# EUR-Lex - 52004PC0149 - EN

Avis juridique important

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# 52004PC0149

**Proposal for a Council Decision amending Council Decision 1998/161/EC authorising the Kingdom of the Netherlands to apply a measure derogating from Articles 2 and 28a(1) of 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 /* COM/2004/0149 final */ **

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Proposal for a COUNCIL DECISION amending Council Decision 1998/161/EC authorising the Kingdom of the Netherlands to apply a measure derogating from Articles 2 and 28a(1) of 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

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Under Article 27 of the Sixth Council Directive 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, [1] - the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce special measures for derogation from the provisions of the Directive, in order to simplify the procedure for charging the tax or to prevent certain types of tax evasion or avoidance.

[1] OJ L 145, 13.6.1977, p.1. Directive last amended by Directive 2004/7/EC (OJ L 27, 30.1.2004, p.44)

2. As a rule, such authorisations are given on a temporary basis, so that an assessment can be made after a few years as to whether the special measures are appropriate and effective.

3. The Dutch authorities contacted the Commission with a request to apply a derogating measure to supplies of goods in the recycled waste sector. The derogating measure was needed because of the difficulty in dealing with fraud in this sector, where certain operators, mainly small dealers, did not comply with their obligations under article 21.1.a) of the Sixth Council Directive to pay to the authorities the tax they had charged for their supplies. Enforcing collection of the tax in this sector is especially difficult because of the complications of identifying and supervising the activities of non-compliant traders.

4. Council Decision 1998/161/EC [2] authorised the Kingdom of the Netherlands to apply a measure derogating from Articles 2 and 28a(1) of the Sixth Council Directive. The validity of that Decision (31 December 1999), was extended until 31 December 2003 by Council Decision 2000/435/EC [3]. In particular, Decision 1998/161/EC authorised the Kingdom of the Netherlands to introduce:

[2] OJ L 53, 24.2.1998, p.19.

[3] OJ L 172, 12.7.2000, p.24.

- an exemption for the supply and intracommunity acquisition of used and waste materials by firms with an annual turnover of less than NGL 2,5 million. For the purposes of calculating that threshold, turnover in non-ferrous metals may be disregarded,

- an exemption for the supply and intracommunity acquisition of non-ferrous metals.

5. According to article 4 of the Decision, taxable persons carrying out transactions which are exempt pursuant to articles 2 and 3 may be authorised not to apply the special measures provided for by the Decision.

6. By letter registered by the Secretariat-General on 26 November 2003, the Kingdom of the Netherlands requested authorisation to extend application of this measure.

7. In its communication of 7 June 2000 to the Council and the European Parliament on a strategy to improve the operation of the VAT system within the context of the internal market, [4] the Commission undertook to rationalise the large number of derogations currently in force. In some cases, however, this rationalisation could involve extending certain particularly effective derogations to all Member States. Its communication of 20 October 2003 [5] reiterates this compromise. Doing so would require amending the Sixth VAT Directive. The Commission intends to propose such an amendment.

[4] COM(2000)348 final

[5] COM(2003)614 final

8. The Commission's recent contacts with certain national administrations and representatives of the sector suggest that special rules specifically adapted to the sector might be necessary to ensure fairer taxation of the traders concerned across the Community.

9. The proposed derogation has no adverse impact on the European Communities' own resources acruing from VAT , because it exempts supplies of goods whose recipients are not final consumers. For the same reason the derogation does not have an effect on the amount of VAT charged at the final stage.

10. The Commission accepts that, pending more permanent changes, this derogation significantly counters abuse of the VAT system. It also accepts that the situation in the Netherlands affecting this particular sector which justified the application of the special measures has not changed. In view of its continuing work towards the rationalisation of Article 27 derogations, it considers that the request made by the Kingdom of the Netherlands for an extension of the authorisation contained in Decision 1998/161/EC should be granted until the date of entry into force of a special scheme for the application of VAT to the recycled waste sector, but not later than 31 December 2005.

Proposal for a COUNCIL DECISION amending Council Decision 1998/161/EC authorising the Kingdom of the Netherlands to apply a measure derogating from Articles 2 and 28a(1) of 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

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to 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, [6] and in particular Article 27 thereof,

[6] OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive 2004/7/EC (OJ L 27, 30.1.2004, p.44)

Having regard to the proposal from the Commission, [7]

[7] OJ C [...] [...], p. [...]

Whereas:

(1) Pursuant to Article 27(1) of the Sixth VAT Directive, the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce or extend special measures for derogation from that Directive in order to simplify the procedure for charging the tax or to prevent certain types of tax evasion or avoidance.

(2) By letter registered with the Secretariat-General of the Commission on 26 November 2003, the Dutch Government requested the extension of Decision 1998/161/EC [8] authorising it to apply special tax measures to the recyclable waste sector.

[8] OJ L 53, 24.2.1998, p. 19.

(3) The other Member States were informed of the request on 14 January 2004.

(4) Decision 1998/161/EC as amended by Decision 2000/435/EC [9], authorised the Kingdom of the Netherlands to apply, until 31 December 2003 the following measures:

[9] OJ L 172, 12.7.2000, p. 24.

- an exemption for the supply and intracommunity acquisition of used and waste materials by firms with an annual turnover of less than NGL 2,5 million. For the purposes of calculating that threshold, turnover in non-ferrous metals may be disregarded,

- an exemption for the supply and intracommunity acquisition of non-ferrous metals.

(5) Taxable entities carrying out transactions which are exempt pursuant to Articles 2 and 3 of Decision 1998/161/EC may be authorised not to make supplies and intra-Community acquisitions of used and waste materials effected by them subject to the special measures provided for by that Decision.

(6) The derogating measure was needed because of the difficulty in dealing with fraud in this sector, where certain operators, mainly small dealers, did not comply with their obligations under article 21.1.a) of the Sixth Council Directive to pay to the authorities the tax they had charged for their supplies. Enforcing collection of the tax in this sector is especially difficult because of the complications of identifying and supervising the activities of non-compliant traders. Hence these arrangements constitute an effective fraud-prevention measure.

(7) On 7 June 2000 the Commission published a strategy to improve the operation of the VAT system in the short term, in which it undertook to rationalise the large number of derogations currently in force. In some cases, however, this rationalisation could involve extending certain particularly effective derogations to all Member States. The Commission's communication of 20 October 2003 reiterates this compromise.

(8) The Kingdom of the Netherlands should be granted an extension for the current derogation until the date of entry into force of a special scheme for the application of VAT to the recycled waste sector, but not later than 31 December 2005.

(9) The derogation has no adverse impact on the European Communities' own resources accruing from VAT, nor does it have an effect on the amount of VAT charged at the final stage.

HAS ADOPTED THIS DECISION:

Article 1

In Article 1 of Decision 1998/161/EC as amended by Decision 2000/435/EC, the date 31 December 2003 is replaced by the following wording: "until the date of entry into force of a special scheme for the application of VAT to the recycled waste sector amending Directive 77/388/EEC, but not later than 31 December 2005".

Article 2

This Decision is addressed to the Kingdom of the Netherlands.

Done at Brussels,

For the Council

The President