taxud/2414/08 - European Commission - Europa

1. PURPOSE OF THE DOCUMENT
The Council Presidency has requested DG Taxud to elaborate and present a background
paper which gives more detailed information on the process of elaborating the proposals
for modernising the VAT exemptions on financial and insurance services and on the new
definitions of exempt insurance and financial services. The document should highlight in
more detail the intentions and motives of the Commission, increasing thus transparency
for Member States and economic operators. The Council Presidency considered this
information - although of a more explanatory nature - vital for all stakeholders, Member
States and economic operators, and, in particular, for the Council negotiations. After a
first round of consultations with economic operators and with Member States the Council
Presidency concluded that more details on how the legal provisions should be read and
interpreted would be useful for further work and in particular for verifying in detail all
provisions in the proposals.
2. PROCESS OF ELABORATING THE PROPOSALS
The process of elaborating the proposals consisted of a first analytical phase, a second
phase of formulating the objectives and the priorities of the future proposal, a third phase
of initial drafting during which also the basic approach behind the proposals was
developed together with Member States in Working Party No 1 and a fourth phase of
final drafting including inter-service consultation within the Commission.
2.1. ANALYTICAL PHASE
The analytical phase went from December 2004 starting with a Fiscalis seminar in
Dublin and closed in December 2005 when the Commission services summarised their
findings in working document 1802/06 1 This document recalled the reasons for the
existence of the VAT exemptions, analysed the problem areas, described the existing
jurisprudence of the European Court of Justice in that area as well as the advantages and
disadvantages of possible solutions and consulted Member States and economic
operators on the need to address possible distortions between operators established
outside the EU and those established within the EU.
2.2. FORMULATING OBJECTIVES AND PRIORITIES - DEVELOPING OF
BASIC APPROACH - DRAFT PROPOSAL FOR A DIRECTIVE
In a second phase between January 2006 and December 2006 the analytic findings in
working document 1802/06 2 were consulted with Member States and economic operators
(open consultation) and compared with a study commissioned to an international tax
consultant on the impact of VAT in the decision making of economic operators 3 . It
resulted from this consultation process that the proposal to be submitted by the
Commission should target the following objectives:
- increase legal certainty for economic operators and tax administrations,
improving budgetary security for Member States;
1 This document was made public and is the basis for the public consultation organised by the Commission
in 2006; the document can be found on the Taxud Website (publication date 09/06/2006) under:
http://ec.europa.eu/taxation_customs/common/consultations/tax/article_2447_en.htm
2 See footnote 1
3 The study can also be found on the Taxud Website (publication date: 02/11/2006) under:
http://ec.europa.eu/taxation_customs/common/publications/studies/index_en.htm