title: Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes - Structure and procedures for application of the common system of value added tax

text:
   16                                Official Journal of the European Communities
  14.4.67                      OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES                                          1303 /67
                                            SECOND COUNCIL DIRECTIVE
                                                     of 11 April 1967
                 on the harmonisation of legislation of Member States concerning turnover taxes
                Structure and procedures for application of the common system of value added tax
                                                      (67/228/EEC)
  THE COUNCIL OF THE EUROPEAN ECONOMIC                           alignment, thereby preparing the way for the attain
  COMMUNITY,                                                     ment of the objective set out in Article 4 of the First
                                                                 Directive ;
  Having regard to the Treaty establishing the Euro
  pean Economic Community, and in particular                    Whereas, in order to enable the system to be applied
  Articles 99 and 100 thereof;                                   in a simple and neutral manner, and to keep the
                                                                 standard rate of tax within reasonable limits, it is
                                                                necessary to limit special systems and exceptional
 Having regard to the First Council Directive of 11
                                                                measures ;
  April 19671 on the harmonisation of legislation of
  Member States concerning turnover taxes ;
                                                                Whereas the system of value added tax makes it
                                                                possible, where appropriate, for social and economic
 Having regard to the proposal from the Commission ;             reasons, to effect reductions or increases in the tax
                                                                 burden on certain goods and services by means of a
 Having regard to the Opinion of the European Par               differentiation in the rates, but the introduction of
 liament;                                                        zero rates gives rise to difficulties, so that it is highly
                                                                 desirable to limit strictly the number of exemptions
 Having regard to the Opinion of the Economic and                and to make the reductions considered necessary by
 Social Committee;                                              .applying reduced rates which are high enough to permit
                                                                 in normal circumstances the deduction of the tax
 Whereas the replacement of the turnover taxes in               paid at the preceding stage, which moreover achieves
 force in Member States by a common system of                   in general the same result as that at present obtained
 value added tax is intended as a means of attaining            by the application of exemptions in cumulative multi
 the objectives set out in the First Directive;                 stage systems ;
 Whereas, until the abolition of the imposition of tax          Whereas it has proved possible to leave Member
 on importation and the remission of tax on exporta            States themselves to make rules concerning the nu
                                                                merous services whose cost has no influence on the
 tion, it is possible to grant Member States substantial
 autonomy in determining the rate or differential rates         prices of goods, and the systems to be applied in the
 of tax;                                                        case of small undertakings, subject, as regards the lat
                                                                ter, to prior consultation ;
Whereas it is also possible to accept on a transitional
 basis certain differences in the procedure for applying        Whereas it has proved necessary to provide for
 the tax in Member States ; whereas it is, however,             special systems for the application of the value added
 necessary to make provision for appropriate pro               tax to the agricultural sector and to request the Com
 cedures to ensure neutrality in competition between            mission to submit to the Council, as soon as pos
 Member States and to restrict progressively or to              sible proposals to this effect;
 abolish the differences in question, so that national
systems of value added tax may be brought into                  Whereas it is necessary to provide for a rather large
                                                                number of special provisions covering interpretation,
                                                                derogations and certain detailed application pro
1 OJ No 71, 14.4.1967, p. 1301.                                 cedures, and to establish a list of the services com
 ---pagebreak---                                     Official Journal of the European Communities                                      17
 pulsorily subject to the common system ; and whereas                feet that ownership shall pass at the latest upon
 these provisions and this list should appear in the                 payment of the final instalment due;
  Annexes forming an integral part of this Directive ;
                                                               (b) the transfer, by order of a public authority, of
                                                                     ownership in goods against payment of compen
 HAS ADOPTED THIS DIRECTIVE :
                                                                     sation ;
                                                               ( c) the transfer of goods pursuant to a contract
                          Article 1                                  under which commission is payable on purchase
                                                                     or sale ;
 Member States shall introduce, in accordance with a           (d) the delivery of moveable property produced
 common system, a tax on turnover (hereinafter                       under a contract for work, that is to say the
 called 'value added tax').                                          handing over by a contractor to his customer of
                                                                     moveable property which he has made from
 The structure of, and procedures for applying this                  materials and objects entrusted to him by the
tax shall be established by Member States in accord                 customer for this purpose, whether or not the
 ance with the provisions of the following Articles and              contractor has provided a part of the products
 of Annexes A and B.                                                 used;
                                                              (e) the delivery up of works of construction, includ
                          Article 2                                  ing those in which moveable property is incorpor
                                                                     ated in immoveable property.
