Article 119 
For the purposes of applying Article 118, Austria may apply a reduced rate to wines produced on an agricultural holding by the producer-farmer, provided that the rate is not lower than 12 %.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 120 
Greece may apply rates up to 30 % lower than the corresponding rates applied in mainland Greece in the departments of Lesbos, Chios, Samos, the Dodecanese and the Cyclades, and on the islands of Thassos, the Northern Sporades, Samothrace and Skiros.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 121 
Member States which, at 1 January 1993, regarded work under contract as the supply of goods may apply to the delivery of work under contract the rate applicable to the goods obtained after execution of the work under contract. For the purposes of applying the first paragraph, ‘delivery of work under contract’ shall mean the handing over by a contractor to his customer of movable property made or assembled by the contractor from materials or objects entrusted to him by the customer for that purpose, whether or not the contractor has provided any part of the materials used.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 122 
Member States may apply a reduced rate to the supply of live plants and other floricultural products, including bulbs, roots and the like, cut flowers and ornamental foliage, and of wood for use as firewood.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 123 
The Czech Republic may, until 31 December 2010, continue to apply a reduced rate of not less than 5 % to the supply of construction work for residential housing not provided as part of a social policy, excluding building materials.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 125 
1. Cyprus may, until 31 December 2010 , continue to grant an exemption with deductibility of VAT paid at the preceding stage in respect of the supply of pharmaceuticals and foodstuffs for human consumption, with the exception of ice cream, ice lollies, frozen yoghurt, water ice and similar products and savoury food products (potato crisps/sticks, puffs and similar products packaged for human consumption without further preparation).
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 127 
Malta may, until 31 December 2010 , continue to grant an exemption with deductibility of VAT paid at the preceding stage in respect of the supply of foodstuffs for human consumption and pharmaceuticals.
Amendment rationale: CONTEXT OF THE PROPOSAL With Decision 2012/419/EU amending the status of Mayotte with regard to the European Union, the European Council has decided that, from 1 January 2014, the status of Mayotte will be that of outermost region within the meaning of Article 349 of the Treaty on the Functioning of the European Union (TFEU) instead of that of an overseas country or territory (OCT) within the meaning of Article 355(2) of the TFEU. To this end, in the above-mentioned European Council Decision, Mayotte has been added to the list of outermost regions in Articles 349 and 355(1) of the TFEU. Union legislation on VAT (Directive 2006/112/EC[1]) and excise duties (Directive 2008/118/EC[2]) will therefore apply in Mayotte after the change of status. In substance, the objective of this proposal is to bring Mayotte's situation into line with that of other French outermost regions by excluding it from the scope of Directives 2006/112/EC and 2008/118/EC. Furthermore, by referring to Articles 349 and 355(1) of the TFEU, the intention is to make it clearer that all these regions, including Mayotte, are excluded from the scope of these Directives.
Article 128 
1. Poland may, until 31 December 2010, grant an exemption with deductibility of VAT paid at the preceding stage in respect of the supply of certain books and specialist periodicals. 3. Poland may, until 31 December 2010, continue to apply a reduced rate of not less than 3 % to the supply of foodstuffs as referred to in point (1) of Annex III. 4. Poland may, until 31 December 2010, continue to apply a reduced rate of not less than 7 % to the supply of services, not provided as part of a social policy, for construction, renovation and alteration of housing, excluding building materials, and to the supply before first occupation of residential buildings or parts of residential buildings, as referred to in Article 12(1)(a).
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 129 
2. Slovenia may, until 31 December 2010 , continue to apply a reduced rate of not less than 5 % to the supply of construction, renovation and maintenance work for residential housing not provided as part of a social policy, excluding building materials.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 131 
The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.
Article 132 
1. Member States shall exempt the following transactions: (a) the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto; (b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature; (c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned; (d) the supply of human organs, blood and milk; (e) the supply of services by dental technicians in their professional capacity and the supply of dental prostheses by dentists and dental technicians; (f) the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition; (g) the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing; (h) the supply of services and of goods closely linked to the protection of children and young persons by bodies governed by public law or by other organisations recognised by the Member State concerned as being devoted to social wellbeing; (i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects; (j) tuition given privately by teachers and covering school or university education; (k) the supply of staff by religious or philosophical institutions for the purpose of the activities referred to in points (b), (g), (h) and (i) and with a view to spiritual welfare; (l) the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition; (m) the supply of certain services closely linked to sport or physical education by non-profit-making organisations to persons taking part in sport or physical education; (n) the supply of certain cultural services, and the supply of goods closely linked thereto, by bodies governed by public law or by other cultural bodies recognised by the Member State concerned; (o) the supply of services and goods, by organisations whose activities are exempt pursuant to points (b), (g), (h), (i), (l), (m) and (n), in connection with fund-raising events organised exclusively for their own benefit, provided that exemption is not likely to cause distortion of competition; (p) the supply of transport services for sick or injured persons in vehicles specially designed for the purpose, by duly authorised bodies; (q) the activities, other than those of a commercial nature, carried out by public radio and television bodies. 2. For the purposes of point (o) of paragraph 1, Member States may introduce any restrictions necessary, in particular as regards the number of events or the amount of receipts which give entitlement to exemption.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 132 ):
1. Member States shall exempt the following transactions: (a) the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto; (b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature; (c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned; (d) the supply of human organs, blood and milk; (e) the supply of services by dental technicians in their professional capacity and the supply of dental prostheses by dentists and dental technicians; (f) the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition; (g) the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing; (h) the supply of services and of goods closely linked to the protection of children and young persons by bodies governed by public law or by other organisations recognised by the Member State concerned as being devoted to social wellbeing; (i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects; (j) tuition given privately by teachers and covering school or university education; (l) the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition; (m) the supply of certain services closely linked to sport or physical education by non-profit-making organisations to persons taking part in sport or physical education; (n) the supply of certain cultural services, and the supply of goods closely linked thereto, by bodies governed by public law or by other cultural bodies recognised by the Member State concerned; (p) the supply of transport services for sick or injured persons in vehicles specially designed for the purpose, by duly authorised bodies; (q) the activities, other than those of a commercial nature, carried out by public radio and television bodies. 2. For the purposes of point (o) of paragraph 1, Member States may introduce any restrictions necessary, in particular as regards the number of events or the amount of receipts which give entitlement to exemption.
Article 133 
Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions: (a) the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied; (b) those bodies must be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned; (c) those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT; (d) the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT. Member States which, pursuant to Annex E of Directive 77/388/EEC, on 1 January 1989 applied VAT to the transactions referred to in Article 132(1)(m) and (n) may also apply the conditions provided for in point (d) of the first paragraph of this Article when the said supply of goods or services by bodies governed by public law is granted exemption.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 133 ):
(a) the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied; (b) those bodies must be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned; (c) those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT; (d) the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT. Member States which, pursuant to Annex E of Directive 77/388/EEC, on 1 January 1989 applied VAT to the transactions referred to in Article 132(1)(m) and (n) may also apply the conditions provided for in point (d) of the first paragraph of this Article when the said supply of goods or services by bodies governed by public law is granted exemption.
Article 134 
The supply of goods or services shall not be granted exemption, as provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1), in the following cases: (a) where the supply is not essential to the transactions exempted; (b) where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 134 ):
(a) where the supply is not essential to the transactions exempted; (b) where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT.
