VAT COMMITTEE Publication of Guidelines

Introduction

A total of 19 Guidelines have been approved for publication following review by the EU Commission Services of guidelines agreed from meetings of the Committee held in the years from 1996 to 1998 inclusive.

That review of earlier years meetings is still ongoing.

Unless otherwise stated, where unanimous agreement is not reached, it may be taken that Ireland’s position is reflected in the majority agreement.

Meeting No 47 - 11/12 March 1996

Article 16
Removal from tax-warehousing arrangements and person liable for payment

A large majority of the delegations confirmed the conclusions agreed by Working Party No 1 at its meeting of 18 and 19 May 1992 and took the view that the fact of goods being removed from warehousing arrangements did not in itself constitute a taxable transaction. Nevertheless, when goods were removed from warehousing arrangements, it should be checked that the amount of value-added tax due on the stored goods was the same as if exemption had not applied.

In the event of the goods having been resold successively in the warehouse, the delivery resulting in their being removed from warehousing arrangements no longer qualified for exemption under Article 16; application of the normal taxation or exemption rules for this delivery makes any other corrective measures superfluous.

However, in cases where removal from warehousing arrangements was unconnected to the delivery of the stored goods, corrective measures should be implemented where the goods remained on the territory of the Member State which authorised the warehouse.

Article 16(1)(B)(E)
Goods likely to be placed under warehousing arrangements other than customs warehousing

All delegations took the view that goods subject to excise duties could not give rise to exclusive placing under the VAT tax-warehousing arrangements provided for in Article 16(1)(B)(e). However, the Member States agreed that places which were approved as warehouses pursuant to Directive 92/12/EEC on excise duties could be recognised in parallel as VAT warehouses.

Meeting No 48 - 28 June/8 July 1996

Article 16(1)(B)(e)
Goods to which warehousing arrangements other than customs warehousing apply

Exclusion of the goods intended to be supplied at the retail stage.

The Committee considers almost unanimously that in order to preserve the general VAT principle of taxation at each stage of production/marketing, recourse to warehousing arrangements other than customs warehousing should not be automatic.

In this respect, the condition provided under paragraph 1 (e) according to which goods may not have been “intended to be supplied at the retail stage” should be interpreted not only with regard to the nature of the goods but also taking account of the possible different destinations of the goods such as whether they are intended for export or use in a production process as opposed to being destined for distribution for retail sale. The result is that the nature of the goods alone is not sufficient as the criterion to determine tax warehouse treatment but under no circumstances is it permissible for retail stock to be kept in a tax warehouse.

Article 28a(5) and 28b(F)
Consolidated document on transactions, other than bilateral, involving work on movable tangible property (cases No 1 and 4.2)

The Committee unanimously takes note of the up-dating work on the simplification of a number of contract work transactions already agreed by the Working Party No 1 at its meeting on 25 and 26 May 1993. The changes are made necessary (i) by the removal of the term contract work" (deletion of Article 5 (5) (a)) and the amendment of Article 28a(5), and (ii) by the insertion of a new section F in Article 28b in connection with the adoption of Council Directive 95/7/CE of 10 April 1995.

The delegations agreed unanimously that:

• All the simplification cases have the following elements in common:
  • the agreed simplification for applying tax consists in treating, in an identical manner, transactions which are similar from a tax and economic viewpoint
  • the conditions governing the application of Section F of Article 28b are met as the goods, that have to undergo the work, are dispatched or transported outside the Member State where the services were physically carried out
  • if the goods to be worked on are making temporary stops or are strictly speaking not subject of an expedition or re-expedition towards the principal, the finished products have, from the outset, a known final destination: they are solely destined to the client/principal.
• All simplifications are based on the same interpretation: the requirement that the finished products be returned to the Member State of initial departure, as foreseen in Article 28a paragraph 5 (b) 5th indent, is deemed to have been satisfied everywhere temporary stops occur. This presupposes that the individual places in which the work is carried out are not regarded as places of arrival of the goods to be worked on.

The simplification examples described constituted typical cases from which precise conditions have been laid down to enable simplifications to be made. Provided that other Community tax legislation was not affected and subject to the conditions laid down being observed, each of the simplifications envisaged could in practice be combined with any of the other simplifications.

The Committee unanimously considers that the document XXI/2118/95 Rev. 2 could be published in order to make this information available to operators and to strengthen the coherence of the implementation of these simplifications within the Union.

Article 15(2)
Method of calculation of the 175 ECU threshold

The delegations are unanimously of the opinion that, for the application of the exemption according to Article 15(2), the threshold of ECU 175 (or the lower value specified by the Member State in which the supply is deemed to be located) can be ascertained by invoice: implying that the exemption can concern the delivery of several goods shown on a single invoice, issued by the same taxable person for the same customer. The threshold mentioned cannot refer to various invoices issued by one or by different taxable persons regarding deliveries carried out for one or more customers.

