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Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (77/388/EEC) (repealed)

TITLE X U.K. EXEMPTIONS

Article 13 U.K. Exemptions within the territory of the country

A. Exemptions for certain activities in the public interest

1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:

(a) the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto;

(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognized establishments of a similar nature;

(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned;

(d) supplies of human organs, blood and milk;

(e) services supplied by dental technicians in their professional capacity and dental prostheses supplied by dentists and dental technicians;

(f) services supplied by independent groups of persons whose activities are exempt from or are not subject to value added tax, for the purpose of rendering their members the services directly necessary for the exercise of their activity, where these groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to produce distortion of competition;

(g) the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law or by other organizations recognized as charitable by the Member State concerned;

(h) the supply of services and of goods closely linked to the protection of children and young persons by bodies governedf by public law or by other organizations recognized as charitable by the Member State concerned;

(i) children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, provided by bodies governed by public law having such as their aim or by other organizations defined by the Member State concerned as having similar objects;

(j) tuition given privately by teachers and covering school or university education;

(k) certain supplies of staff by religious or philosophical institutions for the purpose of subparagraphs (b), (g), (h) and (i) of this Article and with a view to spiritual welfare;

(l) supply of services and goods closely linked thereto for the benefit of their members in return for a subscription fixed in accordance with their rules by non-profit-making organizations with aims of a political, tradeunion, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition;

(m) certain services closely linked to sport or physical education supplied by non-profit-making organizations to persons taking part in sport or physical education;

(n) certain cultural services and goods closely linked thereto supplied by bodies governed by public law or by other cultural bodies recognized by the Member State concerned;

(o) the supply of services and goods by organizations whose activities are exempt under the provisions of subparagraphs (b), (g), (h), (i), (l), (m) and (n) above in connection with fund-raising events organized exclusively for their own benefit provided that exemption is not likely to cause distortion of competition. Member States may introduce any necessary restrictions in particular as regards the number of events or the amount of receipts which give entitlement to exemption;

(p) the supply of transport services for sick or injured persons in vehicles specially designed for the purpose by duly authorized bodies;

(q) activities of public radio and television bodies other than those of a commercial nature.

2. (a) Member States may make the granting to bodies other than those governed by public law of each exemption provided for in (1) (b), (g), (h), (i), (1), (m) and (n) of this Article subject in each individual case to one or more of the following conditions:

• (a) they shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied,

• they shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned,

• they shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to value added tax,

• exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax.

(b) The supply of services or goods shall not be granted exemption as provided for in (1) (b), (g), (h), (i), (l), (m) and (n) above if:

• (b) it is not essential to the transactions exempted,

• its basic purpose is to obtain additional income for the organization by carrying out transactions which are in direct competition with those of commercial enterprises liable for value added tax.

B. Other exemptions

Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

(a)

insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;

(b)

the leasing or letting of immovable property excluding:

1.

the provision of accomodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accomodation in holiday camps or on sites developed for use as camping sites;

2.

the letting of premises and sites for parking vehicles;

3.

lettings of permanently installed equipment and machinery;

4.

hire of safes.

Member States may apply further exclusions to the scope of this exemption;

(c)

supplies of goods used wholly for an activity exempted under this Article or under Article 28 (3) (b) when these goods have not given rise to the right to deduction, or of goods on the acquisition or production of which, by virtue of Article 17 (6), value added tax did not become deductible;

(d)

the following transactions:

1.

the granting and the negotiation of credit and the management of credit by the person granting it;

2.

the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;

3.

transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;

4.

transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items; collectors' items' shall be taken to mean gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest;

5.

transactions, including negotiation, excluding management and safekeeping, in shares, interests in companies or associations, debentures and other securities, excluding:

• documents establishing title to goods,

• the rights or securities referred to in Article 5 (3);

6.

management of special investment funds as defined by Member States;

(e)

the supply at face value of postage stamps valid for use for postal services within the territory of the country, fiscal stamps, and other similar stamps;

(f)

betting, lotteries and other forms of gambling, subject to conditions and limitations laid down by each Member State;

(g)

the supply of buildings or parts thereof, and of the land on which they stand, other than as described in Article 4 (3) (a);

(h)

the supply of land which has not been built on other than building land as described in Article 4 (3) (b).

C. Options

Member States may allow taxpayers a right of option for taxation in cases of:

(a)

letting and leasing of immovable property;

(b)

the transactions covered in B (d) (g) and (h) above.

Member States may restrict the scope of this right of option and shall fix the details of its use.

Article 14 U.K. Exemptions on importation

1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemption and of preventing any possible evasion, avoidance or abuse:

(a)

final importation of goods of which the supply by a taxable person would in all circumstances be exempted within the country;

(b)

[F1 . . . . .]

(c)

[F2 . . . . .]

(d)

final importation of goods qualifying for exemption from customs duties other than as provided for in the Common Customs Tariff [F1 ]. However, Member States shall have the option of not granting exemption where this would be liable to have a serious effect on conditions of competition [F1 ];

[F3 This exemption shall also apply to the import of goods, within the meaning of Article 7 (1) (b), which would be capable of benefiting from the exemption set out above if they had been imported within the meaning of Article 7 (1) (a).]

