VALUE ADDED TAX COMMITTEE (ARTICLE 398 OF DIRECTIVE 2006/112/EC) WORKING PAPER NO 887 FINAL

Transcription

1 EUROPEAN COMMISSION DIRECTORATE-GENERAL TAXATION AND CUSTOMS UNION Indirect Taxation and Tax administration Value added tax taxud.c.1(2015) EN Brussels, 9 December 2015 VALUE ADDED TAX COMMITTEE (ARTICLE 398 OF DIRECTIVE 2006/112/EC) WORKING PAPER NO 887 FINAL MINUTES 105 TH MEETING 26 OCTOBER 2015 Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel Belgium Tel.:

2 The Chair welcomed the delegations to the 105 th meeting of the VAT Committee, the last in Procedural and housekeeping points Language regime: it was possible to speak in and listen to FR-DE-EN-ES-IT-PL. Topical issues in the Council The Chair briefly spoke about recent developments in the Council. - Vouchers: The last meeting of the Council Working Party took place on 18 September. The date of the next meeting is not yet known. Other topical issues - The Seminar "Modernising VAT for cross-border e-commerce" in Dublin (7-9 September 2015), very well organised under the Fiscalis 2020 Programme by Ireland as the host Member State, brought together delegates from tax administrations and business representatives. It was a big success, both in terms of fruitful discussions and of high interest of business stakeholders. - A Public Consultation on the same subject, on modernising VAT for cross-border e- commerce, is currently ongoing. Until 18 December 2015 business, the public and representative organisations can give their views on 1) the current VAT rules for business to consumer cross-border supplies of goods and services and 2) the implementation of the 2015 changes to the VAT place of supply rules and the Mini One Stop Shop and certain related commitments by the Commission in its Communication on "A Digital Single Market Strategy for Europe". - A survey on the MOSS web portal will be ongoing until 30 October This survey asks users to assess the relevance of the information currently provided and to indicate which additional material would be useful for businesses, as well as which features would improve the user-friendliness and usability of that portal. - Flat-rate compensation percentages: Delegations were reminded of the note sent out by the Commission services on 13 July Pursuant to Article 297 of the VAT Directive, Member States have the obligation to notify to the Commission their flatrate compensation percentages for farmers. All Member States are invited to send an update regarding their practices. - Explanatory notes on services connected with immovable property: the explanatory notes are undergoing finalisation and will be published on the Directorate General's public website within the coming days. 2/13

3 1. ADOPTION OF THE AGENDA (Document taxud.c.1(2015) ) The agenda was adopted as proposed. 2. REPORT ON THE RESULTS OF THE WRITTEN PROCEDURES The Chair stated that the minutes of the 102 nd, 103 rd and 104 th meetings had all been finalised after the last meeting held on 4/5 June As to the sets of guidelines already agreed in written procedure, these were all made available on CIRCABC and had also been made available on the Directorate General's public website. A limited number of written procedures on guidelines from previous meetings are still ongoing. 3. INFORMATION POINTS 3.1 Origin: Commission Reference: Article 218 of the Treaty on the Functioning of the European Union Subject: Update on work undertaken by the OECD (Document taxud.c.1(2015) Information paper) The Commission services presented the Information paper that had been drawn up to inform all delegations, and especially those Member States that are not members of the OECD, about recent important developments regarding VAT at OECD level. This was done also taking into account that VAT is harmonised at EU level and it is important that a coordinated view is agreed between Member States. During the 3 rd meeting of the OECD Global Forum on VAT in Paris on 5-6 November 2015, the complete set of the International VAT/GST Guidelines will be presented and discussed. They will be released at that occasion. Discussion on future work beyond 2015 in VAT/GST including the definition of the scope, objectives and prioritisation of this work is about to start at technical level in Working Party No. 9 on Consumption Taxes at the upcoming meeting on 3-4 November Member State delegations represented and the Commission services attending that meeting will have to keep in mind that all issues tabled by the OECD need to be checked against potential frictions with the EU legal provisions on VAT as well as with the pertinent case-law of the Court of Justice of the European Union. The Information paper already identifies a number of points where EU VAT could be concerned by the further OECD work. One delegation took the floor in the ensuing discussion in order to stress that their Member State as well as the other EU members in the OECD always strove for compatible solutions. The Chair concluded that there was a general consensus on this issue and turned to the next point. 3/13

