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(2004/C 88 E/0593)

WRITTEN QUESTION P-3445/02

by Wolfgang Ilgenfritz (NI) to the Commission

(27 November 2002)

Subject:   Vehicle leasing abroad — transfer of the place where the service is supplied to the home Member State — amendment of the VAT Directive

Advocate-General Geelhoed delivered his opinion in Case C-155/01 concerning tax on own consumption resulting from vehicles leased in another Member State on 10 October 2002. In his conclusions, the Advocate-General endorses the complainant's view that the tax levied on own consumption (section 1(1)2 of the Austrian VAT law) in relation to leasing in another Member State contravenes the provisions of the Sixth VAT Directive. He bases his opinion on Article 9(1) of the Directive, which lays down that, with regard to the hiring of motor vehicles in the form of leasing, the place where the service is supplied is the place where the supplier is established.

According to information from the Austrian Finance Ministry, the VAT Directive is to be amended as follows: the place where the service is supplied is to be transferred from the place where the leasing firm is established to the place where the firm using the vehicle is established.

Is the Commission in favour of amending the Sixth VAT Directive so as to transfer the place where the service is supplied from the place where the leasing firm is established to the place where the firm using the vehicle is established?

If so, when will the Directive be amended?

Answer given by Mr Bolkestein on behalf of the Commission

(7 January 2003)

The Commission has submitted in June 1998 a proposal for a Directive (1) aiming to replace the Eighth VAT Directive (2) refund procedure by a system of cross-border deduction of the VAT paid in another Member State. According to this proposal, taxable persons could recover VAT directly on the VAT return they submit in their Member State of establishment following the rules for the right of deduction in that Member State. The Commission believes that adoption of this proposal would solve the problems Austria faces with leasing of motor vehicles.

Despite the large support of the Parliament and the Economic and Social Committee, the Council has not yet adopted by unanimity this proposal.

At the Ecofin Council meeting on 4 June 2002, the Council noted the Presidency's intention to reopen discussion on the cross-border deduction of VAT and harmonisation of the right to deduct VAT in the case of passenger vehicles, as well as the Commission's intention to prioritise work on the revision of Article 9 of the Sixth VAT Directive (3), which deals with the place of supply of services.

Following an initial consultation of Member States, the Commission has concluded that it should focus its work in the near future on modernising the rules for the place of the supply of business to business services, including cross-border leasing of means of transport. One of the options that will be discussed with the Member States is an amendment of the Sixth VAT Directive as the Honourable Member suggested.

The Commission hopes to be in a position to bring forth proposals for amending Article 9 of the Sixth VAT Directive in the course of 2003.

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(1)OJ C 219, 15.7.1998.

(2)  Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonization of the laws of the Member States relating to turnover taxes — Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, OJ L 331, 27.12.1979.

(3)  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, OJ L 145, 13.6.1977.

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