The following shall be subject to the value added
 tax :                                                        3.       The following shall be treated as supply against
                                                               payment :
 (a) The supply of goods and the provision of services
       within the territory of the country by a taxable       (a) the appropriation by a taxable person, from his
       person against payment;                                      undertaking, of goods which he applies to his
 (b) the importation of goods.                                       own private use or transfers free of charge;
                                                               (b) the use for the needs of his undertaking, by a tax
                          Article 3                                  able person, of goods produced or extracted by
                                                                     him or by another person on his behalf.
'Territory of the country' means the territory in
which the State concerned applies the value added             4.       The place of supply shall be deemed as being :
tax; this territory shall, as a general rule, include the     (a) in cases where the goods are dispatched or trans
whole of the national territory, including territorial              ported either by the supplier or by the consignee,
waters .
                                                                     or by a third person : the place where the goods
                                                                    were at the time when the dispatch or transport
                         Article 4
                                                                     to the consignee began ;
                                                              ( b ) in cases where the goods are not dispatched or
'Taxable person' means any person who indepen                      transported : the place where the goods were at
dently and habitually engages in transactions pertain              the time of supply.
ing to the activities of producers, traders or persons
providing services, whether or not for gain.                  5.       The chargeable event shall occur at the moment
                                                              when delivery is effected. In the case, however, of
                                                              supply involving payments on account before deliv
                         Article 5
                                                             ery, it may be provided that the chargeable event
                                                              shall already have occurred at the moment of issue of
 1.      'Supply of goods' means the transfer of the right    the invoice or, at the latest, at the moment of receipt
to dispose of tangible property as owner.                     of the payment, in respect of the whole of the
                                                              amount invoiced or received .
2. The following shall also be considered as supply
within the meaning of paragraph 1 :
                                                                                Article 6
 (a) the actual handing over of goods, under a con
       tract which provides for the hiring of goods for a    1.       'Provision of services' means any transaction
       certain period, or the sale on deferred terms of       which does not constitute a supply of goods within
       goods, in both cases subject to a clause to the ef    the meaning of Article 5 .
 ---pagebreak--- 18                                  Official Journal of the European Communities
2. The rules laid down in this Directive as regards                  shall apply when the goods are exempt from cus
the taxation of the provision of services shall be com            ' toms duties or are not subject to ad valorem cus
pulsorily applicable only to services listed in Annex                toms duties .
B.
                                                              In the case of importation of goods, each Member
3 . The place of the provision of service shall, as a         State may add to the basis of assessment the inciden
general rule, be regarded as being the place \yhere the       tal expenses (packing, transport, insurance, etc.) aris
services provided, the right transferred or granted, or       ing up to the place of destination which have not
the object hired, is used or enjoyed .                        been included in that basis .
4. The chargeable event shall occur at the moment                                      Article 9
when the service is provided. In the case, however, of
the provision of services of indeterminate length or
                                                              1.       The standard rate of value added tax shall be
exceeding a certain period or involving payments on
account, it may be provided that the chargeable event         fixed by each Member State at a percentage of the
                                                              basis of assessment which shall be the same for the
shall already have occurred at the moment of issue of,
the invoice or, at the latest, at the moment of the re       supply of goods and for the provision of services.
ceipt of the payment on account, in respect of the
whole of the amount invoiced or received.                     2. In certain cases, the supply of goods and the
                                                              provision of services may, however, be subject to in
                                                              creased rates or to reduced rates . Each reduced rate
                         Article 7                            shall be determined in such a manner that the
                                                              amount cf value added tax resulting from the appli
1 . 'Importation of goods' means the entry of such            cation of this rate shall normally permit the deduc
goods into the 'territory of the country' within the          tion of the whole of the value added tax which is de
meaning of Article 3 .                                         ductible under Article 11 .
