It is
understood that this extended form of assistance should not
be asked for unless the competent authority of the applicant
state is convinced that the examination in another Member
State will contribute substantially to the solution of a
domestic indirect tax problem. This procedure is a logical
extension of the provisions for coordinated tax examinations
in Article 7.
30. Paragraphs 2 and 3 of this Article taken together make
it clear that the decision as to whether representatives of
the applicant authority should be allowed to be present or
not is taken by the requested authority. However, it should
be noted that the fact that the requested authority has the
decisive role in this respect does not in any way restrict
 ---pagebreak---                              - 11 -
 the obligation on that authority to furnish information
 requested under any other Article of this proposed
Regulation.
 31. If the request is approved the requested authority is
called upon in paragraph 3 to indicate the time and place of
the examination and any other relevant particulars, such as
the official responsible for the examination and any
specific conditions stipulated for its conduct. All
decisions on how the examination is to be carried out have
to be taken by the official of the requested authority in
charge of the examination.       There is no question of any
exercise of authority in the strict sense of the word by the
official of the applicant authority, but at the discretion
of the requested authority he or she may be permitted to co-
operate actively.
32.      The final paragraph provides that the detailed
application of this Article shall be discussed and if
necessary determined in the context of the meetings to be
organised under Article 19.
ARTICLE 17
33. This Article lays down standard provisions regarding
the confidentiality of the information exchanged as part of
administrative co-operation. The rules broadly define two
categories of access:
- firstly, those persons directly involved in the ascessment
   or administrative control of indirect tax. This category-
   is specifically extended to include appropriate officials
   of the Community institutions, in keeping with parallel
   provisions made in the customs field (Reg. 1468/81,
   paragraph 19).
 - secondly, persons who are directly involved in judicial or
   administrative proceedings involving sanctions relating to
    indirect tax assessment.
 34. Paragraph 2 permits a Member State which for domestic
 purposes operates narrower limits than those indicated above
 to insist that an applicant authority operates the same
 narrower limits in respect of information supplied by it.
 Paragraph 3 goes in the opposite direction by permitting the
  applicant authority to allow wider access to the information
  in question, subject to the consent of the requested
  authority, if such wider access is available in the
  requested Member State. Paragraph 4 is a standard provision
  which allows one Member State to transmit information
  received from another Member State to a third Member State,
  subject to the consent of the Member State which provided
  the information.
 ---pagebreak---                            - 12 -
ARTICLE 18
35.    The first paragraph contains a standard provision
limiting the obligation to provide co-operation where
considerations of public policy ("ordre public") of the
State itself are concerned. This is very much a fall-back
provision which will not be invoked in most normal
circumstances.
36.    When assistance is refused, the Member State in
question is required under the provisions of the second
paragraph to give its reasons.
                           TITLE VI
          Consultation and Co-ordination Procedures
ARTICLE 19
37.   This Article contains the nub of the organizational
procedures envisaged in connection with the new type of
administrative co-operation. While the basis of this co-
operation remains essentially bilateral, between individual
Member States, the introduction of co-operation in the
fields of validation and verification of day-to-day control
procedures implies the need for a central forum in which
practical problems of general concern can be discussed and
in which standard operating procedures can be agreed. It is
the aim of the first paragraph of this Article to provide
such a central forum.     The text draws on the experience
gained in the customs field (Regulation 1468/81) but is
specifically orientated towards the needs of indirect tax
control in the post-1992 situation.
38. Paragraph 2 provides for Member States to continue to
communicate directly with each other on matters of bilateral
interest where no wider need for consultation arises. This
is a standard provision, taken from the existing Directive
on tax co-operation (77/799/EEC).
39.     Paragraph 3 is a provision, based on Regulation
1468/81, which requires Member States to ensure that
domestic co-ordination between the different national
authorities concerned is adequate, so that external co-
operation with other Member States can operate smoothly.
40. Paragraph 4 envisages a process of constant monitoring,
in which the Member States and the Commission jointly
participate, to assess the effectiveness of the co-operation
procedures which have been set up under the provisions of
paragraph 1.    The aim is to improve and refine the co-
operation procedures on an ongoing basis and, where
appropriate,    to   incorporate    these  improvements   in
administrative rules or procedures to be applied by common
 ---pagebreak---                              - 13 -
 agreement. The pooling of experience concerning new means
 of tax avoidance or evasion is one of the important aspects
 of this process.
