Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (77/388/EEC)

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community, and in particular Articles 99 and 100 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament⁽¹⁾,

Having regard to the opinion of the Economic and Social Committee⁽²⁾;

1. Whereas all Member States have adopted a system of value added tax in accordance with the first and second Council Directives of 11 April 1967 on the harmonization of the laws of the Member States realting to turnover taxes⁽³⁾;

2. Whereas the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources⁽⁴⁾ provides that the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources; whereas these resources are to include those accruing from value added tax and obtained by applying a common rate of tax on a basis of assessment determined in a uniform manner according to Community rules;

3. Whereas further progress should be made in the effective removal of restrictions on the movement of persons, goods, services and capital and the integration of national economies;

4. Whereas account should be taken of the objective of abolishing the imposition of tax on the importation and the remission of tax on exportation in trade between Member States; whereas it should be ensured that the common system of turnover taxes is non-discriminatory as regards the origin of goods and services, so that a common market permitting fair competition and resembling a real internal market may ultimately be achieved;

5. Whereas, to enhance the non-discriminatory nature of the tax, the term ‘taxable person’ must be clarified to enable the Member States to extend it to cover persons who occasionally carry out certain transactions;

6. Whereas the term ‘taxable transaction’ has led to difficulties, in particular as regards transactions treated as taxable transactions; whereas these concepts must be clarified;

7. Whereas the determination of the place where taxable transactions are effected has been the subject of conflicts concerning jurisdiction as between Member States, in particular as regards supplies of goods for assembly and the supply of services; whereas although the place where a supply of services is effected should in principle be defined as the place where the person supplying the services has his principal place of business, that place should be defined as being in the country of the person to whom the services are supplied, in particular in the case of certain services supplied between taxable persons where the cost of the services is included in the price of the goods;

8. Whereas the concepts of chargeable event and of the charge to tax must be harmonized if the introduction and any subsequent alterations of the Community rate are to become operative at the same time in all Member States;

9. Whereas the taxable base must be harmonized so that the application of the Community rate to taxable transactions leads to comparable results in all the Member States;

10. Whereas the rates applied by Member States must be such as to allow the normal deduction of the tax applied at the preceding stage;

11. Whereas a common list of exemptions should be drawn up so that the Communities own resources may be collected in a uniform manner in all the Member States;

12. Whereas the rules governing deductions should be harmonized to the extent that they affect the actual amounts collected; whereas the deductible proportion should be calculated in a similar manner in all the Member States;

13. Whereas it should be specified which persons are liable to pay tax, in particular as regards services supplied by a person established in another country;

14. Whereas the obligations of taxpayers must be harmonized as far as possible so as to ensure the necessary safeguards for the collection of taxes in a uniform manner in all the Member States; whereas taxpayers should, in particular, make a periodic aggregate return of their transactions, relating to both inputs and outputs where this appears necessary for establishing and monitoring the basis of assessment of own resources;

15. Whereas Member States should nevertheless be able to retain their special schemes for small undertakings, in accordance with common provisions, and with a view to closer harmonization; whereas Member States should remain free to apply a special scheme involving flat rate rebates of input value added tax to farmers not covered by normal schemes; whereas the basic principles of this scheme should be established and a common method adopted for calculating the value added of these farmers for the purposes of collecting own resources;

16. Whereas the uniform application of the provisions of this Directive should be ensured; whereas to this end a Community procedure for consultation should be laid down; whereas the setting up of a Value Added Tax Committee would enable the Member States and the Commission to cooperate closely;

17. Whereas Member States should be able, within certain limits and subject to certain conditions, to take or retain special measures derogating from this Directive in order to simplify the levying of tax or to avoid fraud or tax avoidance;

18. Whereas it might appear appropriate to authorize Member States to conclude with non-member countries or international organizations agreements containing derogations from this Directive;

19. Whereas it is vital to provide for a transitional period to allow national laws in specified fields to be gradually adapted,

HAS ADOPTED THIS DIRECTIVE: