17.10.98 Official Journal of the European Communities L 281/31 COUNCIL DIRECTIVE 98/80/EC of 12 October 1998 supplementing the common system of value added tax and amending Directive 77/388/EEC — Special scheme for investment gold THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community and in particular Article 99 thereof, Having regard to the proposal from the Commission ('), Having regard to the opinion of the European Parlia- ment (%), Having regard to the opinion of the Economic and Social Committee (%), Whereas, under the sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — common system of value added tax: uniform basis of assessment (*) transactions concerning gold are in principle taxable although, on the basis of the transitional derogation provided for in Article 28(3) in conjunction with point 26 of Annex F to the said Directive, Member States may continue to exempt transactions concerning gold other than gold for industrial use; whereas the application by some Member States of that transitional derogation is the cause of a certain distortion of competition; Wheres gold does not only serve as an input for produc- tion but is also acquired for investment purposes; whereas the application of the normal tax rules constitutes a major obstacle to its use for financial investment purposes and therefore justifies the application of a specific tax scheme for investment gold; whereas such a scheme should also enhance the international competitiveness of the Community gold market; Whereas supplies of gold for investments purposes are similar in nature to other financial investments often exempted from tax under the current rules of the sixth Directive, and therefore exemption from tax appears to be the most appropriate tax treatment for supplies of invest- ment gold; Whereas the definition of investment gold should only comprise forms and weights of gold of very high purity as traded in the bullion markets and gold coins the value of which primarily reflects its gold price; whereas, in the case of gold coins, for reasons of transparency, a yearly list of qualifying coins should be drawn up providing security 1 (") OJ C 302, 19. 11. 1992, p. 9. () OJ C 91, 28. 3. 1994, p. 91. ¢) OJ C 161, 14. 6. 1993, p. 25. () OJ L 145, 13. 5. 1977, p. 1. Directive as last amended by Directive 96/95/EC (O] L 338, 28. 12. 1996, p. 89). for the operators trading in such coins; whereas the legal security of traders demands that coins included in this list be deemed to fulfil the criteria for exemption of this Directive for the whole year for which the list is valid; whereas such list will be without prejudice to the exemp- tion, on a case-by-case basis, of coins, including newly minted coins which are not included in the list but which meet the criteria laid down in this Directive; Whereas since a tax exemption does, in principle, not allow for the deduction of input tax while tax on the value of the gold may be charged on previous operations, the deduction of such input tax should be allowed in order to guarantee the advantages of the special scheme and to avoid distortions of competition with regard to imported investment gold; Whereas the possibility of using gold for both industrial and investment purposes requires the possibility for oper- ators to opt for normal taxation where their activity consists either in the producing of investment gold or transformation of any gold into investment gold, or in the wholesale of such gold when they supply in their normal trade gold for industrial purposes; Whereas the dual use of gold may offer new opportunities for tax fraud and tax evasion that will require effective control measures to be taken by Member States; whereas a common standard of minimum obligations in accounting and documentation to be held by the operators is there- fore desirable although, where this information does already exist pursuant to other Community legislation, a Member State may consider these requirements to be met; Whereas experience has shown that, with regard to most supplies of gold of more than a certain purity the applica- tion of a reverse charge mechanism can help to prevent tax fraud while at the same time alleviating the financing charge for the operation; whereas it is justified to allow Member States to use such mechanism; whereas for importation of gold Article 23 of the Sixth Directive allows, in a similar way, that tax is not paid at the moment of importation provided it is mentioned in the declaration pursuant to Article 22(4) of that Directive; Whereas transactions carried out on a bullion market regulated by a Member State require further simplifica- tions in their tax treatment because of the huge number