2.     At importation, the chargeable event shall occur       3.       The rate applicable to importation of goods
at the time of such entry. Member States may, how            shall be that which is applied in the territory of the
ever, link the chargeable event and the date when             country to the supply of like goods.
payment of value added tax falls due with the
chargeable event and the date when payment of cus                                     Article 10
toms duties or other import taxes, charges and levies
falls due.
                                                               1.      The following shall be exempted from value
The same link may be established, as regards the               added tax on conditions laid down by each Member
                                                               State :
chargeable event and the date when payment of value
 added tax falls due, in respect of the supply of im          (a) the supply of goods consigned or transported to
ported goods placed under a system of suspension of                  places outside the territory in which the State
 customs duties or other taxes, charges or levies.                    concerned applies value added tax ;
                                                               ( b) the provision of services relating to goods
                          Article 8                                   covered by (a) or in transit.
 The basis of assessment shall be :                            2. The provision of services relating to importa
                                                               tions of goods may, subject to the consultations men
 (a) in the case of supply of goods and of the pro            tioned in Article 16, be exempted from value added
      vision of services, everything which makes up the        tax .
      consideration for the supply of the goods or the
     provision of services, including all expenses and         3 . Each Member State may, subject to the consul
      taxes except the value added tax itself;                 tations mentioned in Article 16, determine the other
 (b) in the case of the transactions referred to in            exemptions which it considers necessary.
      Article 5 (3 ) (a) and (b), the purchase price of
      the goods or of like goods or, if there is no pur                               Article 11
      chase price, the cost price;
 (c) in the case of importation of goods, the customs          1 . Where goods and services are used for the pur
      value, plus all duties, taxes, charges and levies        poses of his undertaking, the taxable person shall be
      due by reason of importation, except the value           authorised to deduct from the tax for which he is li
      added tax itself. The same basis of assessment           able :
 ---pagebreak---                                    Official Journal of the European Communities                                     19
 ( a) the value added tax invoiced to him in respect of      2. Every taxable person shall issue an invoice in
      goods supplied to him or in respect of services        respect of goods supplied and services provided by
      rendered to him ;                                      him to another taxable person.
(b) the value added tax paid in respect of imported          3 . Every taxable person shall each month lodge a
      goods ;                                                declaration showing, in respect of transactions car
(c) the value added tax which he has paid in respect         ried out during the preceding month, all the informa
      of the use of goods referred to in Article             tion required to calculate the tax and the deductions
      5 (3 ) (b).                                            to be made. Every taxable person shall pay the
                                                             amount of the value added tax when lodging the de
                                                             claration .
2.     Value added tax on goods and services used in
non-taxable or exempt transactions shall not be
deductible.                                                                         Article 13
The taxable person shall however be authorised to            Should a Member State consider that, in exceptional
make the deduction if the supply of goods or the pro        cases, special measures should be adopted in order to
vision of services takes place abroad or is exempt           simplify the charging procedure in respect of the tax
under Article 10 ( 1 ) or (2).                               or to prevent certain frauds, it shall so inform the
                                                             Commission and the other Member States .
As regards goods and services which are used both in
transactions giving entitlement to deduction and in          Should there, within one month, be objections from
transactions which do not give entitlement to deduc         one or more States or from the Commission, the re
tion, deduction shall only be allowed for that part of       quest for derogation shall be brought before the
the value added tax which is proportional to the             Council, which shall act on a proposal from the
amount relating to the transactions giving entitlement       Commission within three months .
to deduction (pro rata rule).
                                                             Should it appear from the conclusion of the Com
3.     The deduction shall be made from the value            mission that only a simplification of the charging
added tax due for the period during which deductible         procedure or a measure designed to prevent fraud
tax is invoiced in the case of paragraph 1 ( a) or paid      is involved, the Council shall act by a qualified
in the case of paragraph 1 (b) and (c) (immediate de        majority on the derogation requested.
ductions).
                                                             Should it appear, on the contrary, from those conclu
In the case of a partial deduction under paragraph 2         sions that the proposed measure might be prejudicial
the amount of the deduction shall be provisionally           to the very principles of the system introduced by this
determined in accordance with criteria established by        Directive, and in particular to neutrality in competi
each Member State and finally adjusted after the end         tion between Member States, the Council shall act
of the year when the pro rata figure for the year of         unanimously.
acquisition has been calculated.