4 4. CONSULTATIONS PROVIDED FOR UNDER DIRECTIVE 2006/112/EC 4.1 Origin: Hungary Reference: Article 11 Subject: VAT grouping (Document taxud.c.1(2015) Working paper No 877) The Commission services briefly introduced the Working paper that had been established in response to the consultation request by the Hungarian authorities regarding an amendment to their already existing VAT grouping provisions. In the Commission services' view, the problems encountered by Hungary in relation to VAT grouping, as described, possibly stem from the way Article 11 has been transposed into national law. The Hungarian delegation explained that the changes in their national legislation are a short-term solution in line with the VAT Directive, which aims at immediately tackling the problems faced by public undertakings. However, the delegation positively received the suggestion made by the Commission services as a potential mid-term solution. They were open to scrutinise the grouping conditions after the imminent adoption of the amendment by their national parliament. The Chair concluded the exchange by stating that the VAT Committee formally took note of the consultation by Hungary. Further discussions with Hungary would be continued bilaterally. 5. NEW LEGISLATION MATTERS CONCERNING THE IMPLEMENTATION OF RECENTLY ADOPTED EU VAT PROVISIONS 5.1 Origin: Commission Reference: Article 9a of the VAT Implementing Regulation Subject: VAT 2015: Harmonised application of the presumption (Document taxud.c.1(2015) Working paper No 885) [ ] 5.2 Origin: Commission References: Article 73 of the VAT Directive Article 7 of the VAT Implementing Regulation Subject: VAT 2015: VAT treatment of online gambling services (follow-up) (Document taxud.c.1(2015) Working paper No 882) The Commission services in their introduction to the Working paper explained that it had been drafted in follow-up to Working paper No 844 REV that had been discussed during the 102 nd meeting and to the subsequent attempt to agree on guidelines in written procedure. The present Working paper had to be regarded as a complement to Working paper No 844 REV as it addresses more in detail a number of issues that had been raised by delegations and also by other stakeholders. 4/13

5 In particular, it provides further clarifications on the scope of gambling services, a more in-depth analysis on when online gambling services are to be considered to be electronically supplied services, with a focus on the requirement of "minimal human intervention", and finally, clarifications on how to determine the taxable amount in certain scenarios of online gambling services, such as where players compete against each other for a prize fund or where there is an obligation to pay winnings that does not result from legal or statutory provisions. After the presentation of the Working paper several delegations asked for the floor. Discussions focused on the concept of "minimal human intervention" and on the determination of the taxable amount. Regarding the requirement of minimal human intervention, a few delegations found that it should be avoided to identify that intervention as the interaction between the operator and the player. A few delegations stressed that they do not regard online sports betting as electronically supplied services contrary to, for example, online scratch cards; one delegation voiced disagreement with that view. Whilst there was basic agreement with the Commission services' analysis on the taxable amount, with regard to the determination of the taxable amount in relation with the obligation to pay winnings, a few delegations remarked that it being a question of civil law, payment of winnings is not necessarily legally enforceable in all Member States. It could depend on legal obligations only and in a cross-border context the player would have to turn to the Member State of establishment of the company to enforce payment. One delegation stated that the taxable amount should be whatever the operator takes from the game and the taxable value should be calculated over a given period of time. Finally, one delegation reserved its position on the issues discussed. The Chair thanked delegations for their contributions and announced that his services would try to conclude on the draft guidelines. 6. QUESTIONS CONCERNING THE APPLICATION OF EU VAT PROVISIONS 6.1 Origin: Commission Reference: Article 132(1)(f) Subject: Scope of the exemption for cost-sharing arrangements: a further analysis (II) (Document taxud.c.1(2015) Working paper No 883) - continued from the 104 th meeting When briefly introducing the Working paper, the Commission services reminded delegations of the lively discussions with the participation of more than half of the delegations during the previous meeting when Working paper No 856 had been presented. The remarks that had then been made on several issues had shown that more work on a number of particularly controversial points had to be done before the submission of draft guidelines for approval could be contemplated. The Commission services further explained that the present Working paper No 883 built on the assessment already carried out in Working paper No 856 and looked more in depth at three specific questions already preliminarily covered, namely the conditions for the application of the exemption, its application in EU cross-border scenarios and its interaction with VAT grouping. 5/13

