•it £ COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 19.06.1996 
COM(%) 277 final 
Proposal for a 
(X)UN(TI DECISION 
AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY 
TO CONCLUDE WITH THE CZECH REPUBLIC TWO AGREEMENTS 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 letters officially received by the Secretariat-General of the Commission on 
22 August 1995 and 26 March 1996, the German Government requested authorization, 
on the basis of Article 30 of the Sixth Council Directive, to conclude two agreements with 
the Czech Republic containing derogations from Articles 2 and 3 of that Directive (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 ). 
In accordance with Article 30, the other Member States were informed of Germany's 
request by letter dated 25 April 1996. 
The first agreement concerns the construction of a frontier bridge across the Rehlingbach 
between Waidhaus and Rozvadov linking the German A6 motorway, which runs 
eastwards from Nuremberg, with the Czech D5 motorway, which runs westwards from 
Plzen. 
The agreement provides that, in so far as they extend onto the sovereign territory of the 
Czech Republic, the area of the construction site for the frontier bridge and, after its 
completion, the frontier bridge itself are to be treated as forming part of the sovereign 
territory of the Federal Republic of Germany as regards supplies of goods or services 
intended for the construction of the frontier bridge or for its repair and renewal. 
The second agreement concerns the construction of a frontier bridge between Schônberg 
and Vojtanov extending the E49 motorway. 
This agreement provides that, in so far as they extend onto the sovereign territory of the 
Federal Republic of Germany, the area of the construction site for the frontier bridge and, 
after its completion, the frontier bridge itself are to be treated as forming part of the 
sovereign territory of the Czech Republic as regards supplies of goods or services 
intended for the construction of the frontier bridge or for its repair and renewal. 
The two agreements also stipulate that, with the exception of customs duties, no import 
tax is to be charged on goods imported from the sovereign territory of one Contracting 
State into the sovereign territory of the other Contracting State, provided that ihosc 
goods are used for the construction of the frontier bridges in question or for their icpair 
and renewal. This provision does not apply to goods imported by public authorities 
In accordance with the principle of territorial application laid down by the Sixth Directive, 
the bridge construction, repair and renewal work carried out on German sovereign 
territory would be subject to value added tax in Germany, while such work carried out on 
Czech sovereign territory would lie outside the scope of the Sixth Directive. If these 
provisions were applied, it would be necessary to break down transactions on the basis of 
the territory on which they were carried out. In addition, each importation into Germany 
from the Czech Republic of goods used for the construction of the bridges or for their 
repair or renewal would be subject to value added tax in Germany. 
OJ No L 145, 13.6.1977, p. 1, as last amended by Directive 95/7TEC (OJ No L 102, 5.5.1995, p. 18). 
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The Contracting States are of the opinion that application of these rules would involve 
onerous tax complications for the contractors responsible for the work in question They 
therefore take the view that the tax provisions of the draft agreement are justified in order 
to simplify the contractors' tax obligations. 
It should also be noted that, pursuant to Article 30 of the Sixth Directive, the Council has 
already authorized the Federal Republic of Germany to conclude a number of agreements 
with the Republic of Poland concerning construction work in the frontier area which 
contain tax provisions similar to those set out in the present agreements. 
The Commission agrees that the uniform taxation of construction, repair and renewal 
work, and the waiving of collection of value added tax on imports of goods intended for 
use in such work, simplify matters for the contractors compared with application of the 
normal rules of taxation. 
In addition, given that the tax provisions of the two agreements balance out, their 
application will have only a negligible - but, in any event, positive - effect on the European 
Communities' own resources accruing from value added tax According to information 
provided by the German authorities, the taxable turnover on work in Germany under the 
derogations provided for by these agreements is slightly higher than that which would be 
subject to value added tax in Germany if the normal rules of the common system of value 
added tax were to be applied. 
Accordingly, the Commission takes the view that the Federal Republic of Germany should 
be authorized to conclude the proposed agreements. 
