V1.210 The Internal (Single) Market
One of the principal aims of the EU was to establish an internal market1, ie “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured”2. The Sixth Directive3 required the Council to adopt further directives on the common system of value added tax4. In particular, it was committed to “achieve complete parallelism of the national value added tax systems” and thereby “achieve the aim of abolishing the imposition of tax on importation and the remission of tax on exportation in trade between member states, while ensuring the neutrality of those taxes as regards the origin of goods and services”5.
The completion of the Internal Market became a political priority in the early 1980s6 and saw legal expression in the Single European Act7. This required the Community to adopt measures with the aim of progressively establishing the Internal Market over a period expiring on 31 December 19928.
The Commission set out its views of the measures on value added tax necessary to complete the internal market in the White Paper on 14 July 19859 and the Global Communication of 5 August 198710. The Commission's proposals11, in the case of supplies between member states, involved charging VAT in and at the rate applicable in the country of origin of the goods and services (“the origin system”). Input tax would be recovered from the tax authorities of the member state of the customer and a central EU clearing house system would reallocate