98/198/EC: Council Decision of 9 March 1998 authorizing the United Kingdom to extend application of a measure derogating from Articles 6 and 17 of the Sixth Council Directive (77/388/EEC) on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 1998-03-09
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, derogation from EU law, hire purchase, tax relief, vehicle rental

13. 3. 98

EN

Official Journal of the European Communities

L 76/31

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 9 March 1998

authorizing the United Kingdom to extend application of a measure derogating
from Articles 6 and 17 of the Sixth Council Directive (77/388/EEC) on the har-
monisation of the laws of the Member States relating to turnover taxes

(98/198/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Whereas the other Member States were informed on 23
October 1997 of the United Kingdom’s request;

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 (cid:190) Common
system of value added tax: uniform basis of assessment (1),
and in particular Article 27 thereof,

Having regard to the previous Decision 95/252/EC (2),

Having regard to the proposal from the Commission,

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
or avoidance;

Whereas, by letter registered at the Commission on 6
October 1997, the United Kingdom requested authorisa-
tion to extend application of the derogation previously
granted to it by Decision 95/252/EC;

(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 159, 11. 7. 1995, p. 19.

the United Kingdom was

authorised by
Whereas
Decision 95/252/EC to apply until 31 December 1997 a
measure derogating from Articles 6 and 17 of Directive
77/388/EEC;

Whereas the derogation in question is designed, firstly, to
restrict to 50 % the right of the hirer or lessee of a car to
deduct the VAT on the hire or leasing transaction where
the car is used for private purposes and, secondly, to waive
the VAT payable on the private use of the car in question;

Whereas the objective of this restriction of the right to
deduct is to tax the private use of cars hired or leased by
taxable persons at a flat rate;

Whereas the measure, by reducing the administrative
burden on traders, who are not required to keep records
of private mileage, constitutes a simplification of
the
procedure for charging tax within the meaning of Article
27 of Directive 77/388/EEC;

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

L 76/32

EN

Official Journal of the European Communities

13. 3. 98

Whereas the authorisation is being granted until 31
December 1998 so as to enable an assessment to be made
at that time as to whether the derogation measure is
consistent with the Community approach to limitations
of the right to deduct VAT on certain expenditure, which
will be adopted under that programme;

Whereas the derogation will not have an adverse impact
on the Community’s own resources accruing from VAT,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 17(2) and (3) of
Directive 77/388/EEC the United Kingdom is hereby
authorised to restrict to 50 % the right of the hirer or
lessee of a car to deduct the VAT on the cost of hiring or
leasing that car where it is used for private purposes.

Article 2

By way of derogation from Article 6(2)(a) of Directive
77/388/EEC the United Kingdom is hereby authorised
not to treat as supplies of services for consideration the
private use of a business car hired or leased by a taxable
person.

Article 3

This authorisation shall expire on 31 December 1998.

Article 4

This Decision is addressed to the United Kingdom.

Done at Brussels, 9 March 1998.

For the Council

The President

G. BROWN