                                                             In either case, the Council shall act in accordance
As regards capital goods, the adjustment shall be ef        with the same procedure as regards the period of
fected on the basis of the variations of the pro rata        application of such measures.
figure which have occurred during a period of five
years including the year during which the goods were         The State concerned may not apply the proposed
acquired ; the adjustment shall apply each year to           measures until the period for entering objections has
only one-fifth of the tax borne by capital goods.            expired or, where there have been objections, until
                                                             after the Council's decision, if such decision is favour
                                                             able.
4.     Certain goods and services may be excluded
from the deduction system, in particular those capable       These provisions shall cease to be applicable when
of being exclusively or partially used for the private       the imposition of tax on importation and the remis
needs of the taxable person or of his staff.                 sion of tax on exportation are abolished in trade be
                                                             tween Member States .
                        Article 12
                                                                                Article 14
1 . Every taxable person shall keep sufficiently de
tailed accounts to permit application of the value           Each Member State may, subject to the consultations
added tax and inspection by the tax authorities.             mentioned in Article 16, apply to small undertakings
 ---pagebreak---  20                                Official Journal of the European Communities
whose subjection to the normal system of value added             of one year from the introduction of value
tax would meet with difficulties the special system              added tax. In that event, such deductions shall
best suited to national requirements and possibilities.          only be allowed in respect of stocks in hand at
                                                                 the time referred to above and exported in an
                                                                 unaltered state;
                        Article 15
                                                             — provide for reduced rates or even exemptions
1.     The Commission shall submit to the Council, as            with refund, if appropriate, of the tax paid at the
soon as possible, proposals for Directives on com               preceding stage, where the total incidence of such
mon procedures ,for applying value added tax to                  measures does not exceed that of the reliefs ap
transactions relating to agricultural products.                  plied under the present system. Such measures
                                                                 may only be taken for clearly defined social rea
                                                                 sons and for the benefit of the final consumer,
2.     Until the date fixed in the Directive referred to
                                                                 and may not remain in force after the abolition of
in paragraph 1 for the application of such common                the imposition of tax on importation and the re
procedures, each Member State may, subject to the                mission . of tax on exportation in trade between
consultations mentioned in Article 16, apply to under           Member States .
takings in the agricultural sector whose subjection
to the normal system of value added tax would meet
with difficulties the special system best suited to                                  Article 18
national requirements and possibilities.
                                                             The Commission shall, after consulting the Member
                        Article 16                           States, submit to the Council, for the first time on 1
                                                             January 1972 and every two years thereafter, a report
                                                             on the operation of the common system of value
Where a Member State must, in accordance with the            added tax in Member States .
provisions of this Directive, enter into consultations,
it shall refer the matter to the Commission in good
time, having regard to the application of Article 102                                Article 19
of the Treaty.
                                                             The Council shall, in the interest of the common
                                                             market, adopt at the proper time, on a proposal from
                        Article 17                           the Commission, the appropriate Directives to com
                                                             plete the common system of value added tax, and in
With a view to the transition from the present sys          particular to restrict progressively or to abolish
tems of turnover taxes to the common system of               measures adopted by Member States in derogation
value added tax, Member States may :                         from this system, so that national systems of value
                                                             added tax may be brought into alignment, thereby
— adopt transitional measures to levy the tax in ad         preparing the way for the attainment of the objective
     vance ;                                                 set out in Article 4 of the First Directive.
— apply, during a certain transitional period, in re
     spect of capital goods, the method of deduction
                                                                                Article 20
     by annual instalments (deductions pro rata tem
     poris);
                                                             The Annexes shall form an integral part of this Di
— exclude, in whole or in part, during a certain             rective .
     transitional period, capital goods from the deduc
     tion system provided for in Article 11 ;
                                                                                Article 21
and, subject to the consultations mentioned in Article       This Directive is addressed to the Member States.
