Explanatory Memorandum to COM(2009)583 - Authorisation of Austria to continue to derogate from Article 168 of the VAT Directive - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2009)583 - Authorisation of Austria to continue to derogate from Article 168 of the VAT Directive. |
|---|---|
| source | COM(2009)583  |
| date | 29-10-2009 |
Grounds for and objectives of the proposal Pursuant to Article 395 i of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (hereafter: the VAT Directive), the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to apply special measures to derogate from the provisions of that Directive, in order to simplify the procedure for collecting value added tax (VAT) or to prevent certain forms of tax evasion or avoidance. By letter registered with the Secretariat-General of the Commission on 2 June 2009, the Republic of Austria requested authorisation to continue to apply a measure derogating from Article 168 of the VAT Directive. In accordance with Article 395 i of the VAT Directive, the Commission informed the other Member States by letter dated 10 September 2009 of the request made by Austria. By letter dated 21 September 2009, the Commission notified Austria that it had all the information necessary to consider the request.
General context According to Article 168 of the VAT Directive, a taxable person is entitled to deduct the VAT charged on purchases of goods and services made for the purposes of his taxed transactions. The derogating measure however, of which the extension is requested by Austria, excludes VAT borne on goods and services that are used for more than 90% for private or non-business purposes by a taxable person entirely from the right of deduction. This derogating measure had been granted by Council Decision 2004/866/EC of 13 December 2004 (OJ L 371, 18.12.2004, p. 47). The Commission has previously accepted that this derogation is based on the need to simplify the procedure for charging VAT while, at the same time, it affects the amount of tax due at the final consumption stage only to a negligible extent. The derogation should therefore be granted taking into account that the situation and facts, on which the initial derogation was based, continue to exist. However, the extension should be limited in time in order to be able to assess, before considering a possible new extension request and on the basis of appropriate information provided by Austria, whether these circumstances, justifying the derogation, have not changed over time. Therefore, the derogation should be limited to 31 December 2012.
Existing provisions in the area of the proposal Council Decision of 13 December 2004 authorising the Republic of Austria to apply a measure derogating from Article 17 of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (OJ L 371, 18.12.2004, p. 47).
Consistency with the other policies and objectives of the Union Not applicable.
Consultation of interested parties
Not relevant.
There was no need for external expertise.
Impact assessment The proposed Decision aims at simplifying the procedure for charging the VAT in relation to goods and services which are to a very large extent used for non-business purposes and has, therefore, a potential positive impact. However, because of the narrow scope of the derogation and the limited application in time, the impact will in any case be limited.
Contents
Summary of the proposed action Authorisation for Austria to continue to apply a derogating measure from the VAT Directive as regards the total exclusion of the right of deduction in case goods and services are used by a taxable person for more than 90% for non-business purposes.
Legal basis Article 395 of the VAT Directive.
Subsidiarity principle In accordance with Article 395 of the VAT Directive, a Member State wishing to introduce measures derogating from the said Directive must obtain an authorisation from the Council, which will take the form of a Council Decision. Therefore, the proposal complies with the subsidiarity principle.
Proportionality principle The proposal complies with the proportionality principle for the following reason(s).
The Decision concerns an authorisation granted to a Member State upon its own request and does not constitute any obligation.
Given the limited scope of the derogation, the special measure is proportionate to the aim pursued.
Under Article 395 of the VAT Directive, derogation from the common VAT rules is only possible with the authorisation of the Council acting unanimously on a proposal from the Commission. A Council Decision is the most suitable instrument since it can be addressed to individual Member States.
The proposal has no implication for the Community budget.
Review/revision/sunset clause
The proposal includes a sunset clause.
E-
Proposal for a
COUNCIL DECISION
authorising the Republic of Austria to continue to apply a measure derogating from Article 168 of Directive 2006/112/EC on the common system of value added tax
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax i, and in particular Article 395 i thereof,
Having regard to the proposal from the Commission,
Whereas:
By letter registered with the Secretariat-General of the Commission on 2 June 2009, Austria requested authorisation to continue to apply a measure derogating from the provisions of Directive 2006/112/EC governing the right of deduction and previously granted by Council Decision 2004/866/EC i under the then applicable Sixth Directive 77/388/EC i.
In accordance with Article 395 i of Directive 2006/112/EC, the Commission informed the other Member States of the request made by Austria in a letter dated 10 September 2009. By a letter dated 21 September 2009, the Commission notified Austria that it had all the information that it considered necessary to consider the request.
With a view to simplify the levying of VAT, the derogating measure is intended to exclude completely from the right of deduction VAT borne on goods and services when those goods and services are used for more than 90% for the private purposes of the taxable person, or of his employees, or for non-business purposes in general.
The measure derogates from Article 168 of Directive 2006/112/EC establishing the general principle of the right of deduction and is intended to simplify the procedure for charging VAT. The amount of tax due at the final consumption is only affected to a negligible effect.
The legal and factual situation which justified the current application of the simplification measure in question has not changed and continues to exist. Austria should therefore be authorised to apply the simplification measure during a further period, but limited in time until 31 December 2012 in order to allow an evaluation of the measure.
The derogation will not adversely affect the Community's own resources accruing from VAT,
HAS ADOPTED THIS DECISION:
By way of derogation from Article 168 of Directive 2006/112/EC, the Republic of Austria is authorised to exclude VAT borne on goods and services from the right to deduct when the goods and services in question are used more than 90% for the private purposes of a taxable person or of his employees, or, more generally, for non-business purposes.
The Decision shall apply until 31 December 2012.
This Decision is addressed to the Republic of Austria.
Done at Brussels,
The President