Article 135 
1. Member States shall exempt the following transactions: (a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents; (b) the granting and the negotiation of credit and the management of credit by the person granting it; (c) the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit; (d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection; (e) transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest; (f) transactions, including negotiation but not management or safekeeping, in shares, interests in companies or associations, debentures and other securities, but excluding documents establishing title to goods, and the rights or securities referred to in Article 15(2); (g) the management of special investment funds as defined by Member States; (h) the supply at face value of postage stamps valid for use for postal services within their respective territory, fiscal stamps and other similar stamps; (i) betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State; (j) the supply of a building or parts thereof, and of the land on which it stands, other than the supply referred to in point (a) of Article 12(1); (k) the supply of land which has not been built on other than the supply of building land as referred to in point (b) of Article 12(1); (l) the leasing or letting of immovable property. 2. The following shall be excluded from the exemption provided for in point (l) of paragraph 1: (a) the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites; (b) the letting of premises and sites for the parking of vehicles; (c) the letting of permanently installed equipment and machinery; (d) the hire of safes. Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 135 ):
1. Member States shall exempt the following transactions: (a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents; (b) the granting and the negotiation of credit and the management of credit by the person granting it; (c) the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit; (d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection; (e) transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest; (f) transactions, including negotiation but not management or safekeeping, in shares, interests in companies or associations, debentures and other securities, but excluding documents establishing title to goods, and the rights or securities referred to in Article 15(2); (g) the management of special investment funds as defined by Member States; (h) the supply at face value of postage stamps valid for use for postal services within their respective territory, fiscal stamps and other similar stamps; (i) betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State; the supply of a building or parts thereof, and of the land on which it stands, other than the supply referred to in point (a) of Article 12(1); the supply of land which has not been built on other than the supply of building land as referred to in point (b) of Article 12(1); (l) the leasing or letting of immovable property. 2. The following shall be excluded from the exemption provided for in point (l) of paragraph 1: (a) the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites; (b) the letting of premises and sites for the parking of vehicles; (c) the letting of permanently installed equipment and machinery; (d) the hire of safes. Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1.
Article 136 
Member States shall exempt the following transactions: (a) the supply of goods used solely for an activity exempted under Articles 132, 135, 371, 375, 376 and 377, Article 378(2), Article 379(2) and Articles 380 to 390b , if those goods have not given rise to deductibility; (b) the supply of goods on the acquisition or application of which VAT was not deductible, pursuant to Article 176.
Amendment rationale: CONTEXT OF THE PROPOSAL With Decision 2012/419/EU amending the status of Mayotte with regard to the European Union, the European Council has decided that, from 1 January 2014, the status of Mayotte will be that of outermost region within the meaning of Article 349 of the Treaty on the Functioning of the European Union (TFEU) instead of that of an overseas country or territory (OCT) within the meaning of Article 355(2) of the TFEU. To this end, in the above-mentioned European Council Decision, Mayotte has been added to the list of outermost regions in Articles 349 and 355(1) of the TFEU. Union legislation on VAT (Directive 2006/112/EC[1]) and excise duties (Directive 2008/118/EC[2]) will therefore apply in Mayotte after the change of status. In substance, the objective of this proposal is to bring Mayotte's situation into line with that of other French outermost regions by excluding it from the scope of Directives 2006/112/EC and 2008/118/EC. Furthermore, by referring to Articles 349 and 355(1) of the TFEU, the intention is to make it clearer that all these regions, including Mayotte, are excluded from the scope of these Directives.
Revised version (Article 136 ):
Member States shall exempt the following transactions: (a) the supply of goods used solely for an activity exempted under Articles 132, 135, 371, 375, 376 and 377, Article 378(2), Article 379(2) and Articles 380 to 390c, if those goods have not given rise to deductibility; (b) the supply of goods on the acquisition or application of which VAT was not deductible, pursuant to Article 176.
Article 137 
1. Member States may allow taxable persons a right of option for taxation in respect of the following transactions: (a) the financial transactions referred to in points (b) to (g) of Article 135(1); (b) the supply of a building or of parts thereof, and of the land on which the building stands, other than the supply referred to in point (a) of Article 12(1); (c) the supply of land which has not been built on other than the supply of building land referred to in point (b) of Article 12(1); (d) the leasing or letting of immovable property. 2. Member States shall lay down the detailed rules governing exercise of the option under paragraph 1. Member States may restrict the scope of that right of option.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 137 ):
1. Member States may allow taxable persons a right of option for taxation in respect of the following transactions: the supply of a building or of parts thereof, and of the land on which the building stands, other than the supply referred to in point (a) of Article 12(1); the supply of land which has not been built on other than the supply of building land referred to in point (b) of Article 12(1); (d) the leasing or letting of immovable property. 2. Member States shall lay down the detailed rules governing exercise of the option under paragraph 1. Member States may restrict the scope of that right of option.
Article 138 
1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began. 2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions: (a) the supply of new means of transport, dispatched or transported to the customer at a destination outside their respective territory but within the Community, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1), or for any other non-taxable person; (b) the supply of products subject to excise duty, dispatched or transported to a destination outside their respective territory but within the Community, to the customer, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods other than products subject to excise duty are not subject to VAT pursuant to Article 3(1), where those products have been dispatched or transported in accordance with Article 7(4) and (5) or Article 16 of Directive 92/12/EEC; (c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 138 ):
1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, where the following conditions are met: (a) the goods are supplied to another taxable person, or to a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods begins; (b) the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT identification number to the supplier. 1a. The exemption provided for in paragraph 1 shall not apply where the supplier has not complied with the obligation provided for in Articles 262 and 263 to submit a recapitulative statement or the recapitulative statement submitted by him does not set out the correct information concerning this supply as required under Article 264, unless the supplier can duly justify his shortcoming to the satisfaction of the competent authorities. 2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions: (a) the supply of new means of transport, dispatched or transported to the customer at a destination outside their respective territory but within the Community, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1), or for any other non-taxable person; (c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.
Article 139 
1. The exemption provided for in Article 138(1) shall not apply to the supply of goods carried out by taxable persons who are covered by the exemption for small enterprises provided for in Articles 282 to 292. Nor shall that exemption apply to the supply of goods to taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1). 2. The exemption provided for in Article 138(2)(b) shall not apply to the supply of products subject to excise duty by taxable persons who are covered by the exemption for small enterprises provided for in Articles 282 to 292. 3. The exemption provided for in Article 138(1) and (2)(b) and (c) shall not apply to the supply of goods subject to VAT in accordance with the margin scheme provided for in Articles 312 to 325 or the special arrangements for sales by public auction. The exemption provided for in Article 138(1) and (2)(c) shall not apply to the supply of second-hand means of transport, as defined in Article 327(3), subject to VAT in accordance with the transitional arrangements for second-hand means of transport.
Article 140 
Member States shall exempt the following transactions: (a) the intra-Community acquisition of goods the supply of which by taxable persons would in all circumstances be exempt within their respective territory; (b) the intra-Community acquisition of goods the importation of which would in all circumstances be exempt under points (a), (b) and (c) and (e) to (l) of Article 143(1); (c) the intra-Community acquisition of goods where, pursuant to Articles 170 and 171, the person acquiring the goods would in all circumstances be entitled to full reimbursement of the VAT due under Article 2(1)(b).
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 140 ):
Member States shall exempt the following transactions: (a) the intra-Community acquisition of goods the supply of which by taxable persons would in all circumstances be exempt within their respective territory; (c) the intra-Community acquisition of goods where, pursuant to Articles 170 and 171, the person acquiring the goods would in all circumstances be entitled to full reimbursement of the VAT due under Article 2(1)(b).