Proposal for a 
COUNCIL DECISION 
AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY 
TO CONCLUDE WITH THE CZECH REPUBLIC TWO AGREEMENTS 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 
harmonization 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 30 
thereof, 
Having regard to the proposal from the Commission, 
Whereas, under Article 30 of the Sixth Directive, the Council, acting unanimously on a 
proposal from 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 letters officially received by the Secretariat-General of the Commission on 22 
August 1995 and 26 March 1996, the German Government requested authorization to 
conclude two agreements with the Czech Republic which contain derogations from 
Articles 2 and 3 of the Sixth Directive as regards the construction, repair and renewal of 
two frontier bridges between the Contracting States; 
Whereas the other Member States were informed on 25 April 1996 of the German 
request; 
OJ No L 145, 13.6.1977, p. 1, as last amended by Directive 95/7/EC (OJ No L 102, 5.5.1995, p. 18). 
Whereas, in the absence of derogations, the construction, repair and renewal work carried 
out on German territory would be subject to value added tax in Germany while that 
carried out on Czech territory would lie outside the scope of the Sixth Directive and 
whereas, in addition, each importation from the Czech Republic into Germany of goods 
used for the construction, repair and renewal of the frontier bridges would be subject to 
value added tax in Germany; 
Whereas the purpose of these derogations is to simplify the rules of taxation for the 
contractors carrying out the work in question; 
Whereas the derogations will have only a negligible effect on the own resources of the 
European Communities accruing from value added tax, 
HAS ADOPTED THIS DECISION: 
Article 1 
The Federal Republic of Germany is hereby authorized to conclude two agreements with 
the Czech Republic containing measures derogating from the Sixth Council Directive 
(77/388/EEC) of 17 May 1977. 
The first agreement concerns the construction of a frontier bridge across the Rehlingbach 
between Waidhaus and Rozvadov linking the German A6 motorway, which runs 
eastwards from Nuremberg, with the Czech D5 motorway, which runs westwards from 
Plzen. 
The second agreement concerns the construction of a frontier bridge between Schônberg 
and Vojtanov extending the E49 motorway. 
The derogations provided for by these agreements are spelt out in Articles 2, 3 and 4. 
Article 2 
By way of derogation from Article 3 of the Sixth Directive, in so far as they extend onto 
the sovereign territory of the Czech Republic, the area of the construction site for the 
frontier bridge referred to in the second paragraph of Article 1 and, after its completion, 
the frontier bridge itself shall be treated as forming part of the sovereign territory of the 
Federal Republic of Germany as regards supplies of goods or services intended for the 
construction of the frontier bridge or for its repair and renewal. 
Article 3 
By way of derogation from Article 3 of the Sixth Directive, in so far as they extend onto 
the sovereign territory of the Federal Republic of Germany, the area of the construction 
site for the frontier bridge referred to in the third paragraph of Article 1 and, after its 
completion, the frontier bridge itself shall be treated as forming part of the sovereign 
territory of the Czech Republic as regards supplies of goods or services intended for the 
construction of the frontier bridge or for its repair and renewal. 
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Article 4 
By way of derogation from point 2 of Article 2 of the Sixth Directive, the importation of 
goods into Germany from the Czech Republic shall not be subject to value added tax in so 
far as those goods are used for the construction, repair or renewal of one of the bridges 
referred to in the second and third paragraphs of Article 1. However, this derogation shall 
not apply to goods imported by a public authority for the same purpose. 
Article S 
This Decision is addressed to the Federal Republic of Germany. 
Done at Brussels 1996 
For the Council 
The President 
Financial statement 
The proposed Decision, when adopted, will have only a negligible effect for the collection 
of Community own resources. 
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ISSN 0254-1475 
COM(96) 277 final 
DOCUMENTS 
EN 09 11 
Catalogue number : CB-CO-96-285-EN-C 
ISBN 92-78-05512-3 
Office for Official Publications of the European Communities 
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