16 :
— authorise (in order to grant relief, total or partial,
     but general in scope, from the turnover tax             Done at Brussels, 11 April 1967.
     charged up to the time of introducing value added
     tax) standard deductions in respect of capital                                           For the Council
     goods not yet written off and of stocks in hand at                                        The President
     that time. Member States may, however, restrict
     such deductions to goods exported during a period                                      R. VAN ELSLANDE
 ---pagebreak---                                      Official Journal of the European Communities                                            21
                                                             ANNEX A
1.    Regarding Article 3                                         5.      Regarding Article 5 (2) (d) and (e)
If a Member State intends to apply value added tax in a           Member States which, for specifically national reasons,
territory smaller than its national territory, it shall enter     cannot consider the transactions referred to in Article
into the consultations mentioned in Article 16.                   5 (2) (d) and (e) as supply shall classify them in the cate
                                                                  gory of provision of services, .subjecting them to the rate
                                                                  which would be applicable to them if they were considered
2.    Regarding Article 4                                         as supply.
The expression 'activities of producers, traders, or persons       The following, inter alia, shall be considered as 'works of
providing services' is to be understood in a wide sense           construction':
and to cover all economic activities, including, therefore,
activities of the extractive industries, agriculture and the      — the construction of buildings, bridges, roads, ports,
professions.                                                            etc., in performance of a building contract;
If a Member State intends not to tax certain activities, it       — earth-moving and planting of gardens;
should achieve its purpose by means of exemptions rather          — installation work (of central heating, for example);
than by excluding from the scope of the tax persons pur
suing such activities.                                            — repairs to buildings, other than current maintenance.
Member States may also consider as a 'taxable person'
 anyone who engages occasionally in the transactions              6.      Regarding Article 5 (3) (a)
referred to in Article 4.
                                                                  As regards the appropriation of goods in an unaltered
The expression 'independently' is intended in particular to        state bought by a taxable person, Member States may, in
exclude from taxation wage-earners who are bound to               stead of taxing, forbid deduction or adjust it if deduction
 their employer by a contract of service. This expression          has already been effected. However, appropriation for giv
also makes it possible for each Member State not to con
                                                                   ing gifts of small value and samples, which from the tax
sider as separate taxable persons, but as one single taxable
                                                                  point of view may be classified as overhead expenses,
                                                                  shall not be considered as taxable supply. Moreover, the
person, persons who, although independent from the legal          provisions of Article 11 (2) shall not be applicable to such
point of view, are, however, organically linked to one an
                                                                   appropriations.
other by economic, financial or organisational relation
ships. Any Member State intending to adopt such a sys
 tem shall enter into the consultations mentioned in Article      7.      Regarding Article 5 (3) (b)
 16 .
                                                                  This provision shall only be applied to ensure equality of
States, regional and local government bodies and other             taxation between, on the one hand, goods purchased and
public corporate bodies shall not as a general rule be con       intended for the needs of the undertaking, and in respect
sidered as taxable persons in respect of activities which         of which there is no entitlement to immediate or complete
they pursue in their official capacity as official authorities.    deduction, and, on the other hand, goods produced or ex
                                                                   tracted by the taxable person or on his behalf by a third
If, however, they pursue activities as producers, traders, or     person which are also used for the same needs.
providers of services, they may be considered as liable to
tax in respect of such activities.                                 8.     Regarding Article 5 (5)
                                                                  The 'chargeable event' means the event giving rise to the
3.    Regarding Article S (1 )                                    tax .
'Tangible property' means both moveable and immove
able tangible property.                                           9.      Regarding Article 6 (1 )
The supply of electric current, gas, heat, refrigeration and      The definition of provision of services given in this para
the like shall be considered as supply of goods.                  graph involves classification of, inter alia, the following as
                                                                  provision of services:
In case of contribution to a company of the whole or part         — the assignment of intangible property;
of the contributor's assets, Member States may regard the
benefiting company as the successor in title of the contri       — the carrying out of an obligation to refrain from doing
butor.                                                                 something;
                                                                  — the carrying out of a service rendered by order of a
4.    Regarding Article 5 (2) (a)                                      public authority;
For the purposes of this Directive, the contract referred to      — the carrying out of work on goods, if such work is not
in Article 5 (2) (a) must not be subdivided into part hire             considered as supply within the meaning of Article 5
and part sale, but shall be regarded, as soon as concluded,            (2) (d) and (e) as, for example, current maintenance
as a contract involving a taxable supply.                              work, the laundering of linen, etc.
