Article 1 
1. This Directive establishes the common system of value added tax (VAT). 2. The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged. On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components. The common system of VAT shall be applied up to and including the retail trade stage.
Article 2 
1. The following transactions shall be subject to VAT: (a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; (b) the intra-Community acquisition of goods for consideration within the territory of a Member State by: (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36; (ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person; (iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1); (b) the intra-Community acquisition of goods for consideration within the territory of a Member State by: (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36; (ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person; (iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1); (c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such; (d) the importation of goods. (a) For the purposes of point (ii) of paragraph 1(b), the following shall be regarded as ‘means of transport’, where they are intended for the transport of persons or goods: (i) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7,2 kilowatts; (ii) vessels exceeding 7,5 metres in length, with the exception of vessels used for navigation on the high seas and carrying passengers for reward, and of vessels used for the purposes of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing; (iii) aircraft the take-off weight of which exceeds 1 550 kilograms, with the exception of aircraft used by airlines operating for reward chiefly on international routes. (a) For the purposes of point (ii) of paragraph 1(b), the following shall be regarded as ‘means of transport’, where they are intended for the transport of persons or goods: (i) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7,2 kilowatts; (ii) vessels exceeding 7,5 metres in length, with the exception of vessels used for navigation on the high seas and carrying passengers for reward, and of vessels used for the purposes of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing; (iii) aircraft the take-off weight of which exceeds 1 550 kilograms, with the exception of aircraft used by airlines operating for reward chiefly on international routes. (b) These means of transport shall be regarded as ‘new’ in the cases: (i) of motorised land vehicles, where the supply takes place within six months of the date of first entry into service or where the vehicle has travelled for no more than 6 000 kilometres; (ii) of vessels, where the supply takes place within three months of the date of first entry into service or where the vessel has sailed for no more than 100 hours; (iii) of aircraft, where the supply takes place within three months of the date of first entry into service or where the aircraft has flown for no more than 40 hours. (b) These means of transport shall be regarded as ‘new’ in the cases: (i) of motorised land vehicles, where the supply takes place within six months of the date of first entry into service or where the vehicle has travelled for no more than 6 000 kilometres; (ii) of vessels, where the supply takes place within three months of the date of first entry into service or where the vessel has sailed for no more than 100 hours; (iii) of aircraft, where the supply takes place within three months of the date of first entry into service or where the aircraft has flown for no more than 40 hours. (c) Member States shall lay down the conditions under which the facts referred to in point (b) may be regarded as established. 3. ‘Products subject to excise duty’ shall mean energy products, alcohol and alcoholic beverages and manufactured tobacco, as defined by current Community legislation, but not gas supplied through a natural gas system situated within the territory of the Community or any network connected to such a system.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 2 ):
1. The following transactions shall be subject to VAT: (a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; (b) the intra-Community acquisition of goods for consideration within the territory of a Member State by: (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36; (ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person; (iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1); (c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such; (d) the importation of goods. (a) For the purposes of point (ii) of paragraph 1(b), the following shall be regarded as ‘means of transport’, where they are intended for the transport of persons or goods: (i) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7,2 kilowatts; (ii) vessels exceeding 7,5 metres in length, with the exception of vessels used for navigation on the high seas and carrying passengers for reward, and of vessels used for the purposes of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing; (iii) aircraft the take-off weight of which exceeds 1 550 kilograms, with the exception of aircraft used by airlines operating for reward chiefly on international routes. (b) These means of transport shall be regarded as ‘new’ in the cases: (i) of motorised land vehicles, where the supply takes place within six months of the date of first entry into service or where the vehicle has travelled for no more than 6 000 kilometres; (ii) of vessels, where the supply takes place within three months of the date of first entry into service or where the vessel has sailed for no more than 100 hours; (iii) of aircraft, where the supply takes place within three months of the date of first entry into service or where the aircraft has flown for no more than 40 hours. (c) Member States shall lay down the conditions under which the facts referred to in point (b) may be regarded as established. 3. ‘Products subject to excise duty’ shall mean energy products, alcohol and alcoholic beverages and manufactured tobacco, as defined by current Community legislation, but not gas supplied through a natural gas system situated within the territory of the Community or any network connected to such a system.
Article 3 
1. By way of derogation from Article 2(1)(b)(i), the following transactions shall not be subject to VAT: (a) the intra-Community acquisition of goods by a taxable person or a non-taxable legal person, where the supply of such goods within the territory of the Member State of acquisition would be exempt pursuant to Articles 148 and 151; (b) the intra-Community acquisition of goods, other than those referred to in point (a) and Article 4, and other than new means of transport or products subject to excise duty, by a taxable person for the purposes of his agricultural, forestry or fisheries business subject to the common flat-rate scheme for farmers, or by a taxable person who carries out only supplies of goods or services in respect of which VAT is not deductible, or by a non-taxable legal person. 2. Point (b) of paragraph 1 shall apply only if the following conditions are met: (a) during the current calendar year, the total value of intra-Community acquisitions of goods does not exceed a threshold which the Member States shall determine but which may not be less than EUR 10 000 or the equivalent in national currency; (b) during the previous calendar year, the total value of intra-Community acquisitions of goods did not exceed the threshold provided for in point (a). The threshold which serves as the reference shall consist of the total value, exclusive of VAT due or paid in the Member State in which dispatch or transport of the goods began, of the intra-Community acquisitions of goods as referred to under point (b) of paragraph 1. 3. Member States shall grant taxable persons and non-taxable legal persons eligible under point (b) of paragraph 1 the right to opt for the general scheme provided for in Article 2(1)(b)(i). Member States shall lay down the detailed rules for the exercise of the option referred to in the first subparagraph, which shall in any event cover a period of two calendar years.
