Tax-free allowances: administrative cooperation in the field of indirect taxation

Establishment of a common system of administrative cooperation and information exchange between the competent authorities of the Member States in the field of indirect taxation.

Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of indirect taxation (VAT) [Official Journal L 24 of 01.02.1992].

Council Regulation (EC) No 792/2002 of 7 May 2002 [Official Journal L 128 of 15.05.2002].

The Regulation lays down the ways in which the administrative authorities in the Member States responsible for the application of laws on VAT must cooperate with each other and with the Commission to ensure compliance with those laws. It lays down procedures for the exchange by electronic means of VAT information relating to intra-Community transactions and for any subsequent exchange of information in this field.

It stipulates that the competent authorities must exchange any information necessary to determine and collect indirect taxes. They must also provide the Commission with any particular or general information of interest to the Community.

It also lays down that the competent authority must maintain an electronic database containing VAT information relating to intra-Community transactions. It specifies the particulars that the competent authorities must communicate automatically to the other Member States as well as the particulars to which the other Member States may also have direct access. Where such information is insufficient, the competent authorities may, in specific cases, request further information.

Each Member State must maintain an electronic database containing a register of persons to whom VAT identification numbers have been issued. The competent authorities may obtain directly or have communicated to them confirmation of the validity of a VAT identification number of a person established in another Member State.

The Regulation lays down the conditions governing the exchange of information, particularly as regards the number and nature of requests for information, the use of usual sources of information, etc. The Commission will present before July 1994 general criteria for defining the scope of these commitments. The Regulation also contains provisions on the confidential nature of information exchanged under the administrative cooperation arrangements.

The Regulation provides for consultation and coordination procedures. It sets up a Standing Committee that will examine matters relating to the exchanges of information referred to above and adopt implementing measures. In addition, the Member States and the Commission will examine and evaluate the operation of the administrative cooperation arrangements with a view to improving them, notably in the light of Member States' experience of new means of tax avoidance and evasion. Every two years, the Commission must draw up a report on the conditions of application of the Regulation.

Under the Regulation, Member States must inform the Commission of any administrative cooperation agreements in the field of indirect taxation that they have concluded with third countries.

Act	Date of entry into force	Deadline for implementation in the Member States
Regulation (EEC) N° 218/92	04.02.1992	04.02.1992
Regulation (EC) N° 792/2002	22.05.2002	01.07.2003

4) implementing measures

List of competent authorities - Official Journal C 302 of 28.10.1994

The Commission published a list of the competent authorities notified in accordance with Article 2(2) of the Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of indirect taxation (VAT).

Second Commission report to the Council and the European Parliament of 8 January 1997 submitted in accordance with Article 14 and concerning the application of Council Regulation (EEC) No 218/92 [COM(96)681 final - Not published in the Official Journal].

The report describes developments in administrative cooperation since 1993, evaluates its effectiveness and makes recommendations for improvements. Administrative cooperation is becoming an increasingly common practice in Member States and is a source of reliable data. Nonetheless, the situation is not satisfactory. Although this can be attributed mainly to the current arrangements for charging VAT, the Member States must make efforts to build administrative cooperation into their national VAT control procedures.

Third Commission report to the Council and the European Parliament of 28 January 2000 submitted in accordance with Article 14 and concerning the application of Council Regulation (EEC) No 218/92 and Fourth report under Article 12 of Regulation (EEC, Euratom) No 1553/89 on VAT collection and control procedures [COM(2000)28 final - Not published in the Official Journal].

This is a joint report which was written in application of Regulation (EEC) No 218/92 and Regulation (EEC, EURATOM) No 1553/89, because of the close link between administrative cooperation and VAT checks. The Commission notes that the Member States are far from making the best possible use of the options available under the administrative cooperation and mutual assistance arrangements and that this results in few VAT checks being carried out across the board. In spite of the new challenges of the internal market, nothing has changed where carrying out VAT checks is concerned. The Commission therefore proposes a number of measures to fill the gaps, e.g.:

a common anti-fraud policy to combat the fraud perpetrated on the VAT system;
root and branch re-examination of the national VAT auditing systems;
monitoring and analysis of fraud;
review of the administrative cooperation and mutual assistance systems and procedures;
the Member States to invest in new technologies for their administrations and improve their procedures for carrying out VAT checks.

The Commission is considering amending Regulation (EEC) No 218/92 so as to ensure better operation of the administrative cooperation and mutual assistance arrangements.