Article 141 
Each Member State shall take specific measures to ensure that VAT is not charged on the intra-Community acquisition of goods within its territory, made in accordance with Article 40, where the following conditions are met: (a) the acquisition of goods is made by a taxable person who is not established in the Member State concerned but is identified for VAT purposes in another Member State; (b) the acquisition of goods is made for the purposes of the subsequent supply of those goods, in the Member State concerned, by the taxable person referred to in point (a); (c) the goods thus acquired by the taxable person referred to in point (a) are directly dispatched or transported, from a Member State other than that in which he is identified for VAT purposes, to the person for whom he is to carry out the subsequent supply; (d) the person to whom the subsequent supply is to be made is another taxable person, or a non-taxable legal person, who is identified for VAT purposes in the Member State concerned; (e) the person referred to in point (d) has been designated in accordance with Article 197 as liable for payment of the VAT due on the supply carried out by the taxable person who is not established in the Member State in which the tax is due.
Article 142 
Member States shall exempt the supply of intra-Community transport of goods to and from the islands making up the autonomous regions of the Azores and Madeira, as well as the supply of transport of goods between those islands.
Article 143 
1. Member States shall exempt the following transactions: (a) the final importation of goods of which the supply by a taxable person would in all circumstances be exempt within their respective territory; (b) the final importation of goods governed by Council Directives 69/169/EEC ( 5 ), 83/181/EEC ( 6 ) and 2006/79/EC ( 7 ); (c) the final importation of goods, in free circulation from a third territory forming part of the Community customs territory, which would be entitled to exemption under point (b) if they had been imported within the meaning of the first paragraph of Article 30; (d) the importation of goods dispatched or transported from a third territory or a third country into a Member State other than that in which the dispatch or transport of the goods ends, where the supply of such goods by the importer designated or recognised under Article 201 as liable for payment of VAT is exempt under Article 138; (e) the reimportation, by the person who exported them, of goods in the state in which they were exported, where those goods are exempt from customs duties; (f) the importation, under diplomatic and consular arrangements, of goods which are exempt from customs duties; (fa) the importation of goods by the European Community, the European Atomic Energy Community, the European Central Bank or the European Investment Bank, or by the bodies set up by the Communities to which the Protocol of 8 April 1965 on the privileges and immunities of the European Communities applies, within the limits and under the conditions of that Protocol and the agreements for its implementation or the headquarters agreements, in so far as it does not lead to distortion of competition; (g) the importation of goods by international bodies, other than those referred to in point (fa), recognised as such by the public authorities of the host Member State, or by members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements; (h) the importation of goods, into Member States party to the North Atlantic Treaty, by the armed forces of other States party to that Treaty for the use of those forces or the civilian staff accompanying them or for supplying their messes or canteens where such forces take part in the common defence effort; (i) the importation of goods by the armed forces of the United Kingdom stationed in the island of Cyprus pursuant to the Treaty of Establishment concerning the Republic of Cyprus, dated 16 August 1960, which are for the use of those forces or the civilian staff accompanying them or for supplying their messes or canteens; (j) the importation into ports, by sea fishing undertakings, of their catches, unprocessed or after undergoing preservation for marketing but before being supplied; (k) the importation of gold by central banks; (l) the importation of gas through a natural gas system or any network connected to such a system or fed in from a vessel transporting gas into a natural gas system or any upstream pipeline network, of electricity or of heat or cooling energy through heating or cooling networks; 2. The exemption provided for in paragraph 1(d) shall apply in cases when the importation of goods is followed by the supply of goods exempted under Article 138(1) and (2)(c) only if at the time of importation the importer has provided to the competent authorities of the Member State of importation at least the following information: (a) his VAT identification number issued in the Member State of importation or the VAT identification number of his tax representative, liable for payment of the VAT, issued in the Member State of importation; (b) the VAT identification number of the customer, to whom the goods are supplied in accordance with Article 138(1), issued in another Member State, or his own VAT identification number issued in the Member State in which the dispatch or transport of the goods ends when the goods are subject to a transfer in accordance with Article 138(2)(c); (c) the evidence that the imported goods are intended to be transported or dispatched from the Member State of importation to another Member State. However, Member States may provide that the evidence referred to in point (c) be indicated to the competent authorities only upon request.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 143 ):
1. Member States shall exempt the following transactions: (a) the final importation of goods of which the supply by a taxable person would in all circumstances be exempt within their respective territory; (b) the final importation of goods governed by Council Directives 69/169/EEC ( 2 ), 83/181/EEC ( 3 ) and 2006/79/EC ( 4 ); (c) the final importation of goods, in free circulation from a third territory forming part of the Community customs territory, which would be entitled to exemption under point (b) if they had been imported within the meaning of the first paragraph of Article 30; (d) the importation of goods dispatched or transported from a third territory or a third country into a Member State other than that in which the dispatch or transport of the goods ends, where the supply of such goods by the importer designated or recognised under Article 201 as liable for payment of VAT is exempt under Article 138; (e) the reimportation, by the person who exported them, of goods in the state in which they were exported, where those goods are exempt from customs duties; (f) the importation, under diplomatic and consular arrangements, of goods which are exempt from customs duties; (fa) the importation of goods by the European Community, the European Atomic Energy Community, the European Central Bank or the European Investment Bank, or by the bodies set up by the Communities to which the Protocol of 8 April 1965 on the privileges and immunities of the European Communities applies, within the limits and under the conditions of that Protocol and the agreements for its implementation or the headquarters agreements, in so far as it does not lead to distortion of competition; (g) the importation of goods by international bodies, other than those referred to in point (fa), recognised as such by the public authorities of the host Member State, or by members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements; (h) the importation of goods, into Member States party to the North Atlantic Treaty, by the armed forces of other States party to that Treaty for the use of those forces or the civilian staff accompanying them or for supplying their messes or canteens where such forces take part in the common defence effort; (i) the importation of goods by the armed forces of the United Kingdom stationed in the island of Cyprus pursuant to the Treaty of Establishment concerning the Republic of Cyprus, dated 16 August 1960, which are for the use of those forces or the civilian staff accompanying them or for supplying their messes or canteens; (j) the importation into ports, by sea fishing undertakings, of their catches, unprocessed or after undergoing preservation for marketing but before being supplied; (k) the importation of gold by central banks; (l) the importation of gas through a natural gas system or any network connected to such a system or fed in from a vessel transporting gas into a natural gas system or any upstream pipeline network, of electricity or of heat or cooling energy through heating or cooling networks; (a) his VAT identification number issued in the Member State of importation or the VAT identification number of his tax representative, liable for payment of the VAT, issued in the Member State of importation; (c) the evidence that the imported goods are intended to be transported or dispatched from the Member State of importation to another Member State. However, Member States may provide that the evidence referred to in point (c) be indicated to the competent authorities only upon request.
Article 144 
Member States shall exempt the supply of services relating to the importation of goods where the value of such services is included in the taxable amount in accordance with Article 86(1)(b).