6 The ensuing discussions which followed the structure of the present Working paper saw nearly half of the delegations taking the floor. With regard to its point 3.2.5, a few delegations made remarks with nearly all of these maintaining that the conditions of the exemption had to be met by all members of the cost-sharing group for the exemption to apply. As to point 3.2.6, whilst the Commission services pointed out that the wording of the provision did not exclude the possibility of bought-in services to be provided by third parties in the name of the cost-sharing group, several delegations mentioned that the danger of possible distortion of competition in such a scenario was acute. One delegation did however note that the use of "joint expenses" instead of "costs" rather seemed to point to services which are bought in by the cost-sharing group. On point which deals with the question whether the exemption should be available to mixed taxable persons using the exempt services received from the cost-sharing group for their taxed downstream activities, fully or partly, several delegations reacted of which most preferred full taxation in such a scenario. As to the exact reimbursement of costs dealt with under point 3.5.1, it was remarked that the condition of exact reimbursement had to be met by all members of the group and it was further queried whether the non-deductible input VAT itself was part of the costs to be shared by all members. Several delegations asked for the floor on the question of the application of the exemption in cross-border scenarios under points 3.6 and 3.7 of the Working paper. Nearly all of these delegations stressed that a more uniform application of the provision was needed for the exemption to be applicable in cross-border situations. One delegation stated that they did not agree with the Commission services' reading of case C-8/01, Taksatorringen, in respect of distortion of competition. The Commission services emphasized that with the internal market and the free movement of (goods and) services the application of the exemption in cross-border scenarios cannot be excluded without grounds. With the new provisions as to the place of supply of services the place of supply had effectively shifted to the place of the customer. Any blanket rejection of the application of the exemption cross-border would in their view run counter to the single market as it closes markets. On the interaction of the exemption with VAT grouping as analysed in points 3.8 and 3.9 of the Working paper there was no broad discussion. Only one delegation pointed out that in their view the scenario of a cost-sharing group becoming a member of a VAT group was rather theoretical as it seemed impossible that the costsharing group and other members of the VAT group would fulfil the conditions of Article 11 to be closely bound to one another by financial, economic and organisational links. Finally, two delegations pointed to case C-326/15, DNB Banka, recently lodged with the Court of Justice of the European Union, the outcome of which should preferably be awaited before taking further steps. The Chair closed the discussions announcing that his services would carefully reflect on the follow-up to be given. 6/13

7 6.2 Origin: Commission References: Articles 2(1)(b) and (c), 9, 10, 12, 132, 135(1)(b) and (f), 282 to 292 Subject: VAT treatment of sharing economy (Document taxud.c.1(2015) Working paper No 878) When introducing the Working paper, the Commission services first explained that sharing economy activities carried out via online platforms have gained traction over recent years and that national tax administrations are therefore increasingly confronted with this phenomenon. In the Commission services' view the current EU VAT legislation is fully adequate for the assessment of these transactions and it is not intending to suggest any modifications to the existing legal provisions in relation to them. In the Working paper the following three scenarios where goods or services are provided by individuals through an online sharing economy platform are discussed in detail: 1) goods or services are provided for consideration, 2) goods or services are exchanged directly between two individuals and 3) goods or services are provided by an individual to a common pool managed by the platform from which that individual obtains the right to draw in exchange other goods or services that had been provided to that common pool by individuals unknown to him. As to the assessment of the services provided by online sharing economy platforms themselves, the view taken is the same as had been discussed previously for crowdfunding platforms in Working paper No 836. After the presentation several delegations took part in the exchange of views. Overall, they shared the assessment carried out by the Commission services. One delegation declared not to have reached a final standpoint on the issue. Another delegation stated that they read the ruling by the Court of Justice of the European Union in Case C-62/12, Kostov, differently. Yet another delegation pointed to certain difficulties with bartering scenarios and the pertinent case-law. The Chair closed the discussions by announcing that his services would try to draft guidelines for agreement in written procedure. 6.3 Origin: Croatia References: Articles 306 to 310 Subject: Scope of the special scheme for travel agents (Document taxud.c.1(2015) Working paper No 881) The Commission services briefly introduced the Working paper drafted in response to a request from the Croatian authorities who had asked for clarification of three specific questions regarding the scope of the special scheme for travel agents. The Commission services concur with the analysis of these questions by the Croatian authorities in Annex to the Working paper. In addition, they emphasize that there exists established case-law for all of the questions which clearly lays down how the legal provisions are to be read. Member States are therefore expected to follow these. 7/13