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 3 ):
(a) the intra-Community acquisition of goods by a taxable person or a non-taxable legal person, where the supply of such goods within the territory of the Member State of acquisition would be exempt pursuant to Articles 148 and 151; (b) the intra-Community acquisition of goods, other than those referred to in point (a) and Article 4, and other than new means of transport or products subject to excise duty, by a taxable person for the purposes of his agricultural, forestry or fisheries business subject to the common flat-rate scheme for farmers, or by a taxable person who carries out only supplies of goods or services in respect of which VAT is not deductible, or by a non-taxable legal person. 2. Point (b) of paragraph 1 shall apply only if the following conditions are met: (a) during the current calendar year, the total value of intra-Community acquisitions of goods does not exceed a threshold which the Member States shall determine but which may not be less than EUR 10 000 or the equivalent in national currency; (b) during the previous calendar year, the total value of intra-Community acquisitions of goods did not exceed the threshold provided for in point (a). The threshold which serves as the reference shall consist of the total value, exclusive of VAT due or paid in the Member State in which dispatch or transport of the goods began, of the intra-Community acquisitions of goods as referred to under point (b) of paragraph 1. 3. Member States shall grant taxable persons and non-taxable legal persons eligible under point (b) of paragraph 1 the right to opt for the general scheme provided for in Article 2(1)(b)(i). Member States shall lay down the detailed rules for the exercise of the option referred to in the first subparagraph, which shall in any event cover a period of two calendar years.
Article 4 
In addition to the transactions referred to in Article 3, the following transactions shall not be subject to VAT: (a) the intra-Community acquisition of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), where the vendor is a taxable dealer acting as such and VAT has been applied to the goods in the Member State in which their dispatch or transport began, in accordance with the margin scheme provided for in Articles 312 to 325; (b) the intra-Community acquisition of second-hand means of transport, as defined in Article 327(3), where the vendor is a taxable dealer acting as such and VAT has been applied to the means of transport in the Member State in which their dispatch or transport began, in accordance with the transitional arrangements for second-hand means of transport; (c) the intra-Community acquisition of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), where the vendor is an organiser of sales by public auction, acting as such, and VAT has been applied to the goods in the Member State in which their dispatch or transport began, in accordance with the special arrangements for sales by public auction.
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 4 ):
In addition to the transactions referred to in Article 3, the following transactions shall not be subject to VAT: (b) the intra-Community acquisition of second-hand means of transport, as defined in Article 327(3), where the vendor is a taxable dealer acting as such and VAT has been applied to the means of transport in the Member State in which their dispatch or transport began, in accordance with the transitional arrangements for second-hand means of transport; (c) the intra-Community acquisition of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), where the vendor is an organiser of sales by public auction, acting as such, and VAT has been applied to the goods in the Member State in which their dispatch or transport began, in accordance with the special arrangements for sales by public auction.
Article 5 
For the purposes of applying this Directive, the following definitions shall apply: (1) ‘Community’ and ‘territory of the Community’ mean the territories of the Member States as defined in point (2); (2) ‘Member State’ and ‘territory of a Member State’ mean the territory of each Member State of the Community to which the Treaty establishing the European Community is applicable, in accordance with Article 299 of that Treaty, with the exception of any territory referred to in Article 6 of this Directive; (3) ‘third territories’ means those territories referred to in Article 6; (4) ‘third country’ means any State or territory to which the Treaty is not applicable.
Article 6 
1. This Directive shall not apply to the following territories forming part of the customs territory of the Community: (a) Mount Athos; (b) the Canary Islands; (c) the French overseas departments; (d) the Åland Islands; (e) the Channel Islands. 2. This Directive shall not apply to the following territories not forming part of the customs territory of the Community: (a) the Island of Heligoland; (b) the territory of Büsingen; (c) Ceuta; (d) Melilla; (e) Livigno; (f) Campione d'Italia; (g) the Italian waters of Lake Lugano.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 6 ):
1. This Directive shall not apply to the following territories forming part of the customs territory of the Community: (a) Mount Athos; (b) the Canary Islands; (c) the French territories referred to in Article 349 and Article 355(1) of the Treaty on the Functioning of the European Union; (d) the Åland Islands; (e) the Channel Islands. 2. This Directive shall not apply to the following territories not forming part of the customs territory of the Community: (a) the Island of Heligoland; (b) the territory of Büsingen; (c) Ceuta; (d) Melilla; (e) Livigno; (f) Campione d'Italia; (g) the Italian waters of Lake Lugano.
Article 7 
1. In view of the conventions and treaties concluded with France, the United Kingdom and Cyprus respectively, the Principality of Monaco, the Isle of Man and the United Kingdom Sovereign Base Areas of Akrotiri and Dhekelia shall not be regarded, for the purposes of the application of this Directive, as third countries. 2. Member States shall take the measures necessary to ensure that transactions originating in or intended for the Principality of Monaco are treated as transactions originating in or intended for France, that transactions originating in or intended for the Isle of Man are treated as transactions originating in or intended for the United Kingdom, and that transactions originating in or intended for the United Kingdom Sovereign Base Areas of Akrotiri and Dhekelia are treated as transactions originating in or intended for Cyprus.
Article 8 
If the Commission considers that the provisions laid down in Articles 6 and 7 are no longer justified, particularly in terms of fair competition or own resources, it shall present appropriate proposals to the Council.
Article 9 
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity. 2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.
Article 10 
The condition in Article 9(1) that the economic activity be conducted ‘independently’ shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer's liability.
Article 11 
After consulting the advisory committee on value added tax (hereafter, the ‘VAT Committee’), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links. A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.
Article 12 
1. Member States may regard as a taxable person anyone who carries out, on an occasional basis, a transaction relating to the activities referred to in the second subparagraph of Article 9(1) and in particular one of the following transactions: (a) the supply, before first occupation, of a building or parts of a building and of the land on which the building stands; (b) the supply of building land. 2. For the purposes of paragraph 1(a), ‘building’ shall mean any structure fixed to or in the ground. Member States may lay down the detailed rules for applying the criterion referred to in paragraph 1(a) to conversions of buildings and may determine what is meant by ‘the land on which a building stands’. Member States may apply criteria other than that of first occupation, such as the period elapsing between the date of completion of the building and the date of first supply, or the period elapsing between the date of first occupation and the date of subsequent supply, provided that those periods do not exceed five years and two years respectively. 3. For the purposes of paragraph 1(b), ‘building land’ shall mean any unimproved or improved land defined as such by the 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 12 ):
2. For the purposes of paragraph 1(a), ‘building’ shall mean any structure fixed to or in the ground. Member States may lay down the detailed rules for applying the criterion referred to in paragraph 1(a) to conversions of buildings and may determine what is meant by ‘the land on which a building stands’. Member States may apply criteria other than that of first occupation, such as the period elapsing between the date of completion of the building and the date of first supply, or the period elapsing between the date of first occupation and the date of subsequent supply, provided that those periods do not exceed five years and two years respectively. 3. For the purposes of paragraph 1(b), ‘building land’ shall mean any unimproved or improved land defined as such by the Member States.
