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"B COUNCIL DECISION
of 19 December 1997
authorising the United Kingdom to extend application of a measure derogating from Article 28e(1) of the
Sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to
turnover taxes
(98/23/EC)
(OJ L 8, 14.1.1998, p. 24)
Amended by:
Official Journal
No page date
"M1 Council Decision 2000/435/EC of 29 June 2000 L 172 24 12.7.20001998D0023 — EN — 12.07.2000 — 001.001 — 1
COUNCIL DECISION
of 19 December 1997
authorising the United Kingdom to extend application of a measure
derogating from Article 28e(1) of the Sixth Council Directive 77/388/EEC
on the harmonisation of the laws of the Member States relating to
turnover taxes
(98/23/EC)
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 (
1), and
in particular Article 27 thereof,
Having regard to the previous Decision 92/546/EEC (2),
Having regard to the proposal from the Commission,
Whereas, pursuant to Article 27(1) of Directive 77/388/EEC, 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 toprevent certain types of tax evasion and avoidance;
Whereas, by letter registered at the Commission on 21 February 1997, the
United Kingdom requested authorisation to extend application of thederogation measure previously granted to it by Decision 92/546/EEC until
31 December 1996;
Whereas the other Member States were informed on 6 May 1997 of the
United Kingdom’ s request;
Whereas, pursuant to Decision 92/546/EEC, the United Kingdom is
authorised to introduce a special measure allowing the appropriate authorities
to direct that the open-market value be taken as the taxable amount for
intra-Community acquisitions of goods where the person acquiring the goodsis not a fully taxable person and there are family, legal or business ties,specified in national legislation, between the person acquiring the goods and
the supplier;
Whereas Decision 92/546/EEC empowered the United Kingdom to
supplement a special measure authorised by Council Decision (
3), deemed
to have been adopted on 11 April 1987, permitting the United Kingdom to
direct that the open-market value be taken as the taxable amount for suppliesof goods and services or imports where the recipient is a totally or partially
exempt person and there are family, legal or business ties, specified in
national legislation, between the person supplying the goods or services andthe recipient or between the person importing the goods and the person towhom payment for them has to be made;
Whereas the purpose of the measure in question is to prevent persons with
family, legal or business ties, specified in national legislation, from artificiallyreducing the prices of taxable transactions;
Whereas according to the case law of the Court of Justice of the European
Communities (
4), national derogation measures which are intended to prevent
fraud or tax avoidance are to be interpreted strictly and can be used to
derogate from the rules for determining the taxable amount only within thelimits strictly necessary to achieve this objective;!B
(1) OJ L 145, 13. 6. 1977, p. 1. Directive as last amended by Directive 96/95/EC (OJ L
338, 28. 12. 1996, p. 89).
(2) OJ L 351, 2. 12. 1992, p. 34.
(3) OJ L 132, 21. 5. 1987, p. 22.
(4) See Judgments of 10 April 1984, the Commission/Belgium (324/82, ECR 1984, p.
1861, item 29) and of 29 May 1997, Werner Skripalle (63/96, ECR 1997, p.
I-2847).1998D0023 — EN — 12.07.2000 — 001.001 — 2
Whereas, the special measure is to apply only in cases where the
administration is able, based on the facts, to conclude that the determinationof the taxable amount provided for in Article 28e of Directive 77/388/EEC isinfluenced by family, business or legal ties between the person who acquires
the goods and the supplier; whereas the administration may not act on mere
presumptions, and the parties concerned must be allowed to adduce evidenceto the contrary where they dispute the level of the open value established bythe administration;
Whereas the measure is limited in scope insofar as it will apply only to
taxable transactions where the recipient is a totally or partially exempt person;
Whereas, given the limited scope of the derogation, the special measure is
proportionate to the aim pursued;
Whereas the Commission adopted on 10 July 1996 a work programme,
accompanied by a schedule of proposals, providing for gradual, stage-by-
stage progress towards a common V AT system for the internal market;
Whereas, as the final package of proposals is scheduled for mid-1999, the
authorization is being granted until 31 December 1999 so as to enable anassessment to be made at that time as to whether the derogation measure isconsistent with the overall approach adopted under the new common V AT
system;
Whereas this derogation will have an adverse impact on the Communities’
own resources arising from V AT,
HAS ADOPTED THIS DECISION:
Article 1
By way of derogation from Article 28e(1) of Directive 77/388/EEC, the
United Kingdom is hereby authorized, until
"M131 December 2003 3,t o
apply a special measure allowing the appropriate authorities to direct that theopen-market value be taken as the taxable amount for intra-Communityacquisitions of goods when the following two conditions are met:
— the person who acquires the goods is not a fully taxable person and there
are family, legal or business ties specified in national legislation, between
the person acquiring the goods and the supplier,
— a number of facts make it possible to conclude that these family, business
or legal ties have influenced the determination of the taxable amount
provided for in the said Article 28e.
Article 2
This Decision is addressed to the United Kingdom.!B1998D0023 — EN — 12.07.2000 — 001.001 — 3