Meeting No. 49 - 8/9 October 1996

Article 15 (10)
Common form for the application of the Article 15 (10) exemption

All delegations agreed to the common VAT and excise duty exemption certificate for the application of Article 15 (10) of the Directive as this had been amended following linguistic comments having been received from delegations.

Meeting No. 50 - 7 November 1996

Article 18 paragraph 1b)
Customs import documents -Indications required to exercise the right to deduction of VAT payable on import

The Committee unanimously feels that Article 18 paragraph 1b) of the Sixth Directive must be interpreted as meaning that the import “document” specifying the recipient or the importer of the goods and stating or permitting the calculation of the amount of tax due does not necessarily have to be an original paper copy of a certificate, but may take the form of electronic data insofar as the importing Member State has introduced a system allowing customs formalities to be completed by computer.

In this case, it falls to the importing Member State, which lays down the rules for the making of the declarations and payments of VAT, to take the necessary measures to ensure that the import declaration system provides every opportunity for checking regarding the exercise of the right to deduction, e.g. via electronic means.

The vast majority of the Committee consider that in accordance with Article 3(a) of the Eighth Directive, the current legal situation is such that a taxable person may not obtain a refund of value-added tax if the original paper copies of the import documents are not attached to the application. However, this does not prevent the customs administration from certifying as original a printout of data transmitted electronically.

Indeed, regarding application of the eighth Directive, it must be taken into account that the person applying for a refund does not keep in the refunding Member State any records which include the originals and which would permit checks to be carried out at a later date.

Meeting No. 52 - 28/29 May 1997

Articles 8 and 9
Construction of buildings

Virtually all the delegations considered that the construction of houses constituted a supply of services connected with immovable property which Member States however may, by virtue of Article 5 (5) of the Sixth VAT Directive, consider to be a supply of goods.

Where construction of houses is classified as a supply of goods, virtually all the delegations took the view that the location of this supply is governed by the criteria of Article 8 (1) (b) which means that it should be taxed where the work is carried out. They agreed that the dispatch or transport of materials by the construction firm from one Member State in order for this to be used in the construction of a building in another Member State constitutes a transfer followed by an acquisition of goods. In this respect, the non-established firm must, pursuant to the third indent of Article 22 (1) (c), register for VAT purposes in the Member State of acquisition and fulfil the obligations as stipulated.

Member States may, under Article 21 (1) (d), adopt arrangements whereby tax is payable by another person, such as a tax representative.

Article 13A (1) (q)
Activities of public radio and television bodies

Almost all the delegations took the view that the main element which serves to identify a television body as a public television body is public funding (public authority subsidies or licence fees). However, amongst other characteristics are special obligations such as coverage of a certain territory or a linguistic area.

Virtually all the delegations were of the opinion that the broadcasting of programmes for which the radio or television body receives funding through license money and subsidies constitutes the only non-commercial activity of public radio and television bodies. On the other hand, they considered that the sale of television programmes must always be taxed even if the transaction takes place between public bodies.

Article 9
Packages of services supplied in connection with trade fairs and similar exhibitions

The Committee unanimously considers that, when in the framework of a fair or similar exhibition, an enterprise intervenes between the exhibitor and the owner or organiser of the exhibition and, for an all-in price, supplies to the exhibitor, a complex package of services comprising, in addition to the provision of a stand, a number of other, related services, the whole package is to be regarded as a single service comprising various components which cannot and need not to be itemised according to their own place of taxation.

As to the place of supply rules, delegations unanimously agree that the provision of a single compound service should be subject to taxation in the Member State where the fair or exhibition is located, either on the grounds of Article 9 (2) (a) or based on Article 9 (2) (c), first indent.

Article 9 (2) (e)
Transfers of football players

A large majority of delegations confirm the initial guideline agreed by the Committee in its 34th meeting, namely that transfer fees are to be taxed according to Article 9 (2) (e) at the place where the customer has established his business or has a fixed establishment to which the service is supplied.

Article 13 A (1) (a)
Scope of the exemption applicable to deliveries by public postal services

The delegations unanimously agreed that a member state’s “public” postal service can only be treated as such when it operates within that country. A public postal service operating in a country other than its own should lose its status as a public service and, therefore, the right of exemption provided for under Article 13 (1) (a).

Meeting No. 53 - 4/5 November 1997

Article 4
Services supplied by company directors

All delegations agreed that services supplied by a legal person (company) as a member of a company’s board of directors should be regarded as economic activities carried out independently within the meaning of Article 4 (1) and (2) and that they should therefore be subject to VAT.