8 In the ensuing exchange of views a few delegations took the floor. One delegation stated full agreement with the Commission services' opinion. Another delegation queried why travel agents should apply the margin scheme in cases where normal VAT rules could be applied without difficulties. Yet another delegation announced full support in case the Commission would embark on a review of the current outdated provisions. The Chair closed the discussions and turned to the next agenda point. 6.4 Origin: The Netherlands References: Articles 132(1)(e), 140(a) and (b) and 143(1)(a) Subject: Interpretation of the terms 'dental technician', 'services by dental technicians in their professional capacity' and 'dental prostheses' (Document taxud.c.1(2015) Working paper No 880) The Commission services gave a summary of the Working paper that had been drawn up on a request by the Dutch authorities concerning the correct interpretation of certain terms used in Article 132(1)(e) of the VAT Directive. The Commission services conclude that 'dental technicians' within the meaning of Article 132(1)(e) are taxable persons who independently of their legal form possess the necessary professional qualification to carry out essential activities linked to the typical job description of a dental technician. As to practical problems in relation to the exemptions granted upon the intra- Community acquisition of dental prostheses or final importation of such goods which are linked to the requirements governing the tax exemption pursuant to Article 132(1)(e) of the VAT Directive, the Commission services strongly argue that a general assumption, for the sake of simplification, that prostheses are supplied by dental technicians cannot be maintained. Such a general assumption would render the conditions contained in Article 132(1)(e), namely that the supply must be carried out by a dentist or a dental technician, inoperative, and therefore Member States are not entitled to implement such a facilitation of the burden of proof. As regards the supplies which are covered by the tax exemption in question, the Commission concludes that services which are carried out by dental technicians in their professional capacity are those which are covered by the typical job description of a dental technician and, thus, constitute the specific subject matter of this profession. This might include the manufacturing of a 3D-scan as described by the Netherlands. However, this only applies if the relevant supply qualifies as a service and not as a supply of goods and if the supplier is a dental technician. This is finally dependent on the underlying contractual relationship. With regard to the meaning of the term 'dental prostheses', the Commission services maintain that the term could also encompass parts of such prostheses typically manufactured by dentists or dental technicians but do not think that the supply of material used to manufacture dental prostheses and the supply of dental devices, such as braces, is covered by that term. After the presentation of the Working paper several delegations asked for the floor. The remarks made centred on the supply of 'dental prostheses'. Two delegations 8/13

9 stated that they exempt supplies that are individually adjusted. Another delegation explained that in their Member State the supply of braces is exempted if it is part of medical care. Finally, another delegation argued that the exemption should only be granted for the final product and not to any component parts of prostheses. In reply to a question from one delegation, the Commission services explained that it clearly derives from the case-law of the Court, however not for Article 132(1)(e) but for other points of Article 132(1), that the tax exemption in question also applies to legal persons. The Chair closed the discussions by announcing that his services would prepare draft guidelines on the issue. 7. CASE LAW ISSUES ARISING FROM RECENT JUDGMENTS OF THE COURT OF JUSTICE OF THE EUROPEAN UNION 7.1 Origin: Commission References: Articles 2(1), 9 and 11 Subject: CJEU Case C-7/13 Skandia America: VAT grouping the point of view of the VAT Expert Group (Document taxud.c.1(2015) Working paper No 879) - continued from the 102 nd meeting Before the members of the VAT Expert Group (VEG), who had been invited to present the VEG view on the Skandia America case, joined the meeting, the Chair briefly reminded delegations of the exchanges already held during the 102 nd and 103 rd meetings on the basis of Working paper No 845. He announced that discussions with delegations only on that Working paper would immediately resume after the VEG's presentation and the foreseen questions and answers session following it. He expressed his hope that after having first listened to the standpoint of stakeholders the broader perspective gained would contribute to arriving at a convergence of views regarding issues already debated at some length. A member of the VEG then gave a presentation of the VEG's paper as submitted in Annex to Working paper No 879. He initially explained that the VEG had tasked a sub-group to deal with the issues arising from the Court's ruling and that the subgroup's findings had been endorsed by the VEG at its last meeting in September For the VEG paper the Court's ruling, the Commission service's Working paper No 845 and 23 selected transaction scenarios had been assessed in depth. He stated that the VEG concurred with the Court's ruling that VAT had to be levied on the transaction at issue between a head office and its branch but in their view the application of the Court case should be regarded as limited only to the specific case in question as an extended application of the ruling would lead to difficulties because of missing uniform application of the provisions of Article 11 in the Member States. The members of the VEG present further underlined the importance of VAT grouping which they considered as beneficial both for businesses and tax administrations. They saw the Skandia America case as an abusive structure and 9/13

