98/23/EC: Council Decision of 19 December 1997 authorising the United Kingdom to extend application of a measure derogating from Article 28e(1) of the Sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 1997-12-19
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, approximation of laws, basis of tax assessment, derogation from EU law, turnover

L 8/24

EN

Official Journal of the European Communities

14. 1. 98

COUNCIL DECISION

of 19 December 1997

authorising the United Kingdom to extend application of a measure derogating
from Article 28e(1) of the Sixth Council Directive 77/388/EEC on the harmonisa-
tion of the laws of the Member States relating to turnover taxes

(98/23/EC)

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 harmonisation 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 27 thereof,

Having regard to the previous Decision 92/546/EEC (2),

Having regard to the proposal from the Commission,

Whereas Decision 92/546/EEC empowered the United
Kingdom to supplement a special measure authorised by
Council Decision (3), deemed to have been adopted on 11
April 1987, permitting the United Kingdom to direct
that
the open-market value be taken as the taxable
amount for supplies of goods and services or imports
where the recipient is a totally or partially exempt person
and there are family, legal or business ties, specified in
national
legislation, between the person supplying the
goods or services and the recipient or between the person
importing the goods and the person to whom payment
for them has to be made;

Whereas the purpose of the measure in question is to
prevent persons with family, legal or business ties, speci-
fied in national legislation, from artificially reducing the
prices of taxable transactions;

Whereas, pursuant
to Article 27(1) of Directive 77/
388/EEC, the Council, acting unanimously on a proposal
from the Commission, may authorise any Member State
to introduce or extend 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 according to the case law of the Court of Justice
the European Communities (4), national derogation
of
measures which are intended to prevent fraud or tax
avoidance are to be interpreted strictly and can be used to
derogate from the rules for determining the taxable
amount only within the limits
strictly necessary to
achieve this objective;

Whereas, by letter registered at the Commission on 21
February 1997, the United Kingdom requested authorisa-
tion to extend application of
the derogation measure
previously granted to it by Decision 92/546/EEC until 31
December 1996;

Whereas the other Member States were informed on 6
May 1997 of the United Kingdom’s request;

Whereas, the special measure is to apply only in cases
where the administration is able, based on the facts, to
conclude that the determination of the taxable amount
provided for in Article 28e of Directive 77/388/EEC is
influenced by family, business or legal ties between the
person who acquires the goods and the supplier; whereas
the administration may not act on mere presumptions,
and the parties concerned must be allowed to adduce
evidence to the contrary where they dispute the level of
the open value established by the administration;

Whereas, pursuant to Decision 92/546/EEC, the United
Kingdom is authorised to introduce a special measure
allowing the appropriate authorities to direct that the
open-market value be taken as the taxable amount for
intra-Community acquisitions of goods where the person
acquiring the goods is not a fully taxable person and
there are family,
legal or business ties, specified in
national
legislation, between the person acquiring the
goods and the supplier;

Whereas the measure is limited in scope insofar as it will
apply only to taxable transactions where the recipient is a
totally or partially exempt person;

Whereas, given the limited scope of the derogation, the
special measure is proportionate to the aim pursued;

(1) OJ L 145, 13. 6. 1977, p. 1. Directive as last amended by

Directive 96/95/EC (OJ L 338, 28. 12. 1996, p. 89).

(2) OJ L 351, 2. 12. 1992, p. 34.

(3) OJ L 132, 21. 5. 1987, p. 22.
(4) See Judgments of 10 April 1984,

the Commission/Belgium
(324/82, ECR 1984, p. 1861, item 29) and of 29 May 1997,
Werner Skripalle (63/96, ECR 1997, p. I-2847).

14. 1. 98

EN

Official Journal of the European Communities

L 8/25

Whereas the Commission adopted on 10 July 1996 a
work programme,
schedule of
proposals, providing for gradual, stage-by-stage progress
towards a common VAT system for the internal market;

accompanied by

a

Whereas, as the final package of proposals is scheduled
for mid-1999, the authorization is being granted until 31
December 1999 so as to enable an assessment to be made
at that time as to whether the derogation measure is
consistent with the overall approach adopted under the
new common VAT system;

Whereas this derogation will have an adverse impact on
the Communities’ own resources arising from VAT,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 28e(1) of Directive
77/388/EEC, the United Kingdom is hereby authorized,
until 31 December 1999,
to apply a special measure
allowing the appropriate authorities to direct that the
open-market value be taken as the taxable amount for

of
intra-Community
following two conditions are met:

acquisitions

goods when the

 the person who acquires the goods is not a fully
taxable person and there are family, legal or business
legislation, between the
ties specified in national
person acquiring the goods and the supplier,

 a number of facts make it possible to conclude that
these family, business or legal ties have influenced the
determination of the taxable amount provided for in
the said Article 28e.

Article 2

This Decision is addressed to the United Kingdom.

Done at Brussels, 19 December 1997.

For the Council

The President

F. BODEN