Article 9
Place of supply of services involving the tracing of heirs

The Committee unanimously agrees that the tracing of heirs falls within the scope of the third indent of Article 9 (2) (e), either as a service similar to one of the activities referred to in that Article or as the supply of information.

Article 6
Transfers of football players

A large majority of delegations took the view that a payment made by a football club to a player’s original club (a payment required by law and intended to compensate for expenditure incurred in training and developing the player) after the original contract had expired or had been terminated constituted a supply of services that was subject to VAT, even if the old club no longer had any rights over the player.

Meeting No. 54 - 16/17/18 February 1998

Article 12 (3) and annex H category 4
Reduced rates on medical equipment and other appliances

The delegations almost unanimously agreed that Member States may apply a reduced VAT rate to products specifically designed for disabled people (medical equipment, aids and other similar appliances) which are normally purchased or used only by (permanently or temporarily) disabled people to alleviate or treat their complaints. Products normally used for other purposes (e.g. cordless telephones) are excluded by the provision, as are also medical equipment and aids designed for general use and not specifically for disabled people (e.g. x-ray equipment).

Article 4
Assignment of broadcasting rights in respect of international football matches by organisations established abroad

The Committee unanimously agrees that the assignment of TV broadcasting rights in respect of football matches by bodies established in third countries constitutes an economic activity taxable in the hands of the customer on the basis of Article 9 (2) (e), first indent, of the Sixth Directive.

Article 9 (2) (c) 4th indent and 28b (f)
Application in cases of total or partial subcontracting

The Committee unanimously agrees that partial or total subcontracting of work on movable tangible property does not alter the intrinsic nature of the service supplied by the principal contractor in his relationship with his co-contractor customer and which therefore still ranks as work in respect of movable tangible property, even where the work is not “physically” carried out by the principal contractor who had undertaken to carry out the work, for which he bears full contractual responsibility vis-a-vis the customer.

In the case of partial subcontracting, provided that in the relationship between the principal contractor and the final customer the conditions under Article 28b (F) are not met, a large majority of the delegations considered that, in accordance with the fourth indent of Article 9 (2) (c), the place of the supply of the service by the principal contractor (including the work carried out by the subcontractor or subcontractors) in its entirely is the place where his own part of the work is physically carried out.

Article 28b (b)
Distance selling

The Committee agrees almost unanimously that Article 28b (B) ensuring taxation at destination of distance sales does not apply to supplies carried out until such time as, in the course of the calendar year, the amount laid down by the Member State of arrival has been exceeded (except in the situations covered by the second indent of paragraph 2 or where the taxable person has exercised the option under paragraph 3).

Taxation at destination can apply only to supplies of goods which give rise to the overstepping of the threshold, subsequent supplies, and all sales transacted during the year following that in which the threshold was exceeded.

Article 28a
Purchasing a new car before moving to another Member State

The Committee agrees unanimously that the transfer of a vehicle which still satisfies the definition of “new means of transport” within the meaning of Article 28a (a) (b), second paragraph, is not a taxable transaction when made by a private individual on moving house. It also agrees that, similarly, the return of a vehicle initially supplied under the exemption provided for in Article 28c (A) cannot be regarded as a taxable transaction authorising Member States to demand that the owner pay the VAT not collected when the initial supply was exempted.

The Committee also agrees unanimously that only the initial supply should be checked to ascertain whether the conditions for exemption by reason of transport outside the Member State of departure are met: to this end, registration of the vehicle with normal plates may be sufficient criterion for ruling out definitively any exemption in the Member State of purchase, conversely, registration of the vehicle under “transit” plates may indicate that the supply in fact concerns a new means of transport sent or transported to the buyer outside the territory of the Member State of departure but within the Community.

Note:

This guideline applies only where a private individual can produce independent evidence to show that the vehicle was purchased before there was any intention of transferring residence from one Member State to another.

If the vehicle was purchased, with a view to transfer of residence to another Member State, then clearly it was purchased for use in that other Member State, and should therefore be subject to VAT in that, Member State.

Article 28a (la) (b)
Exceeding the threshold for acquisitions of goods

Where the rules on the place at which taxable transactions are carried out have been incorrectly applied, the Committee unanimously agrees that:

• Each Member State must exercise its powers of taxation, irrespective of events elsewhere (Member State or third country);
• The Member State which collected the VAT incorrectly invoiced must return it to the person liable for the tax (the supplier of the goods or services) in accordance with its own domestic rules. Refunding the sum thus recovered to the final customer depends entirely on the contractual relations between the supplier and his/her customer.