(e)

reimportation by the person who exported them of goods in the state in which they were exported, where they qualify for exemption from customs duties [F1 ];

(f)

[F1 . . . . .]

(g)

importations of goods:

• under diplomatic and consular arrangements, which qualify for exemption from customs duties [F1 ,]

• by international organizations recognized as such by the public authorities of the host country, and by members of such organizations, within the limits and under the conditions laid down by the international conventions establishing the organizations or by headquarters agreements,

• into the territory of Member States which are parties to the North Atlantic Treaty by the armed forces of other States which are parties to that Treaty for the use of such forces or the civilian staff accompanying them or for supplying their messes or canteens where such forces take part in the common defence effort:

(h)

importation into ports by sea fishing undertakings of their catches, unprocessed or after undergoing preservation for marketing but before being supplied;

(i)

the supply of services, in connection with the importation of goods where the value of such services is included in the taxable amount in accordance with Article 11 B (3) (b);

(j)

importation of gold by Central Banks[F4 ;]

(k)

[F5 import of gas through the natural gas distribution system, or of electricity.]

2. The Commission shall submit to the Council at the earliest opportunity proposals designed to lay down Community tax rules clarifying the scope of the exemptions referred to in paragraph 1 and detailed rules for their implementation.

Until the entry into force of these rules, Member States may:

• maintain their national provisions in force on matters related to the above provisions,

• adapt their national provisions to minimize distortion of competition and in particular the non-imposition or double imposition of value added tax within the Community,

• use whatever administrative procedures they consider most appropriate to achieve exemption.

Member States shall inform the Commission, which shall inform the other Member States, of the measures they have adopted and are adopting pursuant to the preceding provisions.

Textual Amendments

F1 Deleted by Council Directive of 16 December 1991 (91/680/EEC).

F2 Deleted by Council Directive 92/111/EEC of 14 December 1992.

F3 Inserted by Council Directive 92/111/EEC of 14 December 1992.

F4 Substituted by Council Directive 2003/92/EC of 7 October 2003 amending Directive 77/388/EEC as regards the rules on the place of supply of gas and electricity.

F5 Inserted by Council Directive 2003/92/EC of 7 October 2003 amending Directive 77/388/EEC as regards the rules on the place of supply of gas and electricity.

Article 15 U.K. [F6 Exemption of exports from the Community and like transactions and international transport]

Without prejudice to other Community provisions Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse:

1.

the supply of goods dispatched or transported to a destination [F6 outside the Community] by or on behalf of the vendor;

2.

the supply of goods dispatched or transported to a destination [F6 outside the Community] by or on behalf of a purchaser not established within the territory of the country, with the exception of goods transported by the purchaser himself for the equipping, fuelling and provisioning of pleasure boats and private aircraft or any other means of transport for private use;

[F7 In the case of the supply of goods to be carried in the personal luggage of travellers, this exemption shall apply on condition that:

• the traveller is not established within the Community,

• the goods are transported to a destination outside the Community before the end of the third month following that in which the supply is effected,

• the total value of the supply, including value added tax, is more than the equivalent in national currency of ECU 175, fixed in accordance with Article 7 (2) of Directive 69/169/EEC (1) ; however, Member States may exempt a supply with a total value of less than that amount.

For the purposes of applying the second subparagraph:

• a traveller not established within the Community shall be taken to mean a traveller whose domicile or habitual residence is not situated within the Community. For the purposes of this provision, ‘ domicile or habitual residence ’ shall mean the place entered as such in a passport, identity card or other identity documents which the Member State within whose territory the supply takes place recognizes as valid,

• proof of exportation shall be furnished by means of the invoice or other document in lieu thereof, endorsed by the customs office where the goods left the Community.

Each Member State shall transmit to the Commission specimens of the stamps it uses for the endorsement referred to in the second indent of the third subparagraph. The Commission shall transmit this information to the tax authorities in the other Member States.]

3.

[F6 The supply of services consisting of work on movable property acquired or imported for the purpose of undergoing such work within the territory of the Community, and dispatched or transported out of the Community by the person providing the services or by the customer if [F3 not established within the territory of the country] or on behalf of either of them;]

4.

the supply of goods for the fuelling and provisioning of vessels:

(a)

used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities;

(b)

used for rescue or assistance at sea, or for inshore fishing, with the exception, for the latter, of ships' provisions;

(c)

of war, as defined in subheading 89.01 A of the Common Customs Tariff, leaving the country and bound for foreign ports or anchorages.

[F3 The Commission shall submit to the Council as soon as possible proposals to establish Community fiscal rules specifying the scope of and practical arrangements for implementing this exemption and the exemptions provided for in (5) to (9). Until these rules come into force, Member States may limit the extent of the exemption provided for in this paragraph.]