41.    Finally, paragraph 5 lays down a specific task for the
Commission in disseminating information provided to it by
individual Member States or other reliable sources and
likely to be of general interest in ensuring compliance with
and proper control of any indirect tax measures. This is a
provision drawn from experience in the customs area
 (Regulation 1468/81). Taken together with paragraphs 2 and
4 it provides a broad outline of the respective roles to be
played in this field by individual Member States, by the
Member States and the Commission jointly, and by the
Commission specifically.
                           TITLE VII
                       Final Provisions
ARTICLE 20
42. Paragraph 1 is a standard provision requiring Member
States to      keep the     Commission  informed   of   their
administrative co-operation arrangements in indirect tax
matters with third countries.
43. Paragraph 2 is once again a standard provision governing
the problem of costs. The general rule, as in previous
Community legislation on this subject, is that each Member
State shall bear the costs arising from its provision of
administrative co-operation, except in respect of fees paid
to experts in certain circumstances. Article 19(1) provides
 a forum for resolving any disputes which may arise in
 connection with this subject.
 44.    The third paragraph is a necessary provision which
 enables Member States, wherever feasible, to use computer
 technology in the exchange of information or documents
 provided for under this proposal.
 ARTICLE 21
  45. The first paragraph requires the Member States to keep
  the Commission informed of any national laws which they
  subsequently adopt in the areas covered by this proposal.
  The second paragraph is a standard provision designed to
  ensure that the present proposal does not limit other
  possible avenues of co-operation. When Member States are
  bound both by the obligations of the present proposal and by
  obligations imposed by other instruments, or arrangements in
  this field, the most effective instrument can be used m any
  particular situation. The third paragraph is designed to
  ensure that existing rules applicable in the Member States
  concerning mutual assistance in criminal matters are not
  affected by the provisions of this proposal.
 ---pagebreak---                          - 14 -
ARTICLE 22
46. The present proposal incorporates and expands on the
provisions of Directive 79/1070/EEC. In addition it extends
administrative co-operation to the field of excise duties
and thus provides a comprehensive umbrella instrument
covering all requirements for co-operation in indirect tax
matters.   In these circumstances Directive 79/1070/EEC is
redundant and must be repealed to avoid confusion or legal
uncertainty.
ARTICLE 23
47. This Article provides for the present proposal to come
into operation on 1 January 1992, one year before the date
laid down by Articles 8a and 100a of the Treaty for
eliminating fiscal frontiers and for establishing the
internal market.    There is no technical reason why the
Member States should not implement this proposal in advance
of other measures forming part of the fiscal approximation
package and experience gained in its operation in the
intervening year will enable the competent authorities of
the Member States to face the ending of border-related
controls on 31 December 1992 with greater confidence than
would otherwise be the case. In particular, the intervening
year should enable the practical control procedures
envisaged under Article 19(1) to be agreed and implemented
while the support provided by border controls is still
available.
