7 Value added taxation
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14248/04
COM(04) 728
| Draft Directive amending Directive 77/388/EEC with a view to simplifying value added tax obligations
Draft Directive laying down detailed rules for the refund of value added tax, provided for in Directive 77/388/EEC, to enable taxable persons not established in the territory of the country but established in another Member State
Draft Regulation amending Regulation (EC) No 1798/2003 as regards the introduction of administrative cooperation arrangements in the context of the one-stop scheme and the refund procedure for value added tax
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| Legal base | Article 93 EC; consultation; unanimity
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| Basis of consideration | Minister's letter of 14 November 2005
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| Previous Committee Report | HC 34-vi (2005-06), para 12 (19 October 2005)
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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 | Not cleared; further information awaited
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Background
7.1 In 2003 the Commission published a Communication[13]
with a programme for improving the operation of the value added
tax (VAT) system within the context of the internal market. The
three legislative proposals in this document were presented by
the Commission in October 2004 as a package dealing with simplification
of VAT on cross- border supplies under that programme. They are:
- a draft Directive to amend the rules to introduce a one-stop
scheme for VAT — a technologically-based compliance framework
which would allow businesses trading across borders to deal predominantly
with a single tax authority;
- a draft Directive to provide detailed rules for
the refund procedure for businesses established in one Member
State, where VAT is incurred by them in another Member State;
and
- a draft Regulation to amend administrative cooperation
arrangements to support the one-stop scheme and refund procedure.
7.2 Our predecessors considered these proposals in
December 2004[14] and
we considered them further in October 2005 in the light of the
outcome of the department's consultations and other development's
the Government had reported to us. We noted the legal base for
the draft Directive on reform of the VAT refund procedure had
been incorrectly identified in the original Explanatory Memorandum
and asked for an assurance that such errors would be avoided for
the future. We asked also to be kept informed of developments
on issues related to refund procedure and threshold matters.[15]
The Minister's letter
7.3 The Paymaster General (Ms Dawn Primarolo) writes
to apologise about the original incorrect information about the
legal base for the draft Directive on reform of the VAT refund
procedure and to assure us that additional procedures are being
put in place to guard against such an error occurring in future.
7.4 As for the legal base itself the Minister explains
the objection to the use of Article 29A of the Sixth VAT Directive,
rather than Article 93 of the EC Treaty, saying that the Government
and other Member States had agreed to this relatively new provision
on the understanding that it was to ensure common interpretations
of the Sixth VAT Directive, such as implementing measures in respect
of VAT Committee guidelines, that the draft Directive to reform
the VAT refund procedure does not fall into that category, that
Member States objected to its use as a legal base and that they
insisted that the legal base should be changed to Article 93,
in line with the other two legislative proposals.
Conclusion
7.5 We are grateful for the Minister for her assurance
about avoiding incorrect information on legal bases for the future
and for her explanation of the objection to the original legal
base for the draft Directive to reform the VAT refund procedure.
7.6 We await the information in due course on
developments on the issues related to refund procedure and threshold
matters, which we requested previously. Meanwhile we do not clear
the document.
13 (24978) 13853/03: see HC 42-i (2003-04), para 1
(3 December 2003). Back
14
HC 38-ii (2004-05), para 5 (8 December 2004). Back
15
See headnote. Back
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