5.

the supply, modification, repair, maintenance, chartering and hiring of the sea-going vessels referred to in paragraph 4 (a) and (b) and the supply, hiring, repair and maintenance of equipment — including fishing equipment — incorporated or used therein;

6.

the supply, modification, repair, maintenance, chartering and hiring of aircraft used by airlines operating for reward chiefly on international routes, and the supply, hiring, repair and maintenance of equipment incorporated or used therein;

7.

the supply of goods for the fuelling and provisioning of aircraft referred to in paragraph 6;

8.

the supply of services other than those referred to in paragraph 5, to meet the direct needs of the sea-going vessels referred to in that paragraph or of their cargoes;

9.

the supply of services other than those referred to in paragraph 6, to meet the direct needs of aircraft referred to in that paragraph or of their cargoes;

10.

supplies of goods and services:

• under diplomatic and consular arrangements,

• to international organizations recognized as such by the public authorities of the host country, and to members of such organizations, within the limits and under the conditions laid down by the international conventions establishing the organizations or by headquarters agreements,

• effected within a Member State which is a party to the North Atlantic Treaty and intended either for the use of the forces of other States which are parties to that Treaty or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort,

• [F6 to another Member State and intended for the forces of any Member State which is a party to the North Atlantic Treaty, other than the Member State of destination itself, for the use of those forces or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defense effort.]

This exemption shall be [F6 subject to [F3 limitations] laid down by the host Member State]until Community tax rules are adopted.

[F3 In cases where the goods are not dispatched or transported out of the country, and in the case of services, the benefit of the exemption may be given by means of a refund of the tax.]

11.

supplies of gold to Central Banks;

12.

goods supplied to approved bodies which export them [F6 from the Community] as part of their humanitarian, charitable or teaching activities [F6 outside the Community]. This exemption may be implemented by means of a refund of the tax;

13.

[F3 The supply of services, including transport and ancillary operations, but excluding the supply of services exempted in accordance with Article 13, where these are directly connected with the export of goods or imports of goods covered by the provisions of Article 7 (3) or Article 16 (1), Title A;]

14.

services supplied by brokers and other intermediaries, acting in the name and for account of another person, where they form part of transactions specified in this Article, or of transactions carried out [F6 outside the Community].

This exemption does not apply to travel agents who supply in the name and for account of the traveller services which are supplied in other Member States.

15.

[F8 The Portuguese Republic may treat sea and air transport between the islands making up the autonomous regions of the Azores and Madeira and between those regions and the mainland in the same way as international transport.]

Textual Amendments

F3 Inserted by Council Directive 92/111/EEC of 14 December 1992.

F6 Inserted by Council Directive of 16 December 1991 (91/680/EEC).

F7 Inserted by Council Directive 95/7/EC of 10 April 1995.

F8 Inserted by Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties.

Article 16 U.K. Special exemptions linked to international goods traffic

1. Without prejudice to other Community provisions, Member States may, subject to the consultations provided for in Article 29, take special measures designed to relieve from value added tax all or some of the following transactions, provided that they are not aimed at final use and/or consumption and that the amount of value added tax charged at entry for home use corresponds to the amount of the tax which should have been charged had each of these transactions been taxed on import or within the territory of the country:

A.

[F6 imports of goods which are intended to be placed under warehousing arrangements other than customs;

B.

supplies of goods which are intended to be

a)

produced to customs and, where applicable, placed in temporary storage;

b)

placed in a free zone or in a free warehouse;

c)

placed under customs warehousing arrangements or inward processing arrangements;

d)

admitted into territorial waters:

• in order to be incorporated into drilling or production platforms, for purposes of the construction, repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or production platforms to the mainland,

• for the fuelling and provisioning of drilling or production platforms;

e)

placed under warehousing arrangements other than customs.

The places referred to in (a), (b), (c) and (d) shall be as defined by the Community customs provisions in force;

C.

supplies of services relating to the supplies of goods referred to in B;

D.

supplies of goods and of services carried out in the places listed in B and still subject to one of the arrangements specified therein;

E.

supplies:

• of goods referred to in Article 7 (1) (a) still subject to arrangements for temporary importation with total exemption from import duty or to external transit arrangements,

• of goods referred to in Article 7 (1) (b) still subject to the internal Community transit procedure provided for in Article 33a,

as well as supplies of services relating to such supplies.]

2. Subject to the consultation provided for in Article 29, Member States may opt to exempt imports for and supplies of goods to a taxable person intending to export them as they are or after processing, as well as supplies of services linked with his export business, up to a maximum equal to the value of his exports during the preceding 12 months.

3. The Commission shall submit to the Council at the earliest opportunity proposals concerning common arrangements for applying value added tax to the transactions referred to in paragraphs 1 and 2.

Textual Amendments

F6 Inserted by Council Directive of 16 December 1991 (91/680/EEC).

(1)

[F7 JO No L 133, 4. 6. 1969, p. 6 . Directive as last amended by directive 94/4/EC ( JO No L 60, 3. 3. 1994, p. 14 ).]

Textual Amendments

F7 Inserted by Council Directive 95/7/EC of 10 April 1995.