 ---pagebreak---                                   - 15 -
                               Proposal for a
                         COUNCIL REGULATION (EEC)
          concerning administrative cooperation in the field of
                             indirect taxation
THE COUNCIL OF THE EUROPEAN COMMUNITIES»
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 100a thereof,
Having regard to the proposal from the Commission,
In cooperation with the European Parliament(1),
Having regard     to  the    opinion     of   the  Economic   and Social
Committee(2),
Whereas the establishment of the internal market in accordance
with Article 8a of the Treaty requires the creation of an area
without internal frontiers in which the free movement of goods,
persons, services and capital is ensured;              whereas the free
movement of goods, persons and services requires, in particular,
the elimination      of customs-related           controls within the
Community ;
Whereas in order to give full effect to the abolition of
frontier controls while avoiding fiscal revenue losses for
Member States, the fiscal harmonisation measures taken for
completion of the internal market and for the transitional
period require the establishment of a common system of
administrative cooperation between the competent authorities of
the Member States;
 (1)0J No
 (2)OJ No
 ---pagebreak---                                     - 16 -
Whereas the provisions of this Regulation which provide for this
cooperation system are designed to permit the abolition of
frontier controls in accordance with the aims set out in Article
8a of the Treaty, and not to harmonise fiscal provisions in the
sense of Article 100a(2); whereas it is moreover necessary
that the transitional taxation system should be effectively
established without risks of fraud which might lead to distortions
Of compet i t i on;
Whereas Member States nevertheless have a continuing need to
exercise controls over intra-Community traffic in goods and
services similar to those which they exercise over domestic
transactions affected by indirect tax obligations; whereas lack
of such controls can lead to tax evasion and tax avoidance
extending across the frontiers of Member States with consequent
budgetary losses, violation of the principles of fair taxation
and distortion of conditions of competition between Member
States ;
Whereas collaboration between indirect tax administrations
within the Community, and between such administrations and the
Commission, should therefore be strengthened in accordance with
common principles and rules to ensure the establishment and the
functioning of the internal market;
Whereas in making the appropriate arrangements for carrying out
administrative        cooperation  the     Member   States shall  pay
particular attention to the need for validation and verification
of intra-Community transactions in goods and services, given
that the kinds of controls formerly exercised over such
transactions are no longer applicable;
Whereas the Member States should, on request, exchange
information concerning particular cases; whereas the Member State so
requested should make the necessary enquiries to obtain such
information;
Whereas the Member States should exchange, even without any
request, any information which appears relevant for the control
of indirect taxes, in particular where such taxes have been or
may be evaded or avoided for any reason whatever;
Whereas it is important that officials of the indirect tax
administration of one Member State be allowed to be present in
the territory of another Member State if both the States
concerned consider it desirable;
Whereas care must be taken to ensure that information provided
in the course of such collaboration is not disclosed to
unauthorized persons, so that the basic rights of citizens and
enterprises are safeguarded; whereas it is therefore necessary
that the authority receiving such information should not use it,
without the authorization of the authority supplying it, other
than for the purposes of taxation or to facilitate legal
proceedings for failure to observe the tax laws of the Member
States concerned; whereas it is also necessary that the receiving
authority      affords     the  information     the   same degree  of
confidentiality which it enjoyed in the Member State which provided
it. if the latter so requires;
 ---pagebreak---                                   - 17 -
 Whereas a Member State which is called upon to carry out
 enquiries or to provide information shall have the right to
 refuse to do so where its laws prevent its indirect tax
 administration from carrying out such         enquiries or from
 collecting or using such information for its own purposes, or
 where the provision of such information would be contrary to
 public policy;
 Whereas collaboration between the Member States and the
 Commission is necessary for the permanent study of cooperation
 procedures and the pooling of experience in the fields
 considered, with the aims of improving those procedures and
preparing appropriate Community rules, and of detecting any
activity contrary to indirect tax laws.
HAS ADOPTED THIS REGULATION ;
                              Article 1
This Regulation lays down the ways in which the administrative
authorities responsible in the Member States for the application
of the law on indirect tax matters shall cooperate with those in
the other Member States and with the Commission in order to
ensure compliance with the law and a correct assessment of the
taxes in question.
                             Article 2
1.    For the purposes of this Regulation :
- the "law on indirect tax matters" means all provisions
   applicable in the laws of the Member States and all Community
   provisions relating to value added tax and to excise duties as
   defined in Article 5(1).
- "applicant authority" means the competent authority of a
   Member State which makes a request for assistance,
 - "requested authority" means the competent authority of a
    Member State to which a request for assistance is made.
 2. Each Member State shall communicate to the other Member
 States and to the Commission a list of the competent authorities
 whtch are appointed to act as correspondents for the purposes o
 aoDlving this Regulation. In addition, each Member State shall
 «SnîXïte a central office with principal responsibility for
  liaison with o?her Member States in the field of administrative
  co-operation.
  T« fhîc Peculation "competent authorities" means those
  authoAtie^appoin^d to "act as correspondents under the f xrst
  subparagraph.
 ---pagebreak---                                - 18 -
                               TITLE I
         Administrative cooperation - general provisions
                             Article 3
The competent authorities of the Member States shall cooperate
with each other and with the Commission, to the fullest extent
possible, in ensuring that national and Community provisions
relating to indirect taxes are complied with and properly
controlled.
In particular the competent authorities shall exchange between
themselves any information that is relevant to the assessment
and collection of indirect taxes. They shall also communicate
any specific or general information to the Commission when this
may be of interest at Community level.
