4 Value Added Tax
| (25221)
5051/04
COM(03) 822
| Draft Council Directive amending Directive 77/388/EC as regards the place of supply of services
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| Legal base | Article 93 EC; consultation; unanimity
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| Department | HM Customs and Excise
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| Basis of consideration | SEM of 26 March 2004
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| Previous Committee Report | HC 42-ix (2003-04), para 19 (4 February 2004)
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Cleared (by Resolution of the House of 16 March 2004)
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Background
4.1 In October 2002 the Commission published a Communication reviewing
the definition of "the place of supply of services"
for Value Added Tax (VAT) purposes. A Commission Communication
of October 2003 on wider VAT issues also covered this matter.
The draft Directive in the current document would amend the Sixth
VAT Directive, 77/388/EEC, in relation to the rules determining
the place of taxation for supplies of services made by one business
to another. Presently most supplies of services are treated as
made where the supplier is established. For the future they would
as far as possible be taxed where they are consumed. They would
be treated as made where the customer is established, with exceptions
for certain services. Both the 2003 Commission Communication
and the draft Directive were discussed in European Standing Committee
B on 10 March 2004.[8]
The Regulatory Impact Assessment
4.2 The Paymaster General (Dawn Primarolo) now sends us the Government's
Regulatory Impact Assessment for the draft Directive. The thrust
of this assessment is very much in line with the comment the Minister
made to us in her original Explanatory Memorandum that "The
Government fully supports the Commission's overall aim to achieve
taxation in the place of consumption, and this proposal represents
a significant step in the right direction." The assessment
concludes:
"This measure provides a clear benefit to UK suppliers overall,
as it will allow them to compete in an increasingly competitive
market on level terms with suppliers of the same types of services
that are outside the EU. Further, it will reduce burdens on UK
businesses in having to comply with the VAT requirements of other
Member States and in making
refund claims."
Conclusion
4.3 We are grateful to the Minister for this additional
information.
8 See Stg Co Deb, European Standing Committee B, cols.
3-22. Back
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