On April 11, 1967, the Council of Ministers adopted Directive which establishes the foundations and principles of the Community turnover tax system. It entered into force on 1st January 1970. But there were exceptions, all Member States are not ready to date. However, the 1st January 1974 the Directive was applicable in all Member States of the time.

The Execution of the Proposals

Very quickly on a proposal from the Commission, on May 17, 1977, Directive 77/388 / EEC (6th VAT directive) was adopted, which still forms the reference text for Community VAT today. In accordance with the founding treaties of the European Union, all the Member States had to transpose this directive, but also the modifications it has undergone over time, into their internal legal order.

The same was true for newcomers to the Community, the directives adopted by the European Union forming part, which they are obliged to transpose into their internal legal order in order to become Member States.

The 1993 regime

  • The main change in the 6th Directive which came into force on 1 st January 1993, when the advent of the single market has abolished customs controls at borders for intra-Community goods traffic.

Besides the disappearance of these controls, it was necessary to implement measures to ensure the fiscal monitoring of goods. This was the opportunity to introduce into the regulations a new category of exemptions, namely those which apply to intra-community supplies of goods as well as a new taxable transaction called the intra-community acquisition of goods.

  • In this case, the measures in question would only be temporary, a definitive system for the taxation of trade in goods between Member States to be adopted and enter into force on 1st January 1997. In the absence of agreement between the States Members, the definitive regime was never adopted so that at present it is still the transitional regime initiated in 1993 which governs intra-community traffic in goods.

The 1993 reform was also an opportunity to implement harmonization measures in the area of ​​VAT rates. Thus, the normal rate was set at a minimum of 15%. No agreement could, however, be reached on a maximum normal rate; hence the great disparity in the current rates in the Community: from 15% applied in the Grand Duchy of Luxembourg to 25% (without reduced rates) applied in Denmark. At the same time, member states were allowed to apply one or more reduced rates. Calculating the processes and understanding the rates comes proper with the tax return calculator there.

As it had proved impossible to erase the great disparities in rates, the transitional regime also contained measures designed to avoid “fiscal shopping” by taxable persons, that is to say the purchase in the country where VAT is payable. the least expensive. These measures are referred to as the distance selling regime.

Recent developments

Since then, the 6th Directive has undergone other modifications, especially as regards:

  • specific regime for sales of second-hand goods and works of art
  • telecommunication services
  • gold transactions designed for investment purposes
  • electronic services (especially all services related to Internet use)
  • harmonization of invoices
  • electronic invoicing
  • sales of electricity and gas through pipelines.