                             Article 4
The obligation to provide assistance laid down by this
Regulation shall not cover the provision of information or
documents obtained by the administrative authorities referred to
in Article 1 at the request of the judicial authority.
However, in the case of an application for assistance, such
information or documents shall be provided in all cases where
the judicial authority, to which reference must be made, gives
its consent.
                              TITLE II
                      Assistance on request
                             Article 5
1. At the request of the applicant authority, the requested
authority shall communicate to it all information likely to
enable the former to ensure compliance with the provisions laid
down by the law on indirect tax matters with particular regard
to:
- value added tax,
- excise duty on manufactured tobacco products,
- excise duty    on alcoholic beverages     and on  the  alcohol
  contained in    other products,
- excise duty on mineral oils.
2. In order to obtain this information, the requested authority
or the administrative authority which it has addressed shall
 ---pagebreak---                                  - 19 -
proceed as though it were acting on its own account or at the
request of another authority in its own country.
                             Article 6
At the request of the applicant authority, the requested
authority shall carry out appropriate enquiries or arrange for
such enquiries to be carried out to enable it to supply the
necessary information within the definition of Article 3.
                             Article 7
1. At the request of an applicant authority, two or more of the
administrative authorities referred to in Article 2 shall
consult together for the purposes of determining cases and
procedures for co-ordinated tax examinations. Each authority
involved shall decide whether or not it wishes to participate in
a particular co-ordinated tax examination.
2. For the purposes of this Regu lat i on, a "co-ordinated tax
examination" means an arrangement between two or more authorities
to examine, each in its own territory, the indirect tax affairs
of a person or persons in which they have a common or related
interest, with a view to exchanging any relevant information
which they so obtain.
                            Article 8
At the request of the applicant authority, the requested
authority shall supply to it any attestation, document or
official copy of a document which it has or which it obtains in
the manner referred to in Article 5 (2) and which relates to
operations covered by the law on indirect tax matters.
                            Article 9
1. At the request of the applicant authority, the requested
authority shall, while observing the rules in force in the
Member State in which it is situated, notify any person or have
that person notified of all acts or decisions which
emanate from the administrative authorities and concern the
application of the law on indirect tax matters.
2. Requests for notification, mentioning the subject of the act
or decision to be communicated, shall be accompanied by a
translation in the official language or one of the official
languages of the Member State in which the requested authority
is situated, without prejudice to the latter's right to waive
such a translation.
                            Article 10
At the request of the applicant authority, the requested
authority shall supply to it any information in its possession
 ---pagebreak---                               - 20 -
or which it can obtain as prescribed in Article 5(2), in
particular in the form of reports and other documents or
official copies of or extracts from such reports or documents,
concerning operations detected or planned which are or appear to
the applicant authority to be contrary to the law on indirect
tax matters.
However, such communication shall be in the form of original
documents and other material only if the provisions in force in the
Member State     in which the requested authority has its
headquarters do not preclude this.
                             TITLE III
                Automatic exchange of information
                            Article 11
For categories of cases which shall be determined under the
procedures laid down in Article 19 the competent authorities of
the Member States shall regularly exchange the information
referred to in Article 3 without prior request.
                             TITLE IV
                      Spontaneous assistance
                            Article 12
The competent authorities of each Member State shall, as laid
down in Articles 13 and 14, provide assistance to the competent
authorities of the other Member States without prior request of
the latter.
                            Article 13
1. Where they     consider    it relevant    in connection with
compliance with the law on indirect tax matters, the competent
authorities of a Member State shall without prior request
forward the information referred to in Article 3, of which it
has knowledge, to the competent authority of any other Member
State concerned, when:
(a) the competent authority of the one Member State has grounds
    for supposing that there may be a loss of indirect tax in
    the other Member State;
(b) a person with an indirect tax liability obtains a reduction
    in or an exemption from indirect tax in the one Member State
    which would give rise to an increase in indirect tax or to
    liability to indirect tax in the other Member State;
(c) the competent authority of a Member State has grounds for
    supposing that a saving of indirect tax resulting from
 ---pagebreak---                                - 21 -
     artificial transfers of supplies of goods or services
     through one or more countries, particularly between closely
     related trading groups, accrues to an unentitled person;
 (d) information forwarded to the one Member State by the
     competent authority of the other Member State has enabled
     information to be obtained which may be relevant in
     assessing liability to indirect tax in the latter Member
     State.
