The flat-rate systems used in the EU Member States can be grouped into two main types of compensation for VAT paid on purchases:

Deductible VAT is calculated for all purchases made by agricultural units, whether subject to VAT under the standard or the flat-rate system.

In fact, the Korean fixed amount refund system falls under the general definition of a subsidy according to Article 2 of the Basic Regulation which incorporated Article l of the ASCM.

over-compensation of VAT resulting from the application of the flat-rate systems (cf. 3.041 and 3.042),

Classification of elements of management and control systems for the purpose of applying flat rates of financial corrections for system deficiencies or individual breaches

Flat rate corrections are determined in accordance with the seriousness of the deficiency in the management and control system or the individual breach and the financial implications of the irregularity.

in the case of a flat rate, it shall assess the importance of the infringement of rules and the extent and financial implications of any shortcomings in the management and control system that have led to the irregularity established.

and -should not rule out the possibility for customs authorities to determine special rates for high duty goods or even to exclude some goods from the benefit of the flat-rate system.

While accepting that reimbursements by way of daily allowances could be based on actual costs incurred rather than on a flat-rate arrangement, the Council nevertheless considers that, for practical reasons, the present system should be retained,

A list of what the Commission considers to be key and ancillary elements of systems for the purpose of assessing the seriousness of deficiencies is given in section 2.2 and an indicative scale of flat rates for corrections in section 2.3.

When several deficiencies are found in the same system, the flat rates of correction are not cumulated, the most serious deficiency being taken as an indication of the risks presented by the control system as a whole(2).

The difference between the flat-rate compensation granted to farmers who are subject to the flat-rate systems and the VAT which they would have been able to deduct if they had been subject to the standard VAT system represents over- or under-compensation.

The difference between the deductible VAT which agricultural units under the flat-rate system could have deducted, if they had been subject to the standard VAT scheme, and the flat-rate compensation represents VAT over-compensation or under-compensation.

For the purpose of assessing flat rate corrections for deficiencies in such systems or individual cases of irregularity, it is useful to classify the functions of management and control systems into key and ancillary elements.

They should also be considered where the Commission finds serious deficiencies in management and control systems resulting in large-scale breaches of applicable rules and regulations, or where it detects individual breaches.

In the case of the flat-rate systems, the method of recording VAT will be identical to that used for the standard system, i.e. exclusive of VAT for the individual items of final output and exclusive of deductible VAT for the individual items of intermediate consumption and GFCF.

A system of flat-rate assessment should be applied to goods imported for home use in postal items, provided that the importation is of a non-commercial nature and that the aggregate value of the goods does not exceed a figure which should not be less than US $ 100.

Whereas, to avoid confusion and to facilitate the applicaton of the system of compensatory aid for loss of income from marketing, the value in ecus of the flat-rate reference income fixed in Article 2 (2) of Regulation (EEC) No 1858/93 should be replaced with effect from the start of the marketing period which covers the months of March and April 1995;

by a taxable person for the purpose of his agricultural, forestry or fisheries undertaking, subject to the flat-rate scheme set out in Article 25, by a taxable person who carries out only supplies of goods or services in respect of which value added tax is not deductible, or by a non-taxable legal person,

In response to these arguments it is considered that, for the reasons explained above, payments under the fixed amount refund system constitute grants which are based on export performance and are therefore specific and countervailable under Article 3(4)(a) of the Basic Regulation.

Port and harbour authorities and pilotage authorities already applying, on 13 June 1994, a flat rate system as provided for in the first subparagraph, but based on a lower percentage, shall apply the figure of 17 % as a minimum not later than 1 January 1997.

Recommended practice A system of flat-rate assessment should be applied to goods declared for home use under the facilities applicable to travellers, provided that the importation is of a non-commercial nature and that the aggregate value or quantity of the goods does not exceed the amounts laid down in national legislation.

Flat-rate corrections should be considered when the Commission finds a failure to adequately effect any control which is explicitly required by a regulation, or implicitly required in order to respect an explicit rule (the limiting of aid to a certain type of project, for example), and whose absence could lead to systemic irregularity.

the amount of the total value added tax attaching to the goods and services purchased by all agricultural, forestry and fisheries undertakings of each Member State subject to the flat-rate scheme where such tax would be deductible under Article 17 by a farmer subject to the normal value added tax scheme,

In the case of individual breaches or systemic irregularities whose financial impact is not precisely quantifiable because it is subject to too many variables or is diffuse in its effects, such as those resulting from a failure to undertake checks effectively in order to prevent or detect the irregularity or to comply with a condition of the assistance or a Community rule, but where it would be disproportionate to refuse all the assistance concerned, flat rates should be applied.

should provide that goods may, if the addressee is present at clearance and so requests, be charged at their own appropriate rates of import duties and taxes, in which case, however, the customs authorities may require that all the dutiable and taxable goods shall be so charged, and - should not rule out the possibility for customs authorities to determine special rates for high-duty goods or even to exclude some goods from the benefit of the flat-rate system.

(Flat-rate guarantee system)

Whereas it would seem advisable to maintain in operation until 31 December 2000 the system of flat rate charges provided for in Article 15 of Protocol 4 in connection with the prohibition of drawback and exemption from customs duty;

Whereas the rules on Community transit have been changed to apply, from 1 July 1980, the European unit of account to the flat-rate guarantee system; whereas the aforementioned Agreement and its Appendices should therefore be amended accordingly;