 ---pagebreak---  22                                   Official Journal of the European Communities
This definition shall not prevent taxation by Member            Further, the expenses paid in the name and for the ac
States of certain transactions engaged in by a taxable per     count of the customer which are shown in the accounts of
son as services 'rendered to oneself' when such a measure       the supplier as transitory items shall not be included in *
proves necessary in order to avoid distortion of compe         the basis of assessment.
tition .
                                                                The customs duties and other charges, taxes, etc., paid at
                                                                importation by agents and other intermediaries in customs
10.      Regarding Article 6 (2)                                clearance including forwarding agents, under their own
Member States shall refrain, as far as possible," from grant   name, may also be excluded from the basis of assessment
ing exemption from tax in respect of the provision of the       corresponding to the services they have provided.
services listed in Annex B.
                                                                14.    Regarding Article 8 (c)
11 .     Regarding Article 6 (3)
                                                                In intra-Community trade, Member States shall endeavour
The Council shall, acting unanimously on a proposal from        to apply to importations of goods a basis of assessment
the Commission, lay down, before 1 January 1970, special        which corresponds, as far as possible, to that used for sup
rules concerning certain services for which such rules may      ply made within the territory of the country ; this basis
prove necessary, derogating where appropriate from the          shall include the same components as those taken into
provisions of Article 6 (3). Until those rules have been        account pursuant to Article 8 (c).
laid down, each Member State may, in order to simplify
the procedure for charging the tax, derogate from the pro      Until the abolition of the imposition of tax on importa
visions of Article 6 (3); it shall, however, take the neces    tion and the remission of tax on exportation in trade be
sary steps to avoid double taxation or non-taxation.            tween Member States at the latest, and subject to the con
                                                                sultations mentioned in Article 16, each Member State
                                                                may apply to importations of goods from third countries
12.      Regarding Article 8                                    a basis of assessment which corresponds, as far as possi
Any Member State which applies value added tax only up          ble, to that used for supply within the territory of the
to and including the wholesale stage may, in the case of        country ; this basis shall include the same components as
goods sold by retail by a taxable person, reduce the basis      those taken into account pursuant to Article 8 (c).
of assessment by a certain percentage; the basis thus re
duced shall not, however, be lower than the purchase or         15 .   Regarding Article 9 (2)
cost price plus, where appropriate, the amount of the cus
toms duties (including levies), taxes and charges on the        Where this' paragraph is applied to the transport services
goods (except value added tax), even if payment thereof         referred to in Annex B, item 5, it must be so applied as to
has been suspended.                                             ensure equality of ; treatment as between the different
                                                                modes of transport.
In the case of importation of goods sold by retail, the
same reduction shall be applied to the basis of assessment.
                                                                16.    Regarding Article 10 (1) (a)
It shall be left to Member States to define, in accordance      Relief from tax as provided for in this provision refers to
with their national concepts, the concept of 'sale of goods     the supply of goods directly exported, that is to say sup
by retail'.                                                     ply made by the exporter. Member States may, however,
                                                                extend exemption to supply made at the preceding stage.
Each Member State may, subject to the consultations
mentioned in Article 16, law down, as a measure to pre
vent fraud and in respect of specified goods and services,      17.    Regarding Article 10 (1 ) (b)
that, in derogation from Article 8, the basis of assessment
shall not be lower than a minimum basis determined by           Member States may, however, refrain from granting this
its national law .                                              exemption if relief from the value added tax charged on .
                                                                the provision of these services is effected in favour of the
                                                                beneficiary of the services by means of deductions.
13 .     Regarding Article 8 (a)                                Moreover, Member States may, except in the case of the
                                                                provision of services relating to goods in transit, restrict
The expression 'consideration' means everything received        such exemption to the provision of services relating to
in return for the supply of goods or the provision of serv     goods the supply of which inside the country is taxable.
ices, including incidental expenses (packing, transport, in
surance, etc.) that is to say not only the cash amounts
charged, but also, for example, the value of the goods re      18.    Regarding Article 10 (2)
ceived in exchange or, in the case of goods or services
supplied by order of a public authority, the amount of the      This provision relates in particular to the provision of in
compensation received .                                         ternational transport services at importation and to port
                                                                services .