Article 13 
1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions. However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition. In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible. 2. Member States may regard activities, exempt under Articles 132, 135, 136 and 371, Articles 374 to 377, Article 378(2), Article 379(2) or Articles 380 to 390b, engaged in by bodies governed by public law as activities in which those bodies engage as public authorities.
Article 14 
1. ‘Supply of goods’ shall mean the transfer of the right to dispose of tangible property as owner. 2. In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods: (a) the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation; (b) the actual handing over of goods pursuant to a contract for the hire of goods for a certain period, or for the sale of goods on deferred terms, which provides that in the normal course of events ownership is to pass at the latest upon payment of the final instalment; (c) the transfer of goods pursuant to a contract under which commission is payable on purchase or sale. 3. Member States may regard the handing over of certain works of construction as a supply of goods.
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 14 ):
1. ‘Supply of goods’ shall mean the transfer of the right to dispose of tangible property as owner. In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods: (a) the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation; (b) the actual handing over of goods pursuant to a contract for the hire of goods for a certain period, or for the sale of goods on deferred terms, which provides that in the normal course of events ownership is to pass at the latest upon payment of the final instalment; (c) the transfer of goods pursuant to a contract under which commission is payable on purchase or sale. 3. Member States may regard the handing over of certain works of construction as a supply of goods. For the purposes of this Directive, the following definitions shall apply: ‘intra-Community distance sales of goods’ means supplies of goods dispatched or transported by or on behalf of the supplier, including where the supplier intervenes indirectly in the transport or dispatch of the goods, from a Member State other than that in which dispatch or transport of the goods to the customer ends, where the following conditions are met: (a) the supply of goods is carried out for a taxable person, or a non-taxable legal person, 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 goods supplied are neither new means of transport nor goods supplied after assembly or installation, with or without a trial run, by or on behalf of the supplier; ‘distance sales of goods imported from third territories or third countries’ means supplies of goods dispatched or transported by or on behalf of the supplier, including where the supplier intervenes indirectly in the transport or dispatch of the goods, from a third territory or third country, to a customer in a Member State, where the following conditions are met:
Article 15 
1. Electricity, gas, heat or cooling energy and the like shall be treated as tangible property. 2. Member States may regard the following as tangible property: (a) certain interests in immovable property; (b) rights in rem giving the holder thereof a right of use over immovable property; (c) shares or interests equivalent to shares giving the holder thereof de jure or de facto rights of ownership or possession over immovable property or part thereof.
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 16 
The application by a taxable person of goods forming part of his business assets for his private use or for that of his staff, or their disposal free of charge or, more generally, their application for purposes other than those of his business, shall be treated as a supply of goods for consideration, where the VAT on those goods or the component parts thereof was wholly or partly deductible. However, the application of goods for business use as samples or as gifts of small value shall not be treated as a supply of goods for consideration.
Article 17 
1. The transfer by a taxable person of goods forming part of his business assets to another Member State shall be treated as a supply of goods for consideration. ‘Transfer to another Member State’ shall mean the dispatch or transport of movable tangible property by or on behalf of the taxable person, for the purposes of his business, to a destination outside the territory of the Member State in which the property is located, but within the Community. 2. The dispatch or transport of goods for the purposes of any of the following transactions shall not be regarded as a transfer to another Member State: (a) the supply of the goods by the taxable person within the territory of the Member State in which the dispatch or transport ends, in accordance with the conditions laid down in Article 33; (b) the supply of the goods, for installation or assembly by or on behalf of the supplier, by the taxable person within the territory of the Member State in which dispatch or transport of the goods ends, in accordance with the conditions laid down in Article 36; (c) the supply of the goods by the taxable person on board a ship, an aircraft or a train in the course of a passenger transport operation, in accordance with the conditions laid down in Article 37; (d) the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity or the supply of heat or cooling energy through heating or cooling networks, in accordance with the conditions laid down in Articles 38 and 39; (e) the supply of the goods by the taxable person within the territory of the Member State, in accordance with the conditions laid down in Articles 138, 146, 147, 148, 151 or 152; (f) the supply of a service performed for the taxable person and consisting of work on the goods in question physically carried out within the territory of the Member State in which dispatch or transport of the goods ends, provided that the goods, after being worked upon, are returned to that taxable person in the Member State from which they were initially dispatched or transported; (g) the temporary use of the goods within the territory of the Member State in which dispatch or transport of the goods ends, for the purposes of the supply of services by the taxable person established within the Member State in which dispatch or transport of the goods began; (h) the temporary use of the goods, for a period not exceeding twenty-four months, within the territory of another Member State, in which the importation of the same goods from a third country with a view to their temporary use would be covered by the arrangements for temporary importation with full exemption from import duties. 3. If one of the conditions governing eligibility under paragraph 2 is no longer met, the goods shall be regarded as having been transferred to another Member State. In such cases, the transfer shall be deemed to take place at the time when that condition ceases to be met.
