COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 17.12.1996 
COM(96) 687 final 
Proposal for a 
COUNCIL DECISION 
authorizing the Federal Republic of Germany and the French Republic to apply a 
measure derogating from Article 3 of the Sixth Council Directive (77/388/EEQ 
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 letters received by the Secretariat-General of the Commission on 13 August and 
11 September 1996, the German and French Governments, acting on the basis of Article 27 of 
the Sixth Council Directive 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,1 requested authorization to apply a measure derogating from Article 3 of that 
Directive. 
In accordance with Article 27(3) of the Sixth Directive, the other Member States were 
informed of the request presented by Germany and France by letter dated 10 October 1996. 
The special measure requested by the Federal Republic of Germany and the French Republic 
concerns the arrangements for taxing the work of constructing and maintaining a frontier 
bridge over the Rhine between Altenheim, France, and Eschau, Germany. 
In this connection, the German and French authorities have agreed, as regards indirect taxes, 
for supplies of goods and services, for intra-Community acquisitions and for imports of goods 
intended for the construction or maintenance of the bridge over the Rhine, including winter 
maintenance and day-to-day cleaning of the bridge, to regard: 
- the construction site as being on French territory until acceptance of the bridge; 
- the frontier bridge as being on French territory as from its acceptance and for ten years 
thereafter. 
By this agreement, the contracting States are altering the territorial scope of VAT so that 
transactions on which VAT is chargeable and which are intended for the construction or 
maintenance of the bridge in question, which under the normal rules would be located in 
Germany are, for a period running from the beginning of the construction works to ten years 
after the acceptance of the bridge, regarded as being carried out on French territory and 
therefore subject to VAT in France. 
In accordance with the common system of VAT, and more particularly with the principle of 
territoriality laid down by Article 3 of the Sixth Directive, taxable transactions connected with 
the construction or maintenance of the bridge, carried out on German territory, are subject to 
VAT in Germany, while those carried out on French territory are subject to VAT in France. 
Application of this provision would mean that for every transaction connected with the 
construction or maintenance of the bridge it would have to be established whether it had been 
carried out in France or Germany. For transactions covering both countries, an apportionment 
would have to be made. 
The contracting States consider that application of these aiies would make payment of the tax 
considerably more complicated for the contractors in charge of the works. 
OJ No L 145. 13.6.1977. p. 1. Directive as last amended by Directive %/42/EC (OJ No L 170. 
9.7.19%, p. 34). 
9L 
Article 27(1) of the Sixth Directive provides for the introduction of special measures 
derogating from the provisions of the Directive in order to simplify the procedure for charging 
the tax. However such measures, except to a negligible extent, may not affect the amount of 
tax due at the final consumption stage. 
The Commission agrees that the uniform taxation of the works instead of application of the 
normal rules of taxation would simplify matters for the contractors. In view of the limited 
scope of the special measure, which only covers the construction and maintenance of the 
frontier bridge over the Rhine described above, the Commission feels that its introduction on 
the basis of Article 27 of the Directive is justified. 
Since, under the proposed arrangements, the entire construction and maintenance of the bridge 
will be subject to value added tax in France, the amount of tax due at the final consumption 
stage is not affected. Consequently, there is no adverse impact on the Community's VAT own 
resources. 
It should be noted that the Council has on several occasions already authorized a similar 
derogation from Article 3, on the basis of Article 27, in order to simplify the arrangements for 
taxing construction works carried out on the frontier territory of two Member States.2 
The Commission therefore considers it appropriate for the Federal Republic of Germany and 
the French Republic to be authorized to apply the planned special measure. 
Decision 83/333/EEC of 18 March 1983 (OJ No L 181, 6.7.1983. p.25). 
Decision 84/468/EEC of 10 September 1984 (OJ No L 264. 5.10.1984. p.26) 
Decision 95/114/EC of 3D March 1995 (OJ No L 80, 8.4.1995. p.46). 
Proposal for a 
COUNCIL DECISION 
authorizing the Federal Republic of Germany and the French Republic to apply a measure 
derogating from Article 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) 
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 laws of the Member States relating to turnover taxes - Common system 
of value added tax: uniform basis of assessment1, and in particular Article 27 thereof, 
Having regard to the proposal from the Commission, 
Whereas, under Article 27(1) of the Sixth Directive, the Council, acting unanimously on a 
proposal from the Commission, may authorize any Member State to introduce 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 and avoidance; 
Whereas, by letters officially received by the Commission on 13 August and 
11 September 1996, the Federal Republic of Germany and the French Republic have requested 
authorization to introduce a special measure concerning the construction and maintenance of a 
cross-frontier road bridge over the Rhine between Altenheim, France, and Eschau, Germany. 
Whereas, in accordance with Article 27(3) of the Sixth Directive, the other Member States 
were informed on 10 October 1996 of the requests for authorization received from the Federal 
Republic of Germany and the French Republic; 
Whereas, for supplies of goods and services, for intra-Community acquisitions and for imports 
of goods intended for the construction or maintenance of the bridge, the purpose of the special 
measure is to regard the entire site until acceptance of the bridge and the frontier bridge as 
from its acceptance and for ten years thereafter as being on French territory; 
1 OJ No L 145, 13.6.1977, p. I. Directive as last amended by Directive 96/42/EC (OJ No L 170, 
9.7.1996, p. 34). 
Whereas, in the absence of a special measure, for each supply of goods and services used for 
the construction and maintenance of the bridge in question, it would be necessary to ascertain 
whether the place of taxation was the Federal Republic of Germany or the French Republic; 
whereas, therefore, such taxation arrangements would in practice be veiy complicated for the 
contractors in charge of the works concerned; 
Whereas the purpose of this derogation is to simplify the procedure for charging the tax on the 
construction and maintenance of the bridge in question; 
Whereas the derogation will not affect the amount of tax due at the final consumption state and 
will not therefore have an adverse effect on the European Communities1 own resources arising 
from value added tax, 
HAS ADOPTED THIS DECISION. 
5~ 
Article 1 
By way of derogation from Article 3 of Directive 77/388/EEC, the Federal Republic of 
Germany and the French Republic are hereby authorized, in respect of the supplies of goods or 
services, intra-Community acquisitions and imports of goods intended for the construction or 
maintenance of the road bridge over the Rhine, between Altenheim, France, and Eschau, 
Germany, to regard: 
- the whole of the construction site as being on French territory until acceptance of the 
bridge; 
- the frontier bridge as being on French territory as from its acceptance and for ten years 
thereafter. 
Article 2 
This Decision is addressed to the Federal Republic of Germany and the French Republic. 
Done at Brussels 1996 
For the Council 
The President 
G 
ISSN 0254-1475 
COM(96) 687 final 
DOCUMENTS 
09 06 13 
Catalogue number : CB-CO-96-698-EN-C 
ISBN 92-78-13683-2 
Office for Official Publications of the European Communities 
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