Exchange of Information for Tax Purposes

1. S. 329Historical Background: Why have Cross-Border Administrative Cooperation in the field of VAT?

1.1. Directive 92/77/EEC of 19 October 1992 ‘supplementing the common system of value added tax’

In accordance with the visions and aims of the founders of the European Union, the establishment of the internal market required the creation of an area without internal frontiers in which the free movement of goods, persons, services and capital was ensured. Consequently, the abolition of fiscal frontiers should be achieved in order to obtain the internal market goal.

A package of proposals intended to abolish all fiscal frontiers within the European Community were heavily discussed by the Economic and Financial Affairs Council, which reached a final agreement in October 1992. The topic raised a dilemma for Member State’s governments, which tested their commitment to the internal market notion. The practical implementation of the internal market would entail the relinquishment of part of the Member State’s sovereignty, inasmuch as a common VAT should be implemented. In other words, Member States traded part of their sovereignty, and the power to freely tax certain economic transactions, so as t...