(2004/C 33 E/014)

WRITTEN QUESTION E-3142/02

by Sérgio Marques (PPE-DE) to the Commission

(4 November 2002)

Subject:   Common VAT system

The legal and political goal of promoting a system based on taxation of goods and services in the Member State of origin, charted in 1967 when the VAT arrangements were adopted, has been shelved time after time. Although it has enabled checks to be abolished at the Union's internal frontiers and it is permissible under certain circumstances to continue to levy tax in the Member State of destination, the transitional VAT system currently in force is complex, out of date, and conducive to fraud. In particular, it is difficult to obtain a refund of tax paid in other Member States, and the fact that tax representatives are costly and complicated to use is the main source of problems for firms, especially SMEs, operating in Member States other than their base. Firms frequently mention differences in treatment from one Member State to another.

In addition, some provisions of the Sixth Directive and the various legal instruments which have amended it over the years are ambiguous and incomplete. The numerous exceptions requested by Member States have likewise led to a degree of confusion in the system.

The recent adoption of further legal instruments has not substantially altered the situation described above.

The Commission:

Answer given by Mr Bolkestein on behalf of the Commission

(9 December 2002)

The definitive VAT system is intended to be based on taxation in the Member State of origin of transactions giving rise to consumption in the Community. Before such a system can be put in place, the taxation systems of Member States have to be closely harmonised. It has not been possible yet to achieve the necessary degree of harmonisation.

However, although the Commission still regards the definitive system as a long-term Community goal, it recognises that, in order to overcome the shortcomings of the present arrangements, improvements to the present system are necessary in the short term. It therefore launched a new VAT strategy in June 2000 based on four main objectives: simplification and modernisation of current rules, more uniform application of those rules and closer administrative cooperation (1).

Among the priorities pursued under the new VAT strategy is the codification of the Sixth VAT Directive (2). Codifying existing rules is consistent with the objective of simplification. This codification will take place in the form of a recast of the existing text. It is the purpose of the recast to rationalise the structure of the text without introducing substantial changes, which should rather be the subject of specific proposals for implementing the new strategy. The Commission is currently preparing the recast text, which will be presented as a Commission proposal in 2003. Once adopted, the recast will provide a clear overview of Community legislation currently in force.

In its Communication on the new VAT strategy, the Commission also indicated that it would proceed to a certain rationalisation of the considerable number of derogations, authorised by the Council under Article 27 of the Sixth VAT Directive, currently in place. It is envisaged that this exercise should lead to the presentation of a proposal integrating into the Directive some derogations which have proved to be particularly effective. The Commission has started the preparatory work for this exercise in order to be in a position to present a proposal in the course of 2003.

(1)  Communication from the Commission to the Council and the European Parliament: A strategy to improve the operation of the VAT systems within the context of the internal market (COM(2000) 348 final).

(2)  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, OJ L 145, 13.6.1977.