COMMISSION OF THE EUROPEAN COMVIUNITIES 
COM(91)82 final 
Brussels,14 March 1991 
Proposal for a 
COUNCIL DECISION 
authorizing the Federal Republic of Germany to apply a 
measure derogating from Article 2 (1) 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 
Subject to Article 1(2)(b) of the Eighteenth Council 
Directive of 18 July 1989f1', the Federal Republic of 
Germany was required to abolish, with effect from 1 January 
1991, its exemption from tax of the management of credit 
and credit guarantees by a person or a body other than the 
one which granted the credits. 
By letter received by the Secretariat-General of the 
Commission on 19 December 1990, the Government of the 
Federal Republic of Germany submitted a request for a 
derogation based on Article 27 of the Sixth Council 
Directive of 17 May 1977 on the common system of value 
added tax*2', designed to simplify the procedure for 
charging the tax. 
In accordance with Article 27(3) of the Sixth Directive, 
the other Member States were informed by letter dated 18 
January 1991 of the German request. 
The measure requested by the Federal Republic of Germany is 
the retention of the tax exemption for the management of 
credit and credit guarantees by a person or a body other 
than the one which granted the credits. 
(1) O.J. n*L 226, 3.8.1989 
(2) O.J. n'L 145, 13.6.1977 
In support of its request the Government of the Federal 
Republic of Germany explains the considerable difficulties 
that would be encountered as regards the establishment by 
the undertakings concerned of the taxable transactions and 
the deductible amounts of input tax relating to them and as 
regards control by the tax administration. Since the 
amounts of tax are small in very many cases the burden 
involved in adapting the system would be unjustified in 
relation to the tax yield. 
The Government of the Federal Republic of Germany points 
out that the derogation would have only a limited effect on 
the VAT yield, a fact which has been acknowledged by the 
Commission as regards VAT own resources, most recently in 
the Commission Decision of 23 March 199u'3', Article 2, 
point 3. 
The Commission is convinced that the measure in question, 
which derogates from Article 2 (1) of the Sixth Directive, 
read in conjunction with Article 13 B(d)(1) and (2), is 
designed to simplify the procedure for the application of 
VAT within the meaning of Article 27 of that Directive. 
The Commission therefore considers it appropriate for the 
Federal Republic of Germany to be authorized to apply the 
planned special measure. It nevertheless takes the view 
that the derogation should be limited as to its duration, 
and authorized until 31 December 1995, and that before the 
expiration of this authorization the Federal Republic of 
Germany should endeavour to overcome the practical 
difficulties giving rise to this derogation. 
(3) O.J. n'L 99, p. 28 
* 
Proposal for a 
COUNCIL DECISION 
authorizing the Federal Republic of Germany to apply a 
measure derogating from Article 2 (1) 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 COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic 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 ' ' , as last 
amended by the Eighteenth Council Directive 89/465/EEC (2), 
and in particular Article 27* thereof, 
Having regard to the proposal from the Commission, 
Whereas the Eighteenth Directive 89/465/EEC repeals, as 
from 1 January 1991, the transitional derogation provided 
for in Article 28(3)(b) of the Sixth Directive 77/388/EEC 
read in conjunction with point 13 of Annex F thereto, which 
permitted Member States to continue to exempt the 
management of credit and credit guarantees by a person or a 
body other than the one which granted the credits; 
(1) O.J. n"L 145, 13.6.1977, p. 1 
(2) O.J. n'L 226, 3.8.1989, p. 21 
Whereas, under Article 27(1) of the afore-mentioned 
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 or 
avoidance ; 
Whereas the Federal Republic of Germany, by letter received 
by the Commission on 19 December 1990, requested 
authorization to retain the tax . exemption for the 
management of credit and credit guarantees by a person or a 
body other than the one which granted the credit; whereas 
this measure constitutes a derogation from Article 2(1), 
read in conjunction with Article 13 B (d) (1) and (2) , of 
the Sixth Directive 77/388/EEC, according to which such 
services effected for consideration within the territory of 
a country by a taxable person acting as such shall be 
subject to value added tax; 
Whereas the other Member States were informed of the 
Federal Republic of Germany's request on 18 January 1991; 
Whereas arrangements for taxing such supplies would pose 
considerable technical difficulties in Germany as regards 
establishment by the undertakings concerned of the taxable 
transactions and the deductible amounts of input tax 
relating to them and as regards control by the tax 
administration; 
Whereas the authorization requested can be granted under 
certain conditions; 
Whereas the derogation, shall be temporary, in order to 
allow an assessment of the effects of the authorization 
granted by this Decision after a certain period of 
application; whereas before expiration of this 
authorization the Federal Republic of Germany shall 
endeavour to overcome the practical difficulties 
necessitating this derogation»; 
Whereas this derogation^ will affect the European 
Communitiesown resources accruing from value added tax 
only to a negligible extent; 
HAS ADOPTED THIS DECISION :^ 
Article 1 
By way of derogation from Article 2 (1) , read in 
conjunction with Article 13 B(d) (1) and (2), of the Sixth 
Directive 77/388/EEC, the Federal Republic of Germany is 
hereby authorized until 31 December 1995 to exempt the 
supply of services in respect of the management of credit 
and credit guarantees by a person or a body other than the 
one which granted the credits. 
Article 2 
This decision is addressed to the Federal Republic of 
Germany. 
Done at Brussels, For the Council 
President 

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