2. The competent authorities of the Member States may, under
the procedures laid down in Article 19 extend the exchange of
information provided for in paragraph 1 to cases other than
those specified therein.
3. The competent authorities of each Member State shall take
such measures and implement such procedures as are necessary to
ensure that the information referred to in paragraphs 1 and 2
will be made available for transmission to other Member States.
                            Article 14
The competent authorities of each Member State shall immediately
send to the competent authorities of the other Member States
concerned all information of use in connection with operations
which are or appear to them to be contrary to the law on indirect
tax matters.
                              TITLE V
                  Conditions governing assistance
                            Article 15
1. The competent authority of a Member State which under the
preceding articles is called upon to furnish information shall
 forward it as swiftly as possible and in any case within time
 limits to be agreed under the procedures laid down in Article
 19. Information which is provided on request shall be furnished
within three months of the receipt of the request, unless the
time limit is extended by the applicant authority.
 2. If a competent authority encounters obstacles in furnishing
 the information it shall forthwith inform the other authority or
 authorities concerned to this effect, indicating the nature of
 the obstacles.
                             Article 16
 1. By agreement between the applicant authority and the
 requested authority and in accordance with the arrangements laid
 down by the latter, officials duly authorized by the applicant
 authority may obtain, from the offices where the administrative
 authorities of the Member State in which the requested authority
 is situated exercise their functions, information concerning the
 ---pagebreak---                               - 22 -
application of the law on indirect tax matters which is needed
by the applicant authority       and which    is derived    from
documentation to which the staff of those offices have access.
These officials shall be authorized to take copies of the said
documentation.
2. By agreement between the applicant authority and the
requested authority the latter shall allow officials duly
authorized by the applicant state to be present at the
appropriate part of a tax examination in the requested Member
State.
3. If the request is acceded to, the requested authority shall,
as soon as possible, notify the applicant authority about the
time and place of the examination, the authority or official
designated to carry out the examination and the procedures and
conditions laid down by the requested authority for the conduct
of the examination. All decisions with respect to the conduct
of the tax examination shall be made by the requested authority.
4. The details for applying the preceding provisions shall be
discussed and, as appropriate, determined under the procedures
laid down in Article 19.
                           Article 17
1. Any information communicated in whatever form pursuant to
this Regulation shall be of a confidential nature. It shall be
covered by the obligation of professional secrecy and shall
enjoy the protection extended to like information under both the
national law of the Member State which received it and the
corresponding provisions applying to the Community authorities.
In any case such information:
- may be made available only to the persons directly involved in
  the assessment or administrative control of indirect tax or to
  persons within the Community institutions whose duties require
  that they have access to it. It may not be used for purposes
  other than those provided for in this Regulation, unless the
  authority supplying it has expressly agreed and insofar as the
  provisions in force in the Member State where the authority
  which   received  it is situated do not preclude          such
  communication or use,
- may, in addition, be made known in connection with judicial
  proceedings or administrative proceedings involving sanctions
  undertaken with a view to, or relating to, the making or
  reviewing of the indirect tax assessment and only to persons
  who are directly involved in such proceedings;            such
  information may, however, be disclosed during public hearings
  or in judgments if the requested authority raises no
  objection,
- shall in no circumstances be used other than for taxation
  purposes or in connection with judicial proceedings or
  administrative proceedings involving sanctions undertaken with
 ---pagebreak---                                   - 23 -
   a view to, or in relation to, making or reviewing the tax
   assessment.
2. Paragraph       1 shall not oblige a Member State whose
legislation lays down, for domestic purposes, narrower limits
than those contained in the provisions of that paragraph, to
provide information if the applicant authority does not
undertake to respect those narrower limits.
3. Notwithstanding paragraph 1, the competent authorities of
the Member State providing the information shall permit it to be
used for other purposes in the applicant State, if, under the
legislation of the requested State, the information could be
used in the requested State for similar purposes.
4. Where the applicant authority considers that information
which it has received from the requested authority is likely to
be useful to the competent authority of a third Member State, it
may transmit it to the latter with the agreement of the
requested authority.