Article 145 
1. The Commission shall, where appropriate, as soon as possible, present to the Council proposals designed to delimit the scope of the exemptions provided for in Articles 143 and 144 and to lay down the detailed rules for their implementation. 2. Pending the entry into force of the rules referred to in paragraph 1, Member States may maintain their national provisions in force. Member States may adapt their national provisions so as to minimise distortion of competition and, in particular, to prevent non-taxation or double taxation within the Community. Member States may use whatever administrative procedures they consider most appropriate to achieve exemption. 3. Member States shall notify to the Commission, which shall inform the other Member States accordingly, the provisions of national law which are in force, in so far as these have not already been notified, and those which they adopt pursuant to paragraph 2.
Article 146 
1. Member States shall exempt the following transactions: (a) the supply of goods dispatched or transported to a destination outside the Community by or on behalf of the vendor; (b) the supply of goods dispatched or transported to a destination outside the Community by or on behalf of a customer not established within their respective territory, with the exception of goods transported by the customer himself for the equipping, fuelling and provisioning of pleasure boats and private aircraft or any other means of transport for private use; (c) the supply of goods to approved bodies which export them out of the Community as part of their humanitarian, charitable or teaching activities outside the Community; (d) the supply of services consisting in work on movable property acquired or imported for the purpose of undergoing such work within the Community, and dispatched or transported out of the Community by the supplier, by the customer if not established within their respective territory or on behalf of either of them; (e) the supply of services, including transport and ancillary transactions, but excluding the supply of services exempted in accordance with Articles 132 and 135, where these are directly connected with the exportation or importation of goods covered by Article 61 and Article 157(1)(a). 2. The exemption provided for in point (c) of paragraph 1 may be granted by means of a refund of the VAT.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 147 
1. Where the supply of goods referred to in point (b) of Article 146(1) relates to goods to be carried in the personal luggage of travellers, the exemption shall apply only if the following conditions are met: (a) the traveller is not established within the Community; (b) the goods are transported out of the Community before the end of the third month following that in which the supply takes place; (c) the total value of the supply, including VAT, is more than EUR 175 or the equivalent in national currency, fixed annually by applying the conversion rate obtaining on the first working day of October with effect from 1 January of the following year. However, Member States may exempt a supply with a total value of less than the amount specified in point (c) of the first subparagraph. 2. For the purposes of paragraph 1, ‘a traveller who is not established within the Community’ shall mean a traveller whose permanent address or habitual residence is not located within the Community. In that case ‘permanent address or habitual residence’ means the place entered as such in a passport, identity card or other document recognised as an identity document by the Member State within whose territory the supply takes place. Proof of exportation shall be furnished by means of the invoice or other document in lieu thereof, endorsed by the customs office of exit from the Community. Each Member State shall send to the Commission specimens of the stamps it uses for the endorsement referred to in the second subparagraph. The Commission shall forward that information to the tax authorities of the other Member States.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future. 
Revised version (Article 147 ):
1. However, Member States may exempt a supply with a total value of less than the amount specified in point (c) of the first subparagraph. 2. For the purposes of paragraph 1, ‘a traveller who is not established within the Community’ shall mean a traveller whose permanent address or habitual residence is not located within the Community. In that case ‘permanent address or habitual residence’ means the place entered as such in a passport, identity card or other document recognised as an identity document by the Member State within whose territory the supply takes place. Proof of exportation shall be furnished by means of the invoice or other document in lieu thereof, endorsed by the customs office of exit from the Community. Each Member State shall send to the Commission specimens of the stamps it uses for the endorsement referred to in the second subparagraph. The Commission shall forward that information to the tax authorities of the other Member States.
Article 148 
Member States shall exempt the following transactions: (a) the supply of goods for the fuelling and provisioning of vessels used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing, with the exception, in the case of vessels used for inshore fishing, of ships' provisions; (b) the supply of goods for the fuelling and provisioning of fighting ships, falling within the combined nomenclature (CN) code 8906 10 00, leaving their territory and bound for ports or anchorages outside the Member State concerned; (c) the supply, modification, repair, maintenance, chartering and hiring of the vessels referred to in point (a), and the supply, hiring, repair and maintenance of equipment, including fishing equipment, incorporated or used therein; (d) the supply of services other than those referred to in point (c), to meet the direct needs of the vessels referred to in point (a) or of their cargoes; (e) the supply of goods for the fuelling and provisioning of aircraft used by airlines operating for reward chiefly on international routes; (f) the supply, modification, repair, maintenance, chartering and hiring of the aircraft referred to in point (e), and the supply, hiring, repair and maintenance of equipment incorporated or used therein; (g) the supply of services, other than those referred to in point (f), to meet the direct needs of the aircraft referred to in point (e) or of their cargoes.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Value added tax (VAT) is a general consumption tax borne ultimately by the final consumer but collected by businesses supplying goods or services. The scope of VAT, as set out in Article 2 of the VAT Directive 1 , is very broad, covering any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union (EU). One of the aims of the VAT Directive was to draw up a common list of VAT exemptions so that EU own resources could be collected in a uniform manner in all Member States 2 . That is why the exemption of any transaction from VAT requires a specific provision in the VAT Directive. The VAT Directive does not provide for any general exemption for the supply of goods or services for security and defence purposes. In principle, goods or services supplied to, or goods imported by, armed forces will therefore carry VAT 3 . The cost of VAT is reflected in an increase in the revenues that the tax generates for the state treasury (as public bodies, the military forces are unable to recuperate such VAT), which in turn feed into the budget that finances activities such as national defence. The Directive does provide for an exemption for supplies to the armed forces of any state party to the North Atlantic Treaty that are taking part in a common defence effort outside their own state. This exemption was established to address situations in which the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the state in which the armed forces are located, rather than their own. The Excise Directive 4 provides for a similar exemption from excise duty 5 for movements of excise goods to the armed forces of any North Atlantic Treaty Organisation (NATO) member. While NATO defence effort has been covered by the VAT Directive since 1977 6 and the Excise Directive since 1993, neither of the exemptions covers supplies linked to the common defence effort within the Union framework, because there is as yet no common Union defence policy. However, the common security and defence policy (CSDP), which was established as the European security and defence policy (ESDP) in 2000 7 , is a key instrument for external action and includes the progressive framing of a common Union defence policy 8 . The Lisbon Treaty, which came into force in December 2009, was a milestone in the development of the CSDP. The Treaty on European Union (TEU), as amended by the Lisbon Treaty, includes a mutual assistance clause 9 and allowed Member States to strengthen their cooperation in military matters through ‘permanent structured cooperation’ (PESCO) 10 . The Lisbon Treaty also established the European External Action Service (EEAS), which assists the High Representative of the Union for Foreign Affairs and Security Policy in all her responsibilities, including the CSDP. The fact that the High Representative is also one of the Vice-Presidents of the Commission facilitates the bringing together of all necessary EU assets and the application of a comprehensive approach to EU crisis management. The EU Military Committee (EUMC), which was set up in 2001 11 , is the Council’s highest military body. It directs all military activities within the EU framework and advises on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities. Also established in 2001 12 and working under the military direction of the EUMC, the European Union Military Staff (EUMS) is the source of the EU’s military expertise 13 . It provides early warning, situation assessment and strategic planning for missions and tasks referred to in Articles 42(1) and 43(1) TEU. It also contributes to the elaboration, assessment and review of the capability goals. In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) 14 laid the ground for developing CSDP further towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. In December 2017 15 , the European Council invited the High Representative, the Commission and the Member States to bring forward work on military mobility, both under PESCO and in the context of EU NATO cooperation. In March 2018, as a follow-up to their November 2017 Joint Communication on improving military mobility in the EU 16 , the Commission and the High Representative presented a Joint Communication on the action plan on military mobility 17 . The action plan recognises the need for equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility, and providing Member States with an incentive to cooperate 18 . It requires the Commission to assess the feasibility of aligning the VAT treatment of defence efforts in the EU framework and under the NATO umbrella. On 19 November 2018, the Council concluded on Security and Defence in the context of the EUGS 19 . The Council welcomed the substantive progress made in the area of security and defence during the previous two years and stressed the importance of keeping the momentum through the continued engagement of the Member States and EU institutions. In particular, the Council welcomed the progress in the implementation of PESCO and the ongoing implementation of efforts to improve the mobility of military personnel, materiel and equipment for routine activities and during crisis and conflict, within and beyond the EU. In line with the action plan and the Council conclusions, the objective of this proposal is to align the VAT treatment of defence efforts in the EU and NATO frameworks as far as is feasible. The proposal has to acknowledge that, while there is a collective defence effort under the North Atlantic Treaty, no common Union defence policy exists as yet. The arrangements for exemptions from excise duties, as provided for in the Excise Directive, should be aligned in a similar way.
