1997D0510 — EN — 11.12.2003 — 002.001 — 1
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►B COUNCILDECISION
of24July1997
authorizingIrelandtoapplyameasurederogatingfromArticle21oftheSixthDirective (77/388/
EEC)ontheharmonizationofthelawsoftheMemberStatesrelatingtoturnovertaxes
(97/510/EC)
(OJ L 214, 6.8.1997, p. 37)
Amended by:
Official Journal
No page date
►M1Council Decision 2000/435/EC of 29 June 2000 L 172 24 12.7.2000
►M2Council Decision 2003/857/EC of 25 November 2003 L 324 36 11.12.2003
▼B
COUNCILDECISION
of24July1997
authorizing IrelandtoapplyameasurederogatingfromArticle 21
of the Sixth Directive (77/388/EEC) on the harmonization of the
lawsoftheMember Statesrelatingtoturnovertaxes
(97/510/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 harmonization of the lawsof the Member Statesrelating toturnover taxes — Common system of value added tax: uniform basis ofassessment (
1), and in particular Article 27 thereof,
Having regard to the proposal from the Commission,Whereas, under the terms of Article 27 (1) of Directive 77/388/EEC,
the Council, acting unanimously on a proposal from the Commission,
may authorize any Member State to introduce special measures forderogation from the provisions of that Directive in order to simplifythe procedure for charging the tax or to prevent certain typesof taxevasion or avoidance;
Whereas, by registered letter to the Commission dated 5 February
1997, Ireland requested authorization to introduce a measure derogating
from Article 21 (1) of Directive 77/388/EEC;
Whereas, in accordance with Article 27 (3) of Directive 77/388/EEC,
the other Member Stateswere informed on 4 March 1997 of therequest made by Ireland;
Whereas Ireland operates a specific system of applying VAT to prop-
erty based, on the one hand, on the option under Article 5 (3) of
Directive 77/388/EEC to treat the supply of certain interests (i.e. a
lease of 10 years or more) in immovable property as a supply of goodsand, on the other hand, on a derogation authorized under Article 27 (5)to treat the granting of such an interest by a lessor as a disposal of thelessor's entire interest in the property;
WhereasCommunity law givesMember Statesa great deal of dis cre-
tion in determining the VAT treatment to be applied to immovable
goods, and its transposition has led to considerable variations in thenational lawsapplied in thisfield;
Whereas avoidance schemes have been set up, based on the use of
surrender, including by way of abandonment of a leasehold interest or
assignment of a leasehold interest, which result in the avoidance of the
VAT where the ultimate acquirer of the property isnot entitled to a fulldeduction of VAT;
Whereas it is also necessary to extend the derogation to the surrender
or assignment of a leasehold interest to a taxable person having fullright of deduction, as the surrender or the assignment of a leasehold
interest will often arise due to financial difficulties of the lessee;
Whereas the measure envisaged is a derogation from Article 21 (1) (a)
of Directive 77/388/EEC, whereby the person liable for the tax is thetaxable person who carries out the taxable transaction;
Whereas the derogation provides that, where a surrender or assignment
of a lease-hold interest is a taxable supply of goods, the personacquiring the interest is liable for the payment of the tax if that person
is a taxable person or a non-taxable legal person;
Whereas this derogation should ensure a better functioning of the
current VAT regime applied by Ireland on immovable goods;1997D0510 — EN — 11.12.2003 — 002.001 — 2
(1) OJ No L 145, 13. 6. 1977, p. 1. Directive aslas t amended by Directive 96/
95/EC, OJ No L 338, 28. 12. 1996, p. 89.
▼B
Whereas, given the limited scope of the derogation, the special measure
isproportionate to the aim purs ued;
Whereas there exists a serious risk that use of the said VAT avoidance
scheme will increase in the period between the request for a derogation
and the authorization thereof; whereas at the latest since the publicationon 26 March 1997 of the draft legislation which is the subject of thepresent request for a derogation, suppliers, lessors and lessees of prop-erty have no longer had a legitimate expectation of the continuation ofthe Irish legislation in force before that date; whereas it is therefore
appropriate to authorize the derogation to take effect from 26 March
1997;
Whereas the Commission adopted on 10 July 1996 a work programme
based on a step-by-step approach for progressing towards a newcommon system of VAT;
Whereas the tax treatment of immovable goods is an important issue to
be reviewed in thisprogramme;
Whereas the last package of proposals is to be put forward by mid-
1999 and, in order to permit an evaluation of the coherence of the
derogation with the global approach of the new common VAT system,the authorization isgranted until 31 December 1999;
Whereasthe derogation doesnot have a negative impact on the own
resources of the European Communities accruing from VAT,
HAS ADOPTED THIS DECISION:
Article 1
By way of derogation from Article 21 (1) (a) of Directive 77/388/EEC,
Ireland ishereby authorized, from 26 March 1997 until ►M231
December 2007 ◄, to designate the person to whom the supply is
made asthe pers on liable to pay the tax where the two following
conditionsare met:
— a surrender or assignment of a leasehold interest is treated as a
supply of goods made by a lessee,
— the person acquiring the leasehold interest is a taxable person or a
non-taxable legal person.
Article 2
This Decision is addressed to Ireland.1997D0510 — EN — 11.12.2003 — 002.001 — 3