This provision .shall not, however, prevent each Member
State which considers it necessary for the achievement of       19.    Regarding Article 10 (2) and (3)
greater neutrality in competition from being able to ex
clude from the basis of assessment in respect of supply the     Where these paragraphs are applied to the transport
incidental expenses arising as from the place of supply as      services referred to in Annex B, item 5, they must be so
defined in Article 5 (4) and to tax such expenses as            applied as to ensure equality of treatment as between the
consideration for. the provision of services.                   different modes of transport.
 ---pagebreak---                                         Official Journal of the European Communities                                         23
20.      Regarding Article 11 (1) (a)                              Each Member State may, in special cases, provide for de
                                                                   rogations from this rule and also from the obligation laid
In the cases provided for in Article 5 (5 ), second sentence,     down in Article 12 (2). Such derogations, however, must
and Article 6 (4), second sentence, the deductions may be         be strictly limited.
made as soon as the invoice is received, even though the
goods have not yet been supplied or the services rendered.
                                                                  Notwithstanding the other measures to be taken by
                                                                   Member States to ensure payment of the tax and to
21 .     Regarding Article 11 (2), second subparagraph            prevent fraud, all persons, whether taxable or not, who
Member States may, however, restrict the right to deduc          show the value added tax on an invoice, must pay the
                                                                  amount thereof.
tion to transactions relating to goods the supply of which
inside the country is taxable.
                                                                  26.     Regarding Article 12 (3)
22.      Regarding Article 11 (2), third subparagraph
The pro rata figure shall, in general, be determined in re       Each Member State may, for practical reasons, shorten the
spect of all the transactions carried out by the taxable per     period laid down in Article 12 (3 ) or authorise certain
son (general pro rata figure). However, a taxable person          taxable persons to lodge the declaration quarterly, half
may, exceptionally, obtain administrative permission to           yearly or annually.
determine special pro rata figures for certain sectors of his
activities .
                                                                  During the first six months of each year, the taxable per
                                                                  son shall, where appropriate, lodge a declaration concern
23.      Regarding Article 11 (3), first subparagraph             ing all the previous years's transactions, and including all
                                                                   the particulars necessary for any adjustments.
Subject to the consultations mentioned in Article 16, each
Member State may, on conjunctural grounds, partially or
wholly exclude capital goods from the deduction system,           Each Member State shall, as regards importation of goods,
or apply in respect of such goods, instead of the method          adopt measures governing the procedure in respect of the
of immediate deductions, that of annual instalments (de          declaration and of the payment which must ensue.
ductions pro rata temporis).
                                                                  27.     Regarding Article 14
24.      Regarding Article 11 (3), third subparagraph
Member States may specify certain tolerances in order to          "Where this Article is applied to the transport services re
limit the number of adjustments in the event of variations        ferred to in Annex B, item 5, it must be so applied as to
in the annual pro rata figure as compared with the initial        ensure equality of treatment as between the different
pro rata figure which served as a basis for deductions in          modes of transport.
the case of capital goods.
                                                                  28.     Regarding Article 17, fourth indent
25.      Regarding Article 12 (2)
The invoice must show separately the price exclusive of           Stocks may be valued inter alia by reference to the trans
tax and the corresponding tax for each different rate, to        actions carried out during preceding years by the taxable
gether with any exemption.                                        persons .
                                                            ANNEX B
List of the services referred to in Article 6 (2):                  6. hiring of tangible moveable property to a taxable
                                                                       person ;
  1 . assignments of patents, trade marks and other similar
      rights, and the granting of licences in respect of such       7. provision of staff to a taxable person ;
      rights ;
                                                                    8. services provided by consultants, engineers, planning
  2. work, other than that referred to in Article 5 (2) (d),           offices and similar services, in scientific, economic or
      on tangible moveable property, carried out for a tax            technical fields;
      able person;
                                                                    9. the carrying out of an obligation to refrain from exer
  3. provision of services to prepare or co-ordinate the car          cising, in whole or in part, a business activity or a
      rying out of works of construction, as, for example,             right included in this list;
      services provided by architects and by firms providing
      on-site supervision of works ;                              10. the services of forwarding agents, brokers, business
  4. commercial advertising services;                                  agents and other independent intermediaries, in so far
                                                                       as they relate to supply or importation of goods or
  5 . transport and storage of goods, and ancillary services ;         the provision of services included in this list.