COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.07.1995 
COM(95) 380 final 
COMMUNICATION FROM THE COMMISSION 
REQUEST SUBMITTED BY THE REPUBLIC OF AUSTRIA 
FOR AUTHORIZATION TO INTRODUCE SPECIAL MEASURES 
PURSUANT TO ARTICLE 27 OF THE SIXTH COUNCIL DIRECTIVE 
ON VALUE ADDED TAX 

REQUEST SUBMITTED BY THE REPUBLIC OF AUSTRIA FOR 
AUTHORIZATION TO INTRODUCE SPECIAL MEASURES PURSUANT TO 
ARTIC LE 27 OF THE SIXTH COUNCIL DIRECTIVE ON VALUE ADDED TAX 
(Communication from the Commission to the Council) 
Introduction 
By letter registered at the Secretariat-General of the Commission on 26 April 1995, the 
Austrian Government, acting on the basis of Article 27 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 - Common system of value added tax: uniform basis of 
assessment,1) requested authorization to apply five measures derogating from that 
Directive. 
In accordance with Article 27(3) of the Directive, the other Member States were informed 
of the Republic of Austria's request by letter dated 23 May 1995. Under Article 27(4), 
the Commission or the Member States may request that the matter be raised by the 
Council 
Description of the measures 
A. Transport operations carried out by Austrian railway authorities on foreign feeder 
lines 
Under the derogation, transport operations carried out on foreign feeder lines 
operated by the domestic railway authorities and those carried out on foreign 
transit lines are deemed to form part of the domestic portion of the journey, 
provided that the goods are subject to a single customs clearance procedure at 
domestic rates. 
This measure facilitates the taxation of transport services supplied by domestic 
railway authorities, which are not obliged to provide a breakdown of their services 
to take account of distances covered on foreign feeder or transit lines. 
Furthermore, the Austrian authorities point out that double taxation does not 
occur since the other country does not tax the transport operations concerned. 
B. Tax exemptions in respect of operations carried out by railway undertakings on 
behalf of foreign railways 
The object of this measure is to exempt domestic supplies provided by railway 
undertakings to foreign railways in connection with the handling of passenger and 
D OJ No L 145, 13.6.1977, p. 1. Directive as last amended by Directive 95/7/EC (OJ No L 102, 
5.5.1995, p. 18). 
<2_ 
goods traffic at jointly managed and interchange stations and on frontier lines, with 
input tax paid at the preceding stage being deductible. 
It should be pointed out that foreign railway undertakings do not carry out taxable 
operations on Austrian territory as the Austrian network is run by domestic 
railway undertakings. 
The Austrian Government considers this measure to be justified in that it reduces 
the administrative burden on foreign operators by sparing them the practical 
difficulties deriving from the procedures for refunding VAT. 
No deduction of input tax where more than 90% of the supplies are intended for 
private use 
The measure in question is aimed at excluding input tax on goods and services 
from the right to deduct where the percentage intended for business purposes is 
less than 10% of the total. This measure constitutes a derogation from 
Article 17(2) and (3) of the Sixth Directive. 
The Austrian authorities consider that this measure prevents disputes over the 
percentage of private use of goods and services which are used only incidentally 
for business purposes. 
D. Deduction of input tax in respect of travel expenses 
The object of this measure is to calculate at a flat rate deductible input tax payable 
on subsistence expenses and accommodation expenses during business trips or 
temporary periods of employment elsewhere. The rate is based on the amounts 
laid down under income tax or wages tax arrangements. Input tax is calculated by 
applying a tax rate of 10% to these amounts. 
However, this measure applies only to domestic travel, which is the only type of 
travel subject to Austrian VAT. 
Exchange rates 
This measure lays down that, where factors determining the taxable amount of a 
transaction other than an import transaction are expressed in a foreign currency, 
the conversion must be carried out at the official rate laid down as the average rate 
by the Federal Minister for Financial Affairs. This average rate is also used to 
determine the customs value of goods. However, the taxable person is entitled to 
carry out the conversion at the current rate of exchange where the individual 
amounts are evidenced by a communication issued by a bank or by an official list 
of rates. 
According to the Austrian Government, the requested measure, which derogates 
from the second subparagraph of Article 11(C)(2) of the Sixth Directive, simplifies 
^ 
the procedure for charging the tax within the meaning of Article 27 of the 
Directive. 
Commission's opinion 
The procedure provided for in Article 27 of the Sixth Directive permits Member States to 
introduce special measures derogating from that Directive in order to simplify the 
arrangements for charging the tax or to prevent certain types of tax evasion or avoidance. 
A special measure may not, however, be authorized under Article 27 unless that measure, 
while derogating from certain rules of the common system of value added tax, complies 
with the basic principles and key provisions of the system. 
Furthermore, a derogation under Article 27 is justified only on condition that it falls within 
the scope of the objectives referred to in that Article, namely simplification of the 
arrangements for charging the tax or prevention of tax evasion or avoidance. 
The request submitted by the Austrian Government contains five separate special 
measures. Each, therefore, requires a detailed examination to determine whether a 
derogation is justified on the basis of Article 27. 
The Commission finds that the information supplied on certain measures by the Austrian 
Government in its request for authorization does not provide an overall view of the scope 
and impact of the measures. In these circumstances, the Commission considers that it is 
unable to decide whether the requests are justified. 
In addition, in view of the extent of the requested derogations, which affect some key 
areas of the common VAT system, such as the scope of the tax, the taxable amount and 
the right to deduct input tax, the Commission is of the opinion that a discussion within the 
Council is essential at this stage. 
The Commission considers that such a discussion will enable it to assess more clearly, if 
necessary, the extent to which a proposal for a Council Decision authorizing the Republic 
of Austria to apply measures derogating from the common VAT system is feasible given 
the objectives and scope of the measures concerned. 
Conclusion 
In view of the foregoing, the Commission requests that the matter be raised by the 
Council in accordance with Article 27(4) of the Sixth Directive. 
u 
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COM(95) 380 final 
DOCUMENTS 
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