Revised version (Article 148 ):
Member States shall exempt the following transactions: (a) the supply of goods for the fuelling and provisioning of vessels used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing, with the exception, in the case of vessels used for inshore fishing, of ships' provisions; (b) the supply of goods for the fuelling and provisioning of fighting ships, falling within the combined nomenclature (CN) code 8906 10 00, leaving their territory and bound for ports or anchorages outside the Member State concerned; (c) the supply, modification, repair, maintenance, chartering and hiring of the vessels referred to in point (a), and the supply, hiring, repair and maintenance of equipment, including fishing equipment, incorporated or used therein; the supply of services other than those referred to in point (c), to meet the direct needs of the vessels referred to in point (a) or of their cargoes; (e) the supply of goods for the fuelling and provisioning of aircraft used by airlines operating for reward chiefly on international routes; (f) the supply, modification, repair, maintenance, chartering and hiring of the aircraft referred to in point (e), and the supply, hiring, repair and maintenance of equipment incorporated or used therein; (g) the supply of services, other than those referred to in point (f), to meet the direct needs of the aircraft referred to in point (e) or of their cargoes.
Article 149 
Portugal may treat sea and air transport between the islands making up the autonomous regions of the Azores and Madeira and between those regions and the mainland as international transport.
Article 150 
1. The Commission shall, where appropriate, as soon as possible, present to the Council proposals designed to delimit the scope of the exemptions provided for in Article 148 and to lay down the detailed rules for their implementation. 2. Pending the entry into force of the provisions referred to in paragraph 1, Member States may limit the scope of the exemptions provided for in points (a) and (b) of Article 148.
Article 151 
1. Member States shall exempt the following transactions: (a) the supply of goods or services under diplomatic and consular arrangements; (aa) the supply of goods or services to the European Community, the European Atomic Energy Community, the European Central Bank or the European Investment Bank, or to the bodies set up by the Communities to which the Protocol of 8 April 1965 on the privileges and immunities of the European Communities applies, within the limits and under the conditions of that Protocol and the agreements for its implementation or the headquarters agreements, in so far as it does not lead to distortion of competition; (b) the supply of goods or services to international bodies, other than those referred to in point (aa), recognised as such by the public authorities of the host Member States, and to members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements; (c) the supply of goods or services within a Member State which is a party to the North Atlantic Treaty, intended either for the armed forces of other States party to that Treaty for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort; (d) the supply of goods or services to another Member State, intended for the armed forces of any State which is a party to the North Atlantic Treaty, other than the Member State of destination itself, for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort; (e) the supply of goods or services to the armed forces of the United Kingdom stationed in the island of Cyprus pursuant to the Treaty of Establishment concerning the Republic of Cyprus, dated 16 August 1960, which are for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens. Pending the adoption of common tax rules, the exemptions provided for in the first subparagraph shall be subject to the limitations laid down by the host Member State. 2. In cases where the goods are not dispatched or transported out of the Member State in which the supply takes place, and in the case of services, the exemption may be granted by means of a refund of the VAT.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The current initiative aims to support and facilitate measures taken at Union level in the public interest, in particular where the Union is acting in the execution of a mandate to acquire goods and services in order to distribute them free of charge to Member States according to their emergency needs. These measures are - inter alia - aimed at the prevention of, preparation for or response to emergencies in the context of current or future crises and disasters. The initiative supports these measures by eliminating value added tax (VAT) as a cost factor as well as related compliance burden. More specifically, this proposal provides for an exemption from VAT of goods or services supplied to and goods imported by the Commission or an EU agency or body where the Commission or any such agency or body acquires these goods or services in the fulfilment of a mandate conferred on them by Union law in the public interest . The ongoing COVID-19 pandemic shows to a particular degree the importance of being well prepared and being able to respond quickly based on a structured, coherent and centralized approach at EU level. This conclusion also applies to other present and future situations that require coordinated action at Union level. Therefore, building on the experience with handling of the COVID-19 pandemic, this initiative aims to provide the European Union with a broad-based and future-proof solution. The objective is to align the EU VAT provisions, for example in respect of measures in the field of disaster and crisis management, and thus to facilitate the activities of the Commission, the EU agencies or other EU bodies when fulfilling any mandate conferred on them by Union law. The experience gained in the Commission taking emergency measures during the course of the COVID 19 pandemic has shown that the VAT charged on some transactions ends up being a cost factor in procurement operations that strains limited budgets. Those amounts of VAT reduce the volume of goods and services, which the Commission can procure for stockpiling or immediate distribution to Member States, whilst adding complexity and delaying solidarity-based operations to address urgent needs. In addition, compliance costs become a burden for businesses who are providing goods and services to the Union, particularly as regards their registration with tax authorities in many or all Member States. There is therefore an urgent need for immediate action as regards the fight against the current COVID-19 pandemic and in order to create readiness to act with a view to comparable future measures taken at Union level in the public interest. For this purpose, a broad-based VAT exemption for purchases made by the Commission or by an EU agency or body in order to donate, stockpile or otherwise provide goods or services to Member States or third parties should be introduced since that is the appropriate solution required to facilitate the coordination of measures at Union level. Based on the lessons learned from the COVID-19 pandemic and in order to provide a solution that is future-proof, the scope of this proposal is broad-based, covering all types of goods and services. As regards goods, it would for instance apply to medical countermeasures (MCMs) of all kind such as biologic products 1 , drugs and medicines 2 as well as medical devices 3 . The proposal would also cover non-medical items necessary for addressing humanitarian crises 4 . This proposal also covers a wide range of services with or without link to the health sector 5 . The eligible purpose for which these goods and services are put to use by the Commission or an EU agency or body is any activity in the fulfilment of a mandate conferred on them under Union law and which is in the public interest. The goods or services acquired may, for example, be intended to be made available free of charge to Member States or to a third party 6 . They could also be part of a stockfiling strategy in view of future donations. In the face of the COVID ‑19 pandemic, the Commission has taken exceptional measures in the area of VAT to help victims of the outbreak. On 3 April 2020, the Commission adopted Decision (EU) 2020/491 7 enabling Member States to temporarily exempt