Amendment rationale: CONTEXT OF THE PROPOSAL 1. Article 97(1) of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax[1] (hereinafter "the VAT Directive") provides that from 1 January 2006 until 31 December 2010 the standard rate may not be less than 15% and Article 97(2) stipulates that the Council shall decide, in accordance with Article 93 of the Treaty, on the level of the standard rate of value added tax (VAT) to be applied after 31 December 2010. 2. This provision was based on Article 93 of the Treaty establishing the European Community (the EC Treaty). As from 1 December 2009, Article 93 of the EC Treaty is replaced by Article 113 of the Treaty on the Functioning of the European Union (TFEU). Article 113 TFEU stipulates that the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes to the extent that such harmonisation is necessary to ensure the establishment and functioning of the internal market and to avoid distortion of competition. 3. With a view to establishing the internal market on 1 January 1993, the Commission presented proposals intended to set up a definitive system of tax harmonisation. 4. However, when it became clear that it would be impossible to adopt the Commission's proposals before 1 January 1993, the Council decided to adopt a transitional system. With regard to VAT rates, it adopted Directive 92/77/EEC[2]. 5. That Directive introduced a system of minimum rates. It stipulated that from 1 January 1993 to 31 December 1996, the standard rate could not be set lower than 15%. This provision has been extended four times and applies until 31 December 2010. 6. To maintain the degree of harmonisation of rates already achieved, the Commission has twice presented proposals providing for a standard rate band with a minimum rate of 15% and a maximum rate of 25%[3]. The band was derived from the rates applied in practice in Member States, where standard rates have always varied between 15% and 25%. 7. In both cases, the proposals to approximate rates were amended by the Council,[4] which kept only the principle of a minimum rate, referring to a 15% minimum rate comparable to the system introduced by the 1992 Directive. 8. However, these Council Directives were adopted with a statement for the Council minutes mentioning Member States' efforts to avoid widening the 10 percentage point span between the lowest and highest rates applied. This demonstrates the continued concerns of Member States about distortions between high and low rate countries and the possible budgetary effects of different levels of VAT rates. In the light of the current economic crisis, there are further arguments for keeping a minimum standard rate to be laid down in the VAT Directive. 9. Despite various improvements to the common VAT system based on the Commission's pragmatic, phased VAT strategy launched in 2000[5] and updated in 2003[6], the VAT system continues to suffer from shortcomings and high administrative burdens. This means it needs to be fundamentally reassessed. New economic realities, technological processes, fraud patterns etc. also give rise to new challenges. That is why the Commission plans to publish a consultative green paper soon on a new VAT strategy. This will launch a consultation on future tax harmonisation. Only in the light of the outcome of that process can an appropriate decision be taken on the level of standard rates of VAT in the EU. 10. Moreover, recent modifications to the VAT Directive[7] have favoured taxation at the place of consumption, as this results in fewer possibilities for cross-border transactions seeking lower VAT rates, leading to distortions of competition. However, it remains important to prevent growing divergence in standard VAT rates applied by Member States from leading to structural imbalances in the EU and distortions of competition in some sectors of activity. To this end, it is common practice in the field of indirect taxes, both for excise duties and VAT, to set minimum rates. Although no maximum rate is proposed, the span between the standard rates applied in the Member States can – as is currently the case – be expected to ensure the proper functioning of the internal market while acknowledging the possible need for new budgetary resources from consumption taxes. 11. The accession of new Member States on 1 May 2004 and on 1 January 2007 did not alter the situation regarding the standard rate. That still ranges from 15% to 25% in 27 Member States. Two Member States (Cyprus and Luxembourg) apply a 15% rate and three a 25% rate (Denmark, Hungary and Sweden). 12. In these circumstances, it therefore appears appropriate to maintain the principle of a minimum standard VAT rate of 15%, and to propose that the current arrangements be extended. 13. To give businesses necessary legal certainty, and allow further evaluation of the appropriate level of the standard VAT rate at EU level, it seems appropriate to extend the provision for another five years, while the Commission reflects on a new VAT strategy and re-examines the standard VAT rate appropriate for a common approach. 14. Since the application of the minimum standard rate under Article 97(1) of Directive 2006/112/EC expires on 31 December 2010, the object of this proposal is to enable the Council to extend the period during which this rate applies. The minimum standard VAT rate is therefore set at 15% for five years from 1 January 2011 to 31 December 2015. The Commission would also expect the Council to renew the statement for the minutes agreed earlier on the span between the lowest and highest rates applied for that same period.
Revised version (Article 17 ):
1. The transfer by a taxable person of goods forming part of his business assets to another Member State shall be treated as a supply of goods for consideration. ‘Transfer to another Member State’ shall mean the dispatch or transport of movable tangible property by or on behalf of the taxable person, for the purposes of his business, to a destination outside the territory of the Member State in which the property is located, but within the Community. 2. The dispatch or transport of goods for the purposes of any of the following transactions shall not be regarded as a transfer to another Member State: (a) the supply of the goods by the taxable person within the territory of the Member State in which the dispatch or transport ends, in accordance with the conditions laid down in Article 33; (b) the supply of the goods, for installation or assembly by or on behalf of the supplier, by the taxable person within the territory of the Member State in which dispatch or transport of the goods ends, in accordance with the conditions laid down in Article 36; (c) the supply of the goods by the taxable person on board a ship, an aircraft or a train in the course of a passenger transport operation, in accordance with the conditions laid down in Article 37; (d) the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity or the supply of heat or cooling energy through heating or cooling networks, in accordance with the conditions laid down in Articles 38 and 39; (e) the supply of the goods by the taxable person within the territory of the Member State, in accordance with the conditions laid down in Articles 138, 146, 147, 148, 151 or 152; (f) the supply of a service performed for the taxable person and consisting in valuations of, or work on, the goods in question physically carried out within the territory of the Member State in which dispatch or transport of the goods ends, provided that the goods, after being valued or worked upon, are returned to that taxable person in the Member State from which they were initially dispatched or transported; (g) the temporary use of the goods within the territory of the Member State in which dispatch or transport of the goods ends, for the purposes of the supply of services by the taxable person established within the Member State in which dispatch or transport of the goods began; (h) the temporary use of the goods, for a period not exceeding twenty-four months, within the territory of another Member State, in which the importation of the same goods from a third country with a view to their temporary use would be covered by the arrangements for temporary importation with full exemption from import duties. 3. If one of the conditions governing eligibility under paragraph 2 is no longer met, the goods shall be regarded as having been transferred to another Member State. In such cases, the transfer shall be deemed to take place at the time when that condition ceases to be met.
Article 18 
Member States may treat each of the following transactions as a supply of goods for consideration: (a) the application by a taxable person for the purposes of his business of goods produced, constructed, extracted, processed, purchased or imported in the course of such business, where the VAT on such goods, had they been acquired from another taxable person, would not be wholly deductible; (b) the application of goods by a taxable person for the purposes of a non-taxable area of activity, where the VAT on such goods became wholly or partly deductible upon their acquisition or upon their application in accordance with point (a); (c) with the exception of the cases referred to in Article 19, the retention of goods by a taxable person, or by his successors, when he ceases to carry out a taxable economic activity, where the VAT on such goods became wholly or partly deductible upon their acquisition or upon their application in accordance with point (a).
Article 19 
In the event of a transfer, whether for consideration or not or as a contribution to a company, of a totality of assets or part thereof, Member States may consider that no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor. Member States may, in cases where the recipient is not wholly liable to tax, take the measures necessary to prevent distortion of competition. They may also adopt any measures needed to prevent tax evasion or avoidance through the use of this Article.