10 pronounced themselves in favour of preferably harmonised anti-avoidance measures pointing to the possibility of implementing the second paragraph of Article 11 of the VAT Directive in this respect. The presentation by the VEG members was met with remarks from several delegations. Overall, delegations seemed content to have heard the view of business stakeholders on the issue and been confronted with different opinions. One delegation disagreed with considering Skandia America to be an anti-avoidance case, and another delegation underlined that in their view the ruling in FCE Bank did not protect fiscal neutrality. It was further pointed out that significant uncertainties arose from the Skandia America case because of the different application of Article 11 and also that a harmonised application in all Member States would be desirable. When the VEG members had left the meeting the Commission services pointed to the differences between what was presented and what had been discussed previously. In line with the opinion voiced by one delegation in reaction to the VEG's presentation, the Commission services also thought that the Court's ruling was rather general and could not be read as limited to one specific anti-avoidance case. Whilst the VEG advocated a broad application of the FCE Bank case mitigated by Member States taking anti-avoidance measures the Commission services did not see that measures could address cases where the place of supply could shift to another Member State. When two Member States applied the VAT grouping provisions widely it could in their view effectively lead to "EU VAT grouping". In the ensuing exchange less than half of the delegations took the floor. Views were still split between those advocating a strict interpretation of the VAT grouping provisions and those who favoured a broader one. Some delegations urged for further work on the issue, not necessarily by continuing discussions in the VAT Committee. It was suggested that this work should entail, inter alia, discussions on the way forward and on questions of principle, an in-depth analysis of all pertinent case-law as well as the identification of clear cases of abuse. The Chair closed the exchange of views by announcing that his services would reflect on the follow-up and revert to the VAT Committee, in a first instance, if possible, by seeking agreement on some points where general conclusions could be drawn. 7.2 Origin: Commission Subject: Recent judgments of the Court of Justice of the European Union (Document taxud.c.1(2015) Working paper No 884) The Chair asked whether there was an interest in the discussion at the next meeting of any of the nineteen recent rulings listed in the overview table. No delegation took the floor. 10/13

11 8. ANY OTHER BUSINESS 8.1 Origin: Commission Subject: - follow-up to the 101 st meeting (oral exchange) VAT treatment of the provision of VAT refund services to nonresident individuals The Commission services briefly recounted the follow-up given to the issue after the exchange of views held during the 101 st meeting on the basis of Working paper No 810. From the input transmitted by Member States in reply to the Commission services' request it was confirmed that there exists a relation between traveller and refund agent. The Commission services therefore believe that their assessment in Working paper No 810 of these refund services as a financial transaction still holds. However, as it had also become clear from the replies received that there are various practices and divergent positions, the Commission services concluded to only take note of these and not take the issue any further. * 8.2 Origin: Commission Reference: Article 51 of the VAT Implementing Regulation Subject: Best practice when designating contact points (Document taxud.c.1(2015) Information paper) The Commission services drew delegations' attention to the document. 8.3 Origin: Commission Subject: Informing the VAT Committee of options exercised under Articles 80, 167a, 199 and 199a of Directive 2006/112/EC (Document taxud.c.1(2015) Information paper) The Chair drew delegations' attention to the Information paper regarding recently notified options. He thanked the delegations that had sent the information and explained that all notifications had been uploaded on CIRCABC. He further announced that his services were going to prepare for the next meeting an Information paper giving a comprehensive overview of Member States' notification/information obligations. Conclusion The Chair closed the meeting by thanking all delegations for their participation, the interpreters for their much appreciated contribution to the meeting and the colleagues for the preparation of the documents. He announced that the next meeting was expected to take place in mid-march /13

12 ANNEX LIST OF PARTICIPANTS - LISTE DES PARTICIPANTS - TEILNEHMERLISTE BELGIQUE/BELGIË/BELGIUM БЪЛГАРИЯ/BULGARIA ČESKÁ REPUBLIKA/CZECH REPUBLIC DANMARK/DENMARK DEUTSCHLAND/GERMANY EESTI/ESTONIA ÉIRE/IRELAND ΕΛΛÁΔΑ/GREECE ESPAÑA/SPAIN FRANCE HRVATSKA/CROATIA ITALIA/ITALY KYIIPOΣ/CYPRUS LATVIJA/LATVIA LIETUVA/LITHUANIA LUXEMBOURG MAGYARORSZÁG/HUNGARY MALTA NEDERLAND/NETHERLANDS NRA Ministry of Taxation Customs and Tax Administration BMF Revenue Commissioners Agenzia delle Entrate Dipartimento Finanze Tax Department State Revenue Service State Revenue Service Ministry for National Economy VAT Department 12/13

13 ÖSTERREICH/AUSTRIA POLSKA/POLAND PORTUGAL ROMÂNIA/ROMANIA SLOVENIJA/SLOVENIA SLOVENSKO/SLOVAKIA SUOMI/FINLAND SVERIGE/SWEDEN UNITED KINGDOM Ministry of Public Finance Tax Administration Tax Administration HMRC EUROPEAN COMMISSION 13/13