from VAT (and relieve from customs duties) vital goods needed to combat the effects of the COVID ‑19 o utbreak (covering among other personal protective equipment, in vitro diagnostic medical devices, medical devices such as ventilators and a limited number of medicines 8 ) . This decision covers only importation and not intra-Community or domestic supplies, because the autonomous powers of the Commission are limited to that particular field. The initial measure applied for a period of six months, and was further extended until 31 October 2020 9 and 30 April 2021 10 . A further extension is currently under preparation. On 7 December 2020 11 , the Council adopted a proposal from the Commission 12 introducing an amendment to Council Directive 2006/112/EC 13 (the VAT Directive) and allowing Member States to apply a reduced rate of VAT to the supply of COVID-19 in vitro diagnostic medical devices and services closely linked thereto. In addition, Member States are allowed to grant an exemption with deductibility of VAT paid at the preceding stage in respect of the supply of these devices and closely linked services as well as the supply of COVID-19 vaccines and services closely linked to those vaccines. These measures provided fast, efficient and targeted solutions for urgent needs occurring in the course of the COVID-19 pandemic. They are however very limited in scope of application and temporary in nature and not all Member States have chosen to apply the option of zero rates where that has been made available. The VAT Directive provides, subject to certain conditions and limits, for an exemption 14 with deductibility of VAT at the preceding stage concerning the importation of goods by and the supply of goods and services to European bodies (including the Commission) to which the Protocol on the privileges and immunities of the European Union (PPI 15 ) applies. Based on the respective interpretation of the PPI, that exemption is strictly limited to purchases made for the official use of that EU body. It would not apply to the purchase of goods and services which are, for instance, intended for being made available for free to Member States or a third party such as a national health authority or hospital as this is not regarded as official use. Precisely such cases can however become particularly important in response to crises and hence the currently applicable VAT exemptions are insufficient in this respect. The 2018 Commission proposal 16 to amend the VAT Directive as regards VAT rates, which is pending before the Council, could neither provide a satisfactory solution in lifting VAT from all transactions at which this initiative aims. If adopted unanimously by Council , it would allow Member States to apply a reduced rate or even a zero rate 17 to certain supplies, if such supplies benefit only the final consumer and pursue an objective of general interest. It would in any event remain the discretionary decision of Member States to apply any such favourable VAT treatment. In order to help Member States to cope better with the challenges of the digital age and to reduce administrative burden associated with the use of the paper version of the exemption certificate provided for in Annex II of Council Implementing Regulation (EU) No 282/2011 18 particularly in situations of crises such as pandemics, an electronic form should be introduced. The purpose of that form is to confirm that the transaction qualifies for the exemption under the first subparagraph of Article 151(1) of the VAT Directive. As already done under Article 199b(4) of the VAT Directive, t he Commission should be empowered to adopt by means of implementing acts the technical details of that form, including a common electronic message by which the information is to be transmitted, in consultation of the Standing Committee on Administrative Cooperation established by Article 58 of Council Regulation (EU) No 904/2010 19 , applying the examination procedure referred to in Article 5 of Regulation (EU) No 182/2011
Revised version (Article 151 ):
1. Member States shall exempt the following transactions: (a) the supply of goods or services under diplomatic and consular arrangements; (aa) the supply of goods or services to the European Community, the European Atomic Energy Community, the European Central Bank or the European Investment Bank, or to the bodies set up by the Communities to which the Protocol of 8 April 1965 on the privileges and immunities of the European Communities applies, within the limits and under the conditions of that Protocol and the agreements for its implementation or the headquarters agreements, in so far as it does not lead to distortion of competition; (ab) the supply of goods or services to the Commission or to an agency or a body established under Union law where the Commission or such an agency or body purchases those goods or services in the execution of the tasks conferred on it by Union law in order to respond to the COVID-19 pandemic, except where the goods and services purchased are used, either immediately or at a later date, for the purposes of onward supplies for consideration by the Commission or such an agency or body; (b) the supply of goods or services to international bodies, other than those referred to in point (aa), recognised as such by the public authorities of the host Member States, and to members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements; (c) the supply of goods or services within a Member State which is a party to the North Atlantic Treaty, intended either for the armed forces of other States party to that Treaty for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort; (d) the supply of goods or services to another Member State, intended for the armed forces of any State which is a party to the North Atlantic Treaty, other than the Member State of destination itself, for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort; (e) the supply of goods or services to the armed forces of the United Kingdom stationed in the island of Cyprus pursuant to the Treaty of Establishment concerning the Republic of Cyprus, dated 16 August 1960, which are for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens. Pending the adoption of common tax rules, the exemptions provided for in the first subparagraph, other than that referred to in point (ab), shall be subject to the limitations laid down by the host Member State. 2. In cases where the goods are not dispatched or transported out of the Member State in which the supply takes place, and in the case of services, the exemption may be granted by means of a refund of the VAT. 3. When the conditions for the exemption laid down in paragraph 1, first subparagraph, point (ab), cease to apply, the Commission or the agency or body concerned which received the exempt supply shall inform the Member State in which the exemption was applied and the supply of those goods or services shall be subject to VAT under the conditions applicable at that time.
Article 152 
Member States shall exempt the supply of gold to central banks.
Article 153 
Member States shall exempt the supply of services by intermediaries, acting in the name and on behalf of another person, where they take part in the transactions referred to in Chapters 6, 7 and 8, or of transactions carried out outside the Community. The exemption referred to in the first paragraph shall not apply to travel agents who, in the name and on behalf of travellers, supply services which are carried out in other Member States.
Article 154 
For the purposes of this Section, ‘warehouses other than customs warehouses’ shall, in the case of products subject to excise duty, mean the places defined as tax warehouses by Article 4(b) of Directive 92/12/EEC and, in the case of products not subject to excise duty, the places defined as such by the Member States.
Article 155 
Without prejudice to other Community tax provisions, Member States may, after consulting the VAT Committee, take special measures designed to exempt all or some of the transactions referred to in this Section, provided that those measures are not aimed at final use or consumption and that the amount of VAT due on cessation of the arrangements or situations referred to in this Section corresponds to the amount of tax which would have been due had each of those transactions been taxed within their territory.