Article 20 
‘Intra-Community acquisition of goods’ shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began. Where goods acquired by a non-taxable legal person are dispatched or transported from a third territory or a third country and imported by that non-taxable legal person into a Member State other than the Member State in which dispatch or transport of the goods ends, the goods shall be regarded as having been dispatched or transported from the Member State of importation. That Member State shall grant the importer designated or recognised under Article 201 as liable for payment of VAT a refund of the VAT paid in respect of the importation of the goods, provided that the importer establishes that VAT has been applied to his acquisition in the Member State in which dispatch or transport of the goods ends.
Article 21 
The application by a taxable person, for the purposes of his business, of goods dispatched or transported by or on behalf of that taxable person from another Member State, within which the goods were produced, extracted, processed, purchased or acquired within the meaning of Article 2(1)(b), or into which they were imported by that taxable person for the purposes of his business, shall be treated as an intra-Community acquisition of goods for consideration.
Article 22 
The application by the armed forces of a State party to the North Atlantic Treaty, for their use or for the use of the civilian staff accompanying them, of goods which they have not purchased subject to the general rules governing taxation on the domestic market of a Member State shall be treated as an intra-Community acquisition of goods for consideration, where the importation of those goods would not be eligible for the exemption provided for in Article 143(1)(h).
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 22 ):
The application by the armed forces of a Member State taking part in a defence effort carried out for the implementation of a Union activity under the common security and defence policy, for their use or for the use of the civilian staff accompanying them, of goods which they have not purchased subject to the general rules governing taxation on the domestic market of a Member State shall be treated as an intra-Community acquisition of goods for consideration, where the importation of those goods would not be eligible for the exemption provided for in point (ga) of Article 143(1). The application by the armed forces of a State party to the North Atlantic Treaty, for their use or for the use of the civilian staff accompanying them, of goods which they have not purchased subject to the general rules governing taxation on the domestic market of a Member State shall be treated as an intra-Community acquisition of goods for consideration, where the importation of those goods would not be eligible for the exemption provided for in Article 143(1)(h).
Article 23 
Member States shall take the measures necessary to ensure that a transaction which would have been classed as a supply of goods if it had been carried out within their territory by a taxable person acting as such is classed as an intra-Community acquisition of goods.
Article 24 
1. ‘Supply of services’ shall mean any transaction which does not constitute a supply of goods. 2. ‘Telecommunications services’ shall mean services relating to the transmission, emission or reception of signals, words, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception, with the inclusion of the provision of access to global information networks.
Article 25 
A supply of services may consist, inter alia, in one of the following transactions: (a) the assignment of intangible property, whether or not the subject of a document establishing title; (b) the obligation to refrain from an act, or to tolerate an act or situation; (c) the performance of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law.
Article 26 
1. Each of the following transactions shall be treated as a supply of services for consideration: (a) the use of goods forming part of the assets of a business for the private use of a taxable person or of his staff or, more generally, for purposes other than those of his business, where the VAT on such goods was wholly or partly deductible; (b) the supply of services carried out free of charge by a taxable person for his private use or for that of his staff or, more generally, for purposes other than those of his business. 2. Member States may derogate from paragraph 1, provided that such derogation does not lead to distortion of competition.
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 26 ):
1. Each of the following transactions shall be treated as a supply of services for consideration: (a) the use of goods forming part of the assets of a business for the private use of a taxable person or of his staff or, more generally, for purposes other than those of his business, where the VAT on such goods was wholly or partly deductible; (b) the supply of services carried out free of charge by a taxable person for his private use or for that of his staff or, more generally, for purposes other than those of his business. Each of the following transactions shall be treated as a supply of services for consideration: (a) the use of goods forming part of the assets of a business for the private use of a taxable person or of his staff or, more generally, for purposes other than those of his business, where the VAT on such goods was wholly or partly deductible; (b) the supply of services carried out free of charge by a taxable person for his private use or for that of his staff or, more generally, for purposes other than those of his business. 2. Member States may derogate from paragraph 1, provided that such derogation does not lead to distortion of competition.
Article 27 
In order to prevent distortion of competition and after consulting the VAT Committee, Member States may treat as a supply of services for consideration the supply by a taxable person of a service for the purposes of his business, where the VAT on such a service, were it supplied by another taxable person, would not be wholly deductible.
Article 28 
Where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.
Article 29 
Article 19 shall apply in like manner to the supply of services.
Article 30 
‘Importation of goods’ shall mean the entry into the Community of goods which are not in free circulation within the meaning of Article 24 of the Treaty. In addition to the transaction referred to in the first paragraph, the entry into the Community of goods which are in free circulation, coming from a third territory forming part of the customs territory of the Community, shall be regarded as importation of goods.
Article 31 
Where goods are not dispatched or transported, the place of supply shall be deemed to be the place where the goods are located at the time when the supply takes place.
Article 32 
Where goods are dispatched or transported by the supplier, or by the customer, or by a third person, the place of supply shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer begins. However, if dispatch or transport of the goods begins in a third territory or third country, both the place of supply by the importer designated or recognised under Article 201 as liable for payment of VAT and the place of any subsequent supply shall be deemed to be within the Member State of importation of the goods.
Article 33 
1. By way of derogation from Article 32, the place of supply of goods dispatched or transported by or on behalf of the supplier from a Member State other than that in which dispatch or transport of the goods ends shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends, where the following conditions are met: (a) the supply of goods is carried out for a taxable person, or a non-taxable legal person, 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 goods supplied are neither new means of transport nor goods supplied after assembly or installation, with or without a trial run, by or on behalf of the supplier. 2. Where the goods supplied are dispatched or transported from a third territory or a third country and imported by the supplier into a Member State other than that in which dispatch or transport of the goods to the customer ends, they shall be regarded as having been dispatched or transported from the Member State of importation.
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 33 ):
By way of derogation from Article 32: (a) the place of supply of intra-Community distance sales of goods shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends; (b) the place of supply of distance sales of goods imported from third territories or third countries into a Member State other than that in which dispatch or transport of the goods to the customer ends, shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends; (c) the place of supply of distance sales of goods imported from third territories or third countries into the Member State in which dispatch or transport of the goods to the customer ends shall be deemed to be in that Member State, provided that VAT on those goods is to be declared under the special scheme of Section 4 of Chapter 6 of Title XII.
