COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(94) 509 final 
Brussels, 18.11.1994 
Proposal for a 
COUNCIL DECISION 
AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY AND 
THE REPUBLIC OF POLAND TO CONCLUDE AN AGREEMENT CONTAINING MEASURES 
DEROGATING FROM ARTICLES 2 AND 3 OF 
THE SIXTH COUNCIL DIRECTIVE (77/388/EEC), OF 17 MAY 1977, 
ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES 
RELATING TO TURNOVER TAXES. 
(presented by the Commission) 
Explanatory Memorandum 
By letter received by the Secretariat General of the Commission, and registered on 23 August 
1994, the German Government requested authorisation, on the basis of article 30 of the Sixth 
Council Directive, to conclude an agreement with the Republic of Poland, containing 
derogations from articles 2 and 3 of the said Directive. (The Sixth Council Directive 
77/388/EEC, of 17 May 1977, on the harmonisation of the laws of the Member States relating 
to tufn-over taxes - the Common system of Value Added Tax: uniform basis of assessment 1.) 
In accordance with the provisions of article 30, the other member states were informed of the 
German request by letter of 23 September 1994. 
The agreement designates which of the contracting states is to be responsible for the 
maintenance of each frontier bridge currently operating. The agreement also regulates the 
maintenance and other related matters in the event of a new frontier bridge being constructed, 
or an existing bridge being put back into service; the agreement would have to be amended in 
such cases. Modification would also be required where a bridge, currently in use, is put out of 
service. 
As far as possible, the division of responsibility between the contracting States for the 
maintenance of complete bridges is divided between the contracting States in proportion to the 
surface areas of all the bridges on each respective sovereign territory. 
Under the principle of territoriality, German Value Added Tax would be applied only to 
maintenance work on the bridges carried out on German territory; maintenance work carried 
out on Polish territory would be outwith the scope of application of the Sixth Directive. Work 
carried out on both territories would have to be apportioned. 
The application of these rules would involve considerable tax difficulties for the firms 
contracted to carry out this maintenance work. In order to simplify the tax obligations of these 
firms, the agreement contains tax provisions providing for the uniform taxation of maintenance 
work, either in accordance with the German turnover tax law, or in accordance with the Polish 
tax law on goods and services. 
In particular, the agreement states that the right to tax in a. given case will lie with the 
respective countries responsible for maintaining the frontier bridges. 
Moreover, the agreement provides that, with the exception of customs duties, no import tax 
shall be charged on goods imported from the territory of one contracting state into that of the 
other contracting state, provided that the goods are used for maintaining frontier bridges. 
However, imports for the public authorities (final consumption) are expressly excluded from 
the measure. 
1 OJ no. L 145 of 13.6.1977, p.1. Directive last modified by Directive 94/5/EC (OJ no. L 60 of 
3.3.1994, p. 16) 
Under the provisions of Article 30 of the Sixth Directive any Member State may be authorised 
to conclude with a non member country or an international organisation, an agreement which 
may contain derogations from the said Directive. 
The uniform taxation of maintenance work on the frontier bridges, either in the form of 
German VAT, or a Polish tax, constitutes an important simplification for those carrying out the 
maintenance work, when compared to the normal rules of the Sixth Directive. The decision to 
waive the collection of German VAT on imports of goods into Germany is also aimed at 
helping firms and the authorities avoid the practical difficulties connected with the VAT refund 
procedures. 
The Commission considers that the application of the proposed measures will have only a 
negligible effect on the European Community's VAT receipts. 
In effect, since the obligation to maintain the frontier bridges (which also determines the 
applicable tax law) is divided between the two contracting states according to the territorial 
location of each different part of all the frontier bridges, taxation of maintenance work 
according to the provisions of the agreement will hardly affect the amount of the German VAT 
due from these operations. On the other hand, considering the exclusion of the public 
authorities from this measure, the decision to waive the collection of German VAT on 
importation will not affect the amount of VAT due at the stage of final consumption, as even if 
this VAT on importation was collected, it would be recoverable by the operator who carried 
out the maintenance work. 
Consequently, the Commission considers it advisable to authorise the Federal Republic of 
Germany to conclude the proposed agreement. 
Proposal for a 
COUNCIL DECISION 
AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY AND 
THE REPUBLIC OF POLAND TO CONCLUDE AN AGREEMENT CONTAINING MEASURES 
DEROGATING FROM ARTICLES 2 AND 3 OF 
THE SIXTH COUNCIL DIRECTIVE (77/388/EEC), OF 17 MAY 1977, 
ON THE HARMONIZATION 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* , and in particular Article 30 thereof, 
Having regard to the proposal from the Commission, 
Whereas, under Article 30 of the Sixth VAT Directive, the Council, acting unanimously on a 
proposal of the Commission, may authorize any Member State to conclude with a non member 
country or an international organization, an agreement which may contain derogations from the 
said Directive; 
Whereas, by letter officially received by the Secretary General of the Commission on 23 
August 1994, the German Government requested authorisation to conclude an agreement with 
Poland, concerning the maintenance of frontier bridges linking German motorways to the main 
roads in Poland, which contains derogations from Articles 2 and 3 of the Sixth Directive; 
Whereas, the other Member States were informed on 23 September 1994 of the request for 
authorisation received from Germany; 
1 OJ no. L 145 of 13.6.1977, p.1. Directive last modified by Directive 94/5/EC (OJ no. L 60 of 
3.3.1994, p. 16) 
S 
Whereas in the absence of a special measure, only the maintenance work carried out on 
German territory would be subject to German VAT, those carried out on Polish territory 
would be outwith the scope of the Sixth Directive. In addition, each import of goods from 
Poland into Germany, used for the maintenance of frontier bridges, would be subject to 
German VAT; 
Whereas the purpose of these derogations is to simplify the taxation rules for those responsible 
for carrying out the maintenance work on the frontier bridges; 
Whereas the derogations will only have a negligible effect on the European Community's own 
resources arising from value added tax; 
HAS ADOPTED THIS DECISION: 
Article 1 
The Federal Republic of Germany is authorised to conclude an agreement with the Republic of 
Poland containing measures derogating from the Sixth Council Directive 77/388/EEC. These 
derogations are defined in articles 2 and 3 hereinafter. 
Article 2 
By way of derogation from Article 3 of the Sixth Directive, the frontier bridges of the 
contracting States for which, on the basis of the agreement, the Federal Republic of Germany 
has maintenance responsibility, are considered to be a part of German territory. This is in so far 
as the deliveries of goods and the supply of services are consistent with the maintenance of 
these bridges. 
By way of derogation from Article 3 of the Sixth Directive, the frontier bridges of the 
contracting states for which, on the basis of the agreement, the Republic of Poland has 
maintenance responsibility, are considered to be a part of Polish territory. This is in so far as 
the deliveries of goods and the supply of services are consistent with the maintenance of these 
bridges. 
Article 3 
By way of derogation from Article 2, paragraph 2 of the Sixth Directive, the importation of 
goods into Germany from Poland is not subject to value added tax, in so far as these goods are 
used for the maintenance of the frontier bridges for which, on the basis of the agreement, the 
Republic of Poland is responsible. However, the derogation does not apply to importations of 
goods effected by a public authority. 
4-
Article 4 
This Decision is addressed to the Federal Republic of Grermany. 
Done at Brussels, 1994 
For the Council 
The President 
^SN 0254-1475 
DOCUMENTS 
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Catalogue number : CB-CO-94-535-EN-C 
ISBN 92-77-82301-1 
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