Article 156 
1. Member States may exempt the following transactions: (a) the supply of goods which are intended to be presented to customs and, where applicable, placed in temporary storage; (b) the supply of goods which are intended to be placed in a free zone or in a free warehouse; (c) the supply of goods which are intended to be placed under customs warehousing arrangements or inward processing arrangements; (d) the supply of goods which are intended to be admitted into territorial waters in order to be incorporated into drilling or production platforms, for purposes of the construction, repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or production platforms to the mainland; (e) the supply of goods which are intended to be admitted into territorial waters for the fuelling and provisioning of drilling or production platforms. 2. The places referred to in paragraph 1 shall be those defined as such by the Community customs provisions in force.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The purpose of the current proposal for a Directive amending Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (hereafter the ‘ VAT Directive ’ ) is to prolong: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services included in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM) , as set out in Article 199b of the VAT Directive , to combat fraud via the application of the reverse charge mechanism in very specific cases . As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is liable to pay VAT. As a derogation, the reverse charge mechanism allows to designate the recipient of the supply as the person liable for the payment of VAT. Under this reverse charge mechanism, VAT is not charged by the supplier but accounted for by the customer (a taxable person) in his VAT return. This VAT is then deducted in that same VAT return and, therefore, insofar this person has a full right of deduction, the result is nil. The reverse charge mechanism is used to combat fraud and in particular Missing Trader Intra-Community (MTIC) fraud. This type of fraud occurs when a trader acquires goods, transported or dispatched from another Member State, by means of a supply exempt from VAT, and sells them on including VAT on the invoice to the customer. After having received the VAT amount from the customer such trader disappears before paying the VAT due to the tax authorities. At the same time, the customer acting in good faith can normally deduct the VAT he paid to the supplier through his VAT return. Hence, under the reverse charge mechanism VAT is not effectively paid to the supplier. The reverse charge mechanism based on Article 199a o f the VAT Directive is optional for Member States to apply. It allows them to fight this type of fraud in the pre-defined sensitive areas where it typically occurs 2 on their territory . Once suppliers are obliged to use the reverse charge mechanism for such domestic supplies, t he y cann ot charge VAT on their invoice. They will subsequently not receive the VAT amount from their customer and , as a result , such traders cannot disappear with the amount of VAT received. The QRM of Article 199b is an exceptional measure allowing Member States to quickly introduce , in cases of imperative urgency, a temporary reverse charge mechanism for supplies of goods and services in sectors where sudden and massive fraud occurred and which are not listed in Article 199a of the VAT Directive. This procedure is exceptional and extremely quick as the Commission has to react within one month, either with a negative opinion or to confirm in writing to the Member State concerned that it does not object the measure. The Member State may adopt the QRM special measure from the date of receipt of that confirmation. By u sing this mechanism , Member States can bridge the p eriod required for obtaining a ‘ normal ’ derogation under A rticle 395 of the VAT Directive, which can take up to six months . Such a derogation requires a proposal from the Commission and unanimous adoption by Council. Article 199a of the VAT Directive was introduced 3 for the period 2010 until 30 June 2015 and was a first time extended 4 , with amendments, until 31 December 2018. Article 199b of the VAT Directive was introduced 5 for the period 2013 until 31 December 2018. Both Article s 199a and 199b of the VAT Directive were subsequently extended 6 until 30 June 2022 in order to coincide with the initially foreseen date on which the VAT definitive system would enter into force (see more details below) . At the time the application period of Articles 199a and 199b of the VAT Directive would be extended until 30 June 2022 , the Commission presented a r eport on the effects of the mechanisms i ncluded in these articles 7 and concluded, on the basis of contributions of tax administrations and business stakeholders, that the measures in these articles were useful in the fight against fraud. In order to deal with the issue of (MTIC) fraud in a more structural manner , the Commission made a proposal for the introduction of the so-called definitive VAT system, a simpler and fraud-proof system for intra-Union trade of goods 8 . These arrangements, which the Commission proposed to enter into force on 1 July 2022, provide a fundamental response to MTIC fraud. However, the state of play of the ongoing negotiations in the Council indicates that it will not be possible for the definitive VAT system to enter into force on 1 July 2022. In order to allow the negotiations on the definitive system to continue, without putting at risk the available tools in order to combat VAT fraud, it is appropriate to prolong the anti-fraud measures contained in the said articles for another limited period. To extend the application period of Articles 199a and 199b would also allow developing further tools to fight tax evasion. To that end, and in accordance with the Tax Package 9 , the C ommission is prepar ing a proposal in order to modernise the current VAT rules, taking into account the opportunities offered by digital technologies. Under the heading ‘VAT in the digital age’, the Commission will assess VAT reporting obligations, possibly including on Transaction-B ased R eporting (TBR) and a n enhanced system of e-invoicing . This should provide quicker and more detailed information on individual transactions to tax administrations and therefore lower the risk of fraud . Based on such legislative developments, the need to further extend Articles 199a and 199b should be reassessed in the future.
Article 157 
1. Member States may exempt the following transactions: (a) the importation of goods which are intended to be placed under warehousing arrangements other than customs warehousing; (b) the supply of goods which are intended to be placed, within their territory, under warehousing arrangements other than customs warehousing. 2. Member States may not provide for warehousing arrangements other than customs warehousing for goods which are not subject to excise duty where those goods are intended to be supplied at the retail stage.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The current initiative aims at enabling Member States to temporarily exempt the supply of COVID‑19 vaccines and in vitro diagnostic medical devices ( testing kits) as well as services closely linked to such vaccines and such devices from value added tax (VAT). It also enables Member States, as is already the case for vaccines, to apply a reduced VAT rate to COVID‑19 in vitro diagnostic medical devices and closely linked services. On 30 January 2020, the World Health Organization (WHO) declared the COVID ‑19 outbreak as a public health emergency of international concern. Then, on 11 March 2020, the WHO characterised the situation of the COVID ‑19 outbreak as a pandemic. Since the beginning of the COVID ‑19 outbreak, the European Union has taken unparalleled action to protect lives and livelihoods and limit the impact of the virus on the economy. The Union is leading the global effort for universal testing, treatment and vaccination by mobilising resources through international pledging and by joining forces with countries and global health organisations through the Access to COVID ‑19 Tools (ACT) Accelerator collaborative framework 1 . The latter was launched on 24 April 2020 by the WHO and a group of global actors. It is a call for action in a landmark global collaboration aiming at accelerating equitable global access to safe, quality, effective, and affordable COVID‑19 diagnostics, therapeutics and vaccines. On 4 May 2020, Commission President von der Leyen launched the Coronavirus Global Response as the Union’s response to this call for action. In the Commission President’s words, “[t] he world will only be freed from this pandemic when vaccines, testing kits and treatments are available and affordable to everyone who needs them” . The pledging campaign under the Coronavirus Global Response has raised almost EUR 16 billion to date, including EUR 11.9 billion pledged by the Member States, the Commission and the European Investment Bank. On 18 September 2020, the Commission confirmed its participation in the COVAX Facility, following the announcement, on 31 August 2020, of a EUR 400 million contribution in guarantees to support COVAX and its objectives in the context of the Coronavirus Global Response. The COVAX Facility is the vaccines pillar of the ACT Accelerator and aims to speed up development and manufacture of COVID‑19 vaccines and to guarantee fair and equitable access for every country in the world. It is co-led by Gavi, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO. As part of the effort to help protect people everywhere in the world, and in the Union in particular, the Commission put forward on 17 June 2020 an EU strategy for COVID ‑19 vaccines 2 . The proposed EU approach to secure vaccines for EU people complements the Union’s action for universal access to affordable coronavirus vaccination, treatment and testing. The aim is to accelerate the development, manufacturing and deployment of vaccines against the virus and make sure that in the fight against COVID ‑19 no one in the Union is left behind. The EU vaccine strategy has among its objectives to ensure equitable and affordable access to the supplies of COVID‑19 vaccines for all EU people as early as possible. Generally, an effective and safe vaccine against COVID‑19 is seen as the most likely permanent solution to