Article 34 
1. Provided the following conditions are met, Article 33 shall not apply to supplies of goods all of which are dispatched or transported to the same Member State, where that Member State is the Member State in which dispatch or transport of the goods ends: (a) the goods supplied are not products subject to excise duty; (b) the total value, exclusive of VAT, of such supplies effected under the conditions laid down in Article 33 within that Member State does not in any one calendar year exceed EUR 100 000 or the equivalent in national currency; (c) the total value, exclusive of VAT, of the supplies of goods, other than products subject to excise duty, effected under the conditions laid down in Article 33 within that Member State did not in the previous calendar year exceed EUR 100 000 or the equivalent in national currency. 2. The Member State within the territory of which the goods are located at the time when their dispatch or transport to the customer ends may limit the threshold referred to in paragraph 1 to EUR 35 000 or the equivalent in national currency, where that Member State fears that the threshold of EUR 100 000 might cause serious distortion of competition. Member States which exercise the option under the first subparagraph shall take the measures necessary to inform accordingly the competent public authorities in the Member State in which dispatch or transport of the goods begins. 3. The Commission shall present to the Council at the earliest opportunity a report on the operation of the special EUR 35 000 threshold referred to in paragraph 2, accompanied, if necessary, by appropriate proposals. 4. The Member State within the territory of which the goods are located at the time when their dispatch or transport begins shall grant those taxable persons who carry out supplies of goods eligible under paragraph 1 the right to opt for the place of supply to be determined in accordance with Article 33. The Member States concerned shall lay down the detailed rules governing the exercise of the option referred to in the first subparagraph, which shall in any event cover two calendar years.
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
Article 35 
Articles 33 and 34 shall not apply to supplies of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), nor to supplies of second-hand means of transport, as defined in Article 327(3), subject to VAT in accordance with the relevant special arrangements.
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 35 ):
Article 33 shall not apply to supplies of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), nor to supplies of second-hand means of transport, as defined in Article 327(3), subject to VAT in accordance with the relevant special arrangements.
Article 36 
Where goods dispatched or transported by the supplier, by the customer or by a third person are installed or assembled, with or without a trial run, by or on behalf of the supplier, the place of supply shall be deemed to be the place where the goods are installed or assembled. Where the installation or assembly is carried out in a Member State other than that of the supplier, the Member State within the territory of which the installation or assembly is carried out shall take the measures necessary to ensure that there is no double taxation in that Member State.
Article 37 
1. Where goods are supplied on board ships, aircraft or trains during the section of a passenger transport operation effected within the Community, the place of supply shall be deemed to be at the point of departure of the passenger transport operation. 2. For the purposes of paragraph 1, ‘section of a passenger transport operation effected within the Community’ shall mean the section of the operation effected, without a stopover outside the Community, between the point of departure and the point of arrival of the passenger transport operation. ‘Point of departure of a passenger transport operation’ shall mean the first scheduled point of passenger embarkation within the Community, where applicable after a stopover outside the Community. ‘Point of arrival of a passenger transport operation’ shall mean the last scheduled point of disembarkation within the Community of passengers who embarked in the Community, where applicable before a stopover outside the Community. In the case of a return trip, the return leg shall be regarded as a separate transport operation. 3. The Commission shall, at the earliest opportunity, present to the Council a report, accompanied if necessary by appropriate proposals, on the place of taxation of the supply of goods for consumption on board and the supply of services, including restaurant services, for passengers on board ships, aircraft or trains. Pending adoption of the proposals referred to in the first subparagraph, Member States may exempt or continue to exempt, with deductibility of the VAT paid at the preceding stage, the supply of goods for consumption on board in respect of which the place of taxation is determined in accordance with paragraph 1.
Article 38 
1. In the case of the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity, or the supply of heat or cooling energy through heating or cooling networks to a taxable dealer, the place of supply shall be deemed to be the place where that taxable dealer has established his business or has a fixed establishment for which the goods are supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides. 2. For the purposes of paragraph 1, ‘taxable dealer’ shall mean a taxable person whose principal activity in respect of purchases of gas, electricity, heat or cooling energy is reselling those products and whose own consumption of those products is negligible.
Article 39 
In the case of the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity or the supply of heat or cooling energy through heating or cooling networks, where such a supply is not covered by Article 38, the place of supply shall be deemed to be the place where the customer effectively uses and consumes the goods. Where all or part of the gas, electricity or heat or cooling energy is not effectively consumed by the customer, those non-consumed goods shall be deemed to have been used and consumed at the place where the customer has established his business or has a fixed establishment for which the goods are supplied. In the absence of such a place of business or fixed establishment, the customer shall be deemed to have used and consumed the goods at the place where he has his permanent address or usually resides.
Article 40 
The place of an intra-Community acquisition of goods shall be deemed to be the place where dispatch or transport of the goods to the person acquiring them ends.
Article 41 
Without prejudice to Article 40, the place of an intra-Community acquisition of goods as referred to in Article 2(1)(b)(i) shall be deemed to be within the territory of the Member State which issued the VAT identification number under which the person acquiring the goods made the acquisition, unless the person acquiring the goods establishes that VAT has been applied to that acquisition in accordance with Article 40. If VAT is applied to the acquisition in accordance with the first paragraph and subsequently applied, pursuant to Article 40, to the acquisition in the Member State in which dispatch or transport of the goods ends, the taxable amount shall be reduced accordingly in the Member State which issued the VAT identification number under which the person acquiring the goods made the acquisition.
Article 42 
The first paragraph of Article 41 shall not apply and VAT shall be deemed to have been applied to the intra-Community acquisition of goods in accordance with Article 40 where the following conditions are met: (a) the person acquiring the goods establishes that he has made the intra-Community acquisition for the purposes of a subsequent supply, within the territory of the Member State identified in accordance with Article 40, for which the person to whom the supply is made has been designated in accordance with Article 197 as liable for payment of VAT; (b) the person acquiring the goods has satisfied the obligations laid down in Article 265 relating to submission of the recapitulative statement.
Article 43 
For the purpose of applying the rules concerning the place of supply of services: 1. a taxable person who also carries out activities or transactions that are not considered to be taxable supplies of goods or services in accordance with Article 2(1) shall be regarded as a taxable person in respect of all services rendered to him; 2. a non-taxable legal person who is identified for VAT purposes shall be regarded as a taxable person.
