Proposal for a COUNCIL DECISION Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to apply a measure derogating from Article 3 of 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
Date: 1994-11-18
Institutions: European Commission
Subjects: Germany, Luxembourg, VAT, engineering structure, tax harmonisation, territorial law

COMMISSION OF THE EUROPEAN  COMMUNITIES 

COM(94) 506 final 
Brussels, 18.11.1994 

Proposal  for a 

COUNCIL DECISION 

Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to 
apply a measure derogating from Article 3 of 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. 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

By  letters received by the  General  Secretariat  of the  Commission  on  4  July  1994  and  17 
August  1994 respectively,  the German and Luxembourg  Governments  submitted  requests 
for an authorisation based on Article 27(1) of the Sixth Council Directive of  17 May  1977 
on the  harmonization  of the  laws  of  the Member  States  relating  to  turnover  taxes1.  The 
special measure which is the object of the present Decision derogates from Article 3 of the 
Sixth  VAT  Directive,  which  determines  the  territorial  application  of  the  common  VAT 
system.  The justification  for  this  authorisation  is  in  order  to  simplify  the  procedures  for 
charging value added tax. 

In accordance  with  Article  27(3)  of the  Sixth  VAT  Directive,  thé  Commission  informed 
the other Member States, by letter dated  16 September  1994,  of the requests  submitted by 
the German and Luxembourg Governments. 

The special measure requested by the Federal Republic of Germany and the Grand Duchy 
of Luxembourg concerns the building of a motorway bridge over the river Moselle  to  the 
north  of  Perl  and  Schengen  linking  the  German  A8  motorway  from  Saarbriicken  to  the 
west with the Luxembourg  A13  motorway from the Dudelange motorway junction to  the 
east. 

The bridge is located partly on the sovereign territory of the Federal Republic of Germany 
and the Grand Duchy of Luxembourg, but also partly over the river Moselle,  which,  as the 
frontier between the two countries, is the joint territory of both. 

Under  the  principle  of  territoriality  laid  down  by  Articled  of  the  Sixth  VAT  Directive, 
German  value  added  tax  would  be  applied  to  the  construction  work  carried  out  on 
German  territory,  and  work  carried  out  on  Luxembourg  territory  would  be  subject  to 
Luxembourg taxation. However,  it would not be clear how the work  carried out  between 
the  two  Member  States  would  be  taxed.  Without  a  simplification  of  the  taxation 
arrangements  the  firms  involved  in  constructing  the  bridge  would  be  faced  with  a 
considerable  problem.  For every  single  supply  of goods  and  services  involved  in building 
the bridge it would have to be established whether it occurred  on German or Luxembourg 
territory  or  on  the joint  territory.  Single  transactions  covering  both  sovereign  territories 
and the joint territory would have to be apportioned. 

In  order to  simplify  the  practical  arrangements  for  the  carrying  out  of  the  construction 
project  and to  ensure that goods  and  services  supplied  on the joint  territory  are taxed,  it 
has  been  agreed  between  the  German  and  Luxembourg  authorities  that,  subject  to 
authorisation  of  the  present  measure  by  the  Council,  taxation  of  the  construction  work 
will  be  subject  to  value  added  tax  in the  Grand  Duchy  of  Luxembourg  alone.  The  same 
problem  also  arises  in  respect  of  the  maintenance  of  the  bridge  once  delivery  of  it  has 
taken  place.  Consequently,  maintenance  -  unlike  construction  -  will  be  subject  to  value 
added tax in the Federal Republic of Germany. 

1  OJ  N°  L  145,  13.6.1977,  p.  1. Directive  as  last  amended  by  Directive  94/5/EC  (OJ  N°  L 
60,  3.3.94,  p.  16). 

A 

Article 27(1) of the Sixth VAT 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.  As  explained,  the  proposed  arrangements  serve  the  purpose  of 
simplification. 