the pandemic, as it will facilitate control of COVID‑19 disease and will reduce mortality. However, there is no guarantee that such vaccine will be available soon. Therefore, the development and deployment of COVID‑19 in vitro diagnostic medical devices remain crucial. The Commission will implement the EU strategy for COVID‑19 vaccines together with the Member States. This increases the likelihood that all in the EU, as well as in the European Economic Area (EEA), gain equitable and affordable access to those vaccines in the shortest possible period. An important step towards joint action between Member States has been taken by the creation of an inclusive Vaccine Alliance by France, Germany, Italy, and the Netherlands. This alliance was formed to pool the national resources of those countries and secure fair access to vaccine supplies for the European population. The Union will materialise its strategy for COVID ‑19 vaccines in two ways. First, by securing sufficient production of vaccines in the EU - and thereby sufficient supplies for its Member States - through Advance Purchase Agreements (APAs) with vaccine producers. The related funding will come from the Emergency Support Instrument (ESI 3 ). Second, by making use of existing regulatory, financial, advisory and other tools at its disposal while adapting the Union’s regulatory framework to the current urgency. The contracts with vaccine producing companies will be concluded through a procurement process run by the Commission on behalf of all participating Member States. Once any of the vaccines supported proves successful, Member States will be able to acquire that vaccine directly from the producer based on the conditions laid down in the APA. As the ultimate acquirers of the vaccines, Member States will participate in the process from the outset. In the framework of the EU vaccine strategy, the Commission already concluded agreements to purchase potential COVID ‑19 vaccines with some pharmaceutical companies, while exploratory talks intended to result in APAs have been concluded or will be conducted with others. On 30 September 2020, the WHO issued a draft landscape document of COVID ‑19 candidate vaccines 4 , listing 41 candidate vaccines in clinical evaluation. Since the emergence of the COVID‑19 pandemic and awaiting a vaccine, healthcare professionals have created numerous tests. These tests detect either the presence of the virus or the presence of antibodies against the virus. The most common COVID‑19 tests marketed on the European market are as follows: · Nucleic acid test (e.g. PCR), primarily involving a swab of the nose and throat. The presence of the virus is then detected in the sample taken. · Antigen test, also involving a swab of the nose and throat. This test also detects the presence of the virus. – There are “rapid” antigen tests, where the sample is placed on a plate and the result appears after a few minutes. – There are also ELISA (enzyme-linked immunosorbent assay) or “ELISA-like” tests which are more complex but offer a more reliable and qualitative method. · Antibody test (IgG/IgM/IgA) via a blood sample. This test makes it possible to detect antibodies against the virus in the sample taken. Antibody tests can also be performed via “rapid” tests, or via ELISA or “ELISA-like” tests. Member States are responsible for the strategy and criteria to determine which people are tested and what types of COVID‑19 in vitro diagnostic medical devices are deployed. In the face of the COVID ‑19 pandemic, the Commission has taken exceptional measures in the area of VAT to help victims of the outbreak. On 3 April 2020, the Commission adopted Decision (EU) 2020/491 5 enabling Member States to temporarily exempt from VAT (and relieve from customs duties) vital goods needed to combat the effects of the COVID ‑19 o utbreak (covering among other personal protective equipment, in vitro diagnostic medical devices, medical devices such as ventilators and a limited number of medicines 6 ) . This decision covers only importation and not intra-Community or domestic supplies, because the autonomous powers of the Commission are limited to this field. The initial measure applied for a period of six months, and was further extended by three months until 31 October 2020 7 . A further prolongation until the end of April 2021 has been decided. The current VAT rules contain two main tools that already allow Member States to alleviate the cost of COVID‑19 vaccines and in vitro diagnostic medical devices. First, Council Directive 2006/112/EC 8 (the VAT Directive) provides exemptions without deductibility for hospital and medical care 9 . The objective of those exemptions is to reduce the cost of medical care and to make it more accessible to individuals. Preventive medical care, e.g. when the person concerned is not suffering from any disease or health disorder, may fall under the exemption. This would apply with regard to COVID ‑19 vaccination and testing supplied by way of hospital and medical care. However, the existing exemption would not apply to the supply of COVID ‑19 vaccines and in vitro diagnostic medical devices - including services closely linked thereto - to hospitals, medical practitioners, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature. They would thus be burdened with the VAT cost when acquiring such vaccines and in vitro diagnostic medical devices. Hence, although COVID‑19 vaccination and testing supplied in the context of hospital and medical care would be exempt from VAT, supplies of such vaccines and in vitro diagnostic medical devices acquired by hospitals, medical practitioners, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature would not be covered by this exemption. Therefore, the VAT burden would remain for those. Second, u nder the current VAT rules, Member States may apply a reduced (that is, no lower than 5%) VAT rate to “ pharmaceutical products normally used for health care, prevention of illnesses and as treatment for medical […] purposes ” 10 . The concept of "pharmaceutical products" is not defined in the VAT Directive but has always been understood to cover pharmaceutical products as defined by the Combined Nomenclature 11 . The pharmaceutical products contained in the Combined Nomenclature (Chapter 30) include vaccines. Therefore, vaccines are currently eligible for reduced VAT rates. Moreover, based on historical standstill derogations, certain Member States may continue to apply super-reduced rates (namely lower than 5%) or exemptions with the deductibility of the VAT paid at the preceding stage (zero rate) to pharmaceutical products, including vaccines. However, there is no general provision in the VAT Directive allowing a zero rate to pharmaceutical products that could apply in the case of COVID ‑19 vaccines. In contrast to vaccines, the general VAT rules of the VAT Directive would not allow reduced rates to apply to COVID ‑19 in vitro diagnostic medical devices 12 . Moreover, while Decision (EU) 2020/491 enabled Member States to temporarily exempt from VAT the importation of in vitro diagnostic medical devices among other, there is no explicit provision in the EU VAT rules allowing to exempt from VAT the intra-Community and domestic supply of such devices. In conclusion, although the current VAT rules allow partly alleviating the cost of COVID ‑19 vaccination and testing, they do not permit the application of a zero rate to such vaccines and services closely linked thereto. Likewise, they do not permit the application of either a reduced or a zero rate to in vitro diagnostic medical devices, including services closely linked thereto. The 2018 Commission proposal 13 to amend the VAT Directive as regards VAT rates, which is pending before the Council, could provide a satisfactory solution in lifting VAT from the overall supply of COVID ‑19 vaccination and testing. If adopted unanimously by Council , it would allow Member States to apply a reduced rate or even a zero rate to supplies of COVID ‑19 vaccines and in vitro diagnostic medical devices, including services closely linked thereto, if such supplies benefit only the final consumer and pursue an objective of general interest. However, there is a need for immediate action in fighting the pandemic. Given the urgency, a swift adaptation of the EU VAT rules is necessary in order to ensure that COVID‑19 vaccines and in vitro diagnostic medical devices become more affordable for Europeans by reducing their cost of provision by the health system, thus enhancing the potential for COVID‑19 prevention and screening in the Union. This is a prerequisite for ensuring that full societal and economic activity may be restored in the near term. It is imperative that such measure be of temporary character with the aim to exempt from VAT the supply of COVID‑19 vaccines and in vitro diagnostic medical devices while also allowing a reduced VAT rate for the latter. This measure should remain in place until the COVID‑19 health crisis comes to an end. In concrete terms, the measure in question should not go beyond 31 December 2022. Before the end of this period, the situation will be reviewed and, if necessary, the period of application of the measure may be extended. Pursuant to Article 94(2) of the VAT Directive, the potential reduced rate and the VAT exemption in the form of zero rate applied to the above supplies within the territory of a Member State will also be applicable to the intra-Community supply to or importation into that Member State of COVID‑19 vaccines and in vitro diagnostic medical devices. 
Revised version (Article 157 ):
1. Member States may exempt the following transactions: (a) the importation of goods which are intended to be placed under warehousing arrangements other than customs warehousing; (b) the supply of goods which are intended to be placed, within their territory, under warehousing arrangements other than customs warehousing. Member States may exempt the following transactions: (a) the importation of goods which are intended to be placed under warehousing arrangements other than customs warehousing; (b) the supply of goods which are intended to be placed, within their territory, under warehousing arrangements other than customs warehousing. 2. Member States may not provide for warehousing arrangements other than customs warehousing for goods which are not subject to excise duty where those goods are intended to be supplied at the retail stage.