Article 44 
The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the taxable person who receives such services has his permanent address or usually resides.
Article 45 
The place of supply of services to a non-taxable person shall be the place where the supplier has established his business. However, if those services are provided from a fixed establishment of the supplier located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the supplier has his permanent address or usually resides.
Article 46 
The place of supply of services rendered to a non-taxable person by an intermediary acting in the name and on behalf of another person shall be the place where the underlying transaction is supplied in accordance with this Directive. Subsection 2 Supply of services connected with immovable property
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 46 ):
The place of supply of services rendered to a non-taxable person by an intermediary acting in the name and on behalf of another person shall be the place where the underlying transaction is supplied in accordance with this Directive.
Article 47 
The place of supply of services connected with immovable property, including the services of experts and estate agents, the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or sites developed for use as camping sites, the granting of rights to use immovable property and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the immovable property is located. Subsection 3 Supply of transport
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 47 ):
The place of supply of services connected with immovable property, including the services of experts and estate agents, the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or sites developed for use as camping sites, the granting of rights to use immovable property and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the immovable property is located.
Article 48 
The place of supply of passenger transport shall be the place where the transport takes place, proportionate to the distances covered.
Article 49 
The place of supply of the transport of goods, other than the intra-Community transport of goods, to non-taxable persons shall be the place where the transport takes place, proportionate to the distances covered.
Article 50 
The place of supply of the intra-Community transport of goods to non-taxable persons shall be the place of departure.
Article 51 
‘Intra-Community transport of goods’ shall mean any transport of goods in respect of which the place of departure and the place of arrival are situated within the territories of two different Member States. ‘Place of departure’ shall mean the place where transport of the goods actually begins, irrespective of distances covered in order to reach the place where the goods are located and ‘place of arrival’ shall mean the place where transport of the goods actually ends.
Article 52 
Member States need not apply VAT to that part of the intra-Community transport of goods to non-taxable persons taking place over waters which do not form part of the territory of the Community. Subsection 4 Supply of cultural, artistic, sporting, scientific, educational, entertainment and similar services, ancillary transport services and valuations of and work on movable property
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 52 ):
Member States need not apply VAT to that part of the intra-Community transport of goods to non-taxable persons taking place over waters which do not form part of the territory of the Community.
Article 53 
The place of supply of services and ancillary services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, such as fairs and exhibitions, including the supply of services of the organisers of such activities, shall be the place where those activities are physically carried out.
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 53 ):
The place of supply of services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions, and of ancillary services related to the admission, supplied to a taxable person, shall be the place where those events actually take place.
Article 54 
The place of supply of the following services to non-taxable persons shall be the place where the services are physically carried out: (a) ancillary transport activities such as loading, unloading, handling and similar activities; (b) valuations of and work on movable tangible property. Subsection 5 Supply of restaurant and catering services
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 54 ):
1. The place of supply of services and ancillary services, relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, such as fairs and exhibitions, including the supply of services of the organisers of such activities, supplied to a non-taxable person shall be the place where those activities actually take place. 2. The place of supply of the following services to a non-taxable person shall be the place where the services are physically carried out: (a) ancillary transport activities such as loading, unloading, handling and similar activities; (b) valuations of and work on movable tangible property. Subsection 5 Supply of restaurant and catering services
Article 55 
The place of supply of restaurant and catering services other than those physically carried out on board ships, aircraft or trains during the section of a passenger transport operation effected within the Community, shall be the place where the services are physically carried out. Subsection 6 Hiring of means of transport
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 55 ):
The place of supply of restaurant and catering services other than those physically carried out on board ships, aircraft or trains during the section of a passenger transport operation effected within the Community, shall be the place where the services are physically carried out.
Article 56 
1. The place of short-term hiring of a means of transport shall be the place where the means of transport is actually put at the disposal of the customer. 2. For the purposes of paragraph 1, ‘short-term’ shall mean the continuous possession or use of the means of transport throughout a period of not more than thirty days and, in the case of vessels, not more than ninety days. Subsection 7 Supply of restaurant and catering services for consumption on board ships, aircraft or trains
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 56 ):
1. The place of short-term hiring of a means of transport shall be the place where the means of transport is actually put at the disposal of the customer. 2. The place of hiring, other than short-term hiring, of a means of transport to a non-taxable person shall be the place where the customer is established, has his permanent address or usually resides. However, the place of hiring a pleasure boat to a non-taxable person, other than short-term hiring, shall be the place where the pleasure boat is actually put at the disposal of the customer, where this service is actually provided by the supplier from his place of business or a fixed establishment situated in that place. 3. For the purposes of paragraphs 1 and 2, ‘short-term’ shall mean the continuous possession or use of the means of transport throughout a period of not more than thirty days and, in the case of vessels, not more than 90 days. Subsection 7 Supply of restaurant and catering services for consumption on board ships, aircraft or trains
Article 57 
1. The place of supply of restaurant and catering services which are physically carried out on board ships, aircraft or trains during the section of a passenger transport operation effected within the Community, shall be at the point of departure of the passenger transport operation. 2. For the purposes of paragraph 1, ‘section of a passenger transport operation effected within the Community’ shall mean the section of the operation effected, without a stopover outside the Community, between the point of departure and the point of arrival of the passenger transport operation. ‘Point of departure of a passenger transport operation’ shall mean the first scheduled point of passenger embarkation within the Community, where applicable after a stopover outside the Community. ‘Point of arrival of a passenger transport operation’ shall mean the last scheduled point of disembarkation within the Community of passengers who embarked in the Community, where applicable before a stopover outside the Community. In the case of a return trip, the return leg shall be regarded as a separate transport operation. Subsection 8 Supply of electronic services to non-taxable persons
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 57 ):
1. The place of supply of restaurant and catering services which are physically carried out on board ships, aircraft or trains during the section of a passenger transport operation effected within the Community, shall be at the point of departure of the passenger transport operation. 2. For the purposes of paragraph 1, ‘section of a passenger transport operation effected within the Community’ shall mean the section of the operation effected, without a stopover outside the Community, between the point of departure and the point of arrival of the passenger transport operation. ‘Point of departure of a passenger transport operation’ shall mean the first scheduled point of passenger embarkation within the Community, where applicable after a stopover outside the Community. ‘Point of arrival of a passenger transport operation’ shall mean the last scheduled point of disembarkation within the Community of passengers who embarked in the Community, where applicable before a stopover outside the Community. In the case of a return trip, the return leg shall be regarded as a separate transport operation. Subsection 8 Supply of telecommunications, broadcasting and electronic services to non-taxable persons