                               Article 18
1. This       Regulation   shall    not   bind   the   administrative
authorities of the Member States to grant each other assistance
where to do so would be likely to prejudice public policy of the
State in which they are situated.
2.   Reasons shall be stated for refusal to grant assistance.
                                TITLE VI
               Consultation and Co-ordination Procedures
                               Article 19
1. The       Commission    shall    organise   meetings    with     the
representatives of the Member States during which:
- the operation of the arrangements for administrative co-
   operation provided for in this Regulation shall be examined in
   general terms, with particular regard to the development of
   standard practices for the validation and verification of
   intra-Community transactions,
- common practical procedures for forwarding the information
   referred to in Article 3 shall be laid dowr., taking due
   account of any agreements made under Article II,
- the information sent to the Commission purs .<m'' ~ - V « icle 3
   shrill be examined with a view tc drawj i,, ti - relevant
   conc3usions, determining the measures req-"- ' >\ u ••• >t an end
   to ar y opt, cations found to be contrary to {1i *          indirect
   tax raa; *:ers and, where necessary, ^.v^est ' ».c, t >iCixdments to
 ---pagebreak---                                    24 -
   existing Community provisions or the drawing up of additional
   ones,
- cases and procedures concerning co-ordinated tax examinations
   provided for in Article 7 shall be examined and discussed.
2. On matters of bilateral interest, the competent authorities
of the Member States may communicate directly with each other.
The competent authorities of the Member States may, by mutual
agreement, permit authorities designated by them to communicate
directly with each other in specified cases or in certain
categories of cases.
3. For the purposes of applying this         Article,   Member   States
shall take all the necessary steps to:
 (a) ensure sound internal coordination between         the  competent
     authorities referred to in Article 1;
 (b) establish   direct   cooperation    between   the     authorities
     specially empowered for the purposes of such coordination;
 (c) make suitable arrangements for ensuring the smooth operation
     of the arrangements for administrative cooperation provided
     for in this Regulation, including the nomination of a
     central office as required under Article 2 ( 2 ) .
4. The Member States shall, together with the Commission,
constantly monitor the cooperation procedure provided for in
this Article     and  shall pool their experience,          especially
concerning new means or methods of tax avoidance or evasion with
a view to improving such cooperation and, where appropriate,
drawing up a body of rules as described in paragraph 1.
5. The     Commission   shall     communicate   to    the    competent
authorities of each Member State, as soon as it is available,
any information which it receives under the provisions of
Article 3, or any other relevant information which it is able to
supply.
                              TITLE VII
                          Final Provisions
                             Article 20
1. Member     States   shall    advise   the   Commission     of    any
arrangements for administrative co-operation in the          field of
indirect taxation carried out with third countries.
2. Member States shall waive all claims for the reimbursement
of expenses incurred pursuant to this Regulation except, as
appropriate, in respect of fees paid to experts.
3. For the purposes of this Regulation "document" includes
information held in or transmitted by computerised systems.
 ---pagebreak---                               - 25 -
                           Article 21
1. Member States shall communicate to the Commission the texts
of any provisions of national law which they subsequently adopt
in the field covered by this Regulation.
2. The arrangements provided for by this Regulation do not
limit, nor are they limited by, those contained in other
agreements or instruments which relate to co-operation in tax
matters.
3. This Regulation shall not affect the application in the
Member States of the rules on mutual assistance in criminal
matters.
                           Article 22
Council  Directive  79/1070/EEC1     is hereby repealed.
                           Article 23
This Regulation shall enter into force on the third day
following that of its publication in the Official Journal of the
European Communities.
It shall apply from 1 January 1992.
This Regulation shall be binding in its entirety and directly
applicable in all Member States.
Done at Brussels,                        For the Council
1  OJ Ho I 33f* *7.12.t979# p* 8
 ---pagebreak---  ---pagebreak---                                                                                 ISSN 0254-1475
                                                                 COM (90) 183 final
                                                      DOCUMENTS
EN                                                                                         09
                                 Catalogue number : CB-CO-90-215-EN-C
                                                               ISBN 92-77-60289-9
PRICE                   |     1-30 pages: 3.50 ECU       per additional TO pages: 1.25 ECU
Office for Official Publications of the European Communities
L-2985 Luxembourg