Since, under the proposed arrangements, the entire construction  of the bridge would be 
subject  to  value  added  tax  in  the  Grand  Duchy  of  Luxembourg  and  its  maintenance 
subject to value added tax in the Federal Republic of Germany, 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  by  Decision  83/333/EEC  of  18  March  19832,  the  Council 
authorised a similar derogation to Article 3, on the basis of Article 27(1), for the purpose 
of constructing a bridge over the river Sûre between the same two Member States. 

The Commission is convinced that the derogation in question, provided that it is restricted 
to the construction and maintenance of the frontier bridge over the river Moselle specified 
above, is intended to be a simplification  measure within the meaning of Article 27(1)  of 
the Sixth VAT Directive. 

The Commission therefore  considers it appropriate for the Federal  Republic of Germany 
and  the  Grand  Duchy  of  Luxembourg  to  be  authorised  to  apply  the  planned  special 
measure. 

2  Decision  deemed  to  have  been  adopted,  in  accordance  with  Article  27(4)  of  the  Sixth 
Council Directive 77/388/EEC  on turnover taxes (OJ L 181  of 6.7.83,  p.  25) 

Proposal for a 

COUNCIL DECISION 

Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to 
apply a measure derogating from Article 3 of 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. 

(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  VAT  Directive,  the  Council,  acting 
unanimously  on a proposal from the  Commission,  may authorise  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 4 July  1994 and  17 August 
1994 respectively,  the Governments of the Federal Republic of Germany and the Grand 
Duchy  of  Luxembourg  have  requested  authorisation  to  introduce  a  special  measure 
concerning the construction and maintenance of a motorway bridge crossing over the  river 
Moselle  to  the  north  of  Perl  and  Schengen  linking  the  German  A8  motorway from 
Saarbriicken  to  the  west  with  the  Luxembourg  A13  motorway  from  the  Dudelange 
motorway junction to the east; 

Whereas, in accordance with Article 27(3) of the Sixth VAT Directive, the other Member 
States were informed  on  16  September  1994  of the  requests  for  authorisation  received 
from the Federal Republic of Germany and the Grand Duchy of Luxembourg; 

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  have  to  be 
established whether the place of taxation was within the territory of the Federal Republic 
of  Germany  or the  Grand Duchy  of Luxembourg;  whereas  such taxation  arrangements 
would give rise to considerable practical difficulties; 

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; 

1  OJ  N°  L  145,  13.6.1977,  p.  1. Directive  as  last  amended  by  Directive  94/5/EC  (OJ  N°  L 
60,  3.3.94,  p.  16). 

^> 

Whereas  the  derogation  will  not  affect  the  amount  of  tax  due  at  the final consumption 
stage  and  will  not  therefore  have  an  adverse  affect  on  the  European  Communities' own 
resources arising from value added tax, 

HAS ADOPTED THIS DECISION: 

Article 1 

By way of derogation from Article 3 of Directive  77/388/EEC,  the Federal  Republic  of 
Germany  and  the  Grand  Duchy  of Luxembourg  are hereby  authorised,  in  respect  of the 
motorway  bridge  over  the river Moselle  to  the  north  of Perl  and  Schengen  linking  the 
German  A8  motorway  from  Saarbrucken  to  the  west  with  the  Luxembourg  A13 
motorway  from  the  Dudelange  motorway  junction  to  the  east,  to  consider,  for  the 
duration  of  the  construction  of  the  bridge,  the  whole  of  the  construction  site  as  being 
within  the  territory  of  the  Grand  Duchy  of  Luxembourg,  and,  with  effect  from  the 
completion of the bridge, the whole of the bridge to be within the territory of the Federal 
Republic of Germany. 

Article 2 

This Decision is addressed  to the Federal Republic of Germany and the Grand Duchy of 
Luxembourg. 

Done at Brussels, 

1994. 

For the Council 

The President 

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ISSN 0254-1475 

COM(94) 506 final 

DOCUMENTS 

EN 

09 06 

Catalogue number : CB-CO-94-533-EN-C 

ISBN 92-77-82283-X 

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