Article 58 
The place of supply of electronically supplied services, in particular those referred to in Annex II, when supplied to non-taxable persons who are established in a Member State, or who have their permanent address or usually reside in a Member State, by a taxable person who has established his business outside the Community or has a fixed establishment there from which the service is supplied, or who, in the absence of such a place of business or fixed establishment, has his permanent address or usually resides outside the Community, shall be the place where the non-taxable person is established, or where he has his permanent address or usually resides. Where the supplier of a service and the customer communicate via electronic mail, that shall not of itself mean that the service supplied is an electronically supplied service. Subsection 9 Supply of services to non-taxable persons outside the Community
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 58 ):
The place of supply of the following services to a non-taxable person shall be the place where that person is established, has his permanent address or usually resides: (a) telecommunications services; (b) radio and television broadcasting services; (c) electronically supplied services, in particular those referred to in Annex II. Where the supplier of a service and the customer communicate via electronic mail, that shall not of itself mean that the service supplied is an electronically supplied service. Subsection 9 Supply of services to non-taxable persons outside the Community
Article 59 
The place of supply of the following services to a non-taxable person who is established or has his permanent address or usually resides outside the Community, shall be the place where that person is established, has his permanent address or usually resides: (a) transfers and assignments of copyrights, patents, licences, trade marks and similar rights; (b) advertising services; (c) the services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information; (d) obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right referred to in this Article; (e) banking, financial and insurance transactions including reinsurance, with the exception of the hire of safes; (f) the supply of staff; (g) the hiring out of movable tangible property, with the exception of all means of transport; (h) the provision of access to a natural gas system situated within the territory of the Community or to any network connected to such a system, to the electricity system or to heating or cooling networks, or the transmission or distribution through these systems or networks, and the provision of other services directly linked thereto; (i) telecommunications services; (j) radio and television broadcasting services; (k) electronically supplied services, in particular those referred to in Annex II. Where the supplier of a service and the customer communicate via electronic mail, that shall not of itself mean that the service supplied is an electronically supplied service. Subsection 10 Prevention of double taxation or non-taxation
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 59 ):
The place of supply of the following services to a non-taxable person who is established or has his permanent address or usually resides outside the Community, shall be the place where that person is established, has his permanent address or usually resides: (a) transfers and assignments of copyrights, patents, licences, trade marks and similar rights; (b) advertising services; (c) the services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information; (d) obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right referred to in this Article; (e) banking, financial and insurance transactions including reinsurance, with the exception of the hire of safes; (f) the supply of staff; (g) the hiring out of movable tangible property, with the exception of all means of transport; (h) the provision of access to a natural gas system situated within the territory of the Community or to any network connected to such a system, to the electricity system or to heating or cooling networks, or the transmission or distribution through these systems or networks, and the provision of other services directly linked thereto. Subsection 10 Prevention of double taxation or non-taxation
Article 59a 
In order to prevent double taxation, non-taxation or distortion of competition, Member States may, with regard to services the place of supply of which is governed by Articles 44, 45, 56 and 59: (a) consider the place of supply of any or all of those services, if situated within their territory, as being situated outside the Community if the effective use and enjoyment of the services takes place outside the Community; (b) consider the place of supply of any or all of those services, if situated outside the Community, as being situated within their territory if the effective use and enjoyment of the services takes place within their territory. However, this provision shall not apply to the electronically supplied services where those services are rendered to non-taxable persons not established within the Community.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal On 7 April 2016, the Commission adopted the VAT Action Plan 1 which presents objectives and measures to modernise the EU VAT system. It builds on the work carried out since the Communication on the future of VAT 2 that followed the large consultation process initiated by the Commission with its Green Paper on the future of VAT 3 . The creation of a robust single European VAT area is one of the key actions announced by the Commission in its Action Plan. It will require the setting up of the definitive VAT system for intra-EU business-to-business (B2B) cross-border trade in order to replace the current system which was intended to be transitional. As agreed by the European Parliament and the Council, this definitive VAT system will be based on the principle of taxation in the country of destination of the goods (the so called “destination principle”) whereas the current system is based on exemption of supplies of goods in the Member State of departure. Therefore, the Commission announced its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade based on this “taxation” option. However, since preparing, adopting and implementing such a major change is likely to take some time, the Commission recognized the need to work in parallel on other initiatives, in particular on urgent measures to tackle VAT fraud and, subsequently, the VAT gap, the difference between the expected VAT revenue and the VAT actually collected by tax authorities. This VAT gap has reached an alarming level of nearly EUR 160 billion 4 of which cross-border fraud accounts for about EUR 50 billion of revenue loss each year 5 . As one of these urgent measures, the Commission considered, upon request of certain Member States, the possibility of allowing these Member States to implement a temporary generalised reverse charge mechanism (GRCM) that would derogate from one of the general principles of the VAT Directive 6 , which is the fractionated payment. To that end, the Commission agreed to thoroughly assess the political, legal and economic implications of such a temporary GRCM before presenting its conclusions. This in depth analysis at technical level of a GRCM, with an invoice threshold of EUR 10 000, has been carried out and presented during the ECOFIN meeting of 17 June 2016. In the context of a political agreement on the overall anti-fraud policy within the EU, the Commission made the following statement to the ECOFIN Minutes: "The Commission commits to present, before the end of the year, a legislative proposal allowing individual Member States to derogate from the common system of value added tax so as to apply a generalised reverse charge mechanism to domestic supplies above a defined threshold and preserving the Internal Market." Consistency with existing policy provisions in the policy area The purpose of the legislative proposal is limited in scope and in time and is without prejudice to the development of the definitive VAT system based upon the taxation of cross-border supplies.
Revised version (Article 59a ):
In order to prevent double taxation, non-taxation or distortion of competition, Member States may, with regard to services the place of supply of which is governed by Articles 44, 45, 56, 58 and 59: (a) consider the place of supply of any or all of those services, if situated within their territory, as being situated outside the Community if the effective use and enjoyment of the services takes place outside the Community; (b) consider the place of supply of any or all of those services, if situated outside the Community, as being situated within their territory if the effective use and enjoyment of the services takes place within their territory.