Proposal for a Council Decision authorising the Kingdom of Denmark and the Kingdom of Sweden to apply a measure derogating from Article 17 of the Sixth Council Directive (77/388/EEC) on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 1999-10-22
Institutions: European Commission
Subjects: Denmark, Sweden, VAT, derogation from EU law, toll

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 22.10.1999
COM(1999) 497 final

Proposal for a

COUNCIL DECISION

authorising the Kingdom of Denmark and the Kingdom of Sweden to apply a measure
derogating from Article 17 of the Sixth Council Directive (77/388/EEC) on the
harmonisation of the laws of the Member States relating to turnover taxes

(presented by the Commission)

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EXPLANATORY MEMORANDUM

Acting on the basis of Article 27 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 - Common system of value added tax: uniform basis of assessment,1 the Danish
and Swedish governments have requested authorisation to apply a measure
derogating from Article 17 of that Directive.

In accordance with Article 27(3) of the Sixth Directive, the Commission informed
the other Member States by letter dated 3 September 1999 of the requests presented
by Denmark and Sweden.

These requests concern the VAT rules applying to the operation of the Öresund fixed
link between Denmark and Sweden, which is scheduled to open in July 2000.

The link will be operated by a consortium of two companies set up for the purpose,
one owned by the Danish State and the other by the Swedish. This consortium will
charge users a toll for using the link. The only toll gates will be sited on Swedish
territory.

Under Article 9(2)(a) of the Sixth Directive, use is taxable in the Member State
where the link is situated, namely partly on Danish territory and partly on Swedish.

In accordance with Article 17 of the Directive, VAT on the use of the link has to be
deducted in the Member State where it was paid: VAT on tolls for using the Öresund
link will therefore be deductible in the Member States concerned according to the
usual rules.

This means that taxable persons based in Denmark or Sweden would normally have
to recover part of the VAT on tolls by entering it on the periodic returns lodged in
their Member State of establishment and the rest via the refund procedure laid down
in the Eighth VAT Directive. Moreover, taxable persons who are not established in
either Member State would have to lodge two requests for refunds, under the Eighth
or the Thirteenth VAT Directive, as the case may be.

The Swedish and Danish authorities consider that applying the normal VAT rules
would create excessive paperwork for taxpayers and administrations alike.

the Danish and Swedish authorities wish to introduce
To avoid this situation,
simplified rules to enable the deduction and refund of VAT to be handled by a single
country. The rules would be as follows:

–

In their periodic returns taxable persons established in Denmark or Sweden
would be entitled to deduct the whole amount of deductible VAT on tolls,
including that relating to the use of the link on the territory of the Member
State in which they are not established.

1

OJ L 145, 13.06.1977, p. 1. Last amended by Directive 99/59/EC (OJ L 162, 26.06.1999, p. 63).

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To recover the VAT deductible via the procedure laid down in the Eighth or
Thirteenth Directive, taxable persons who are not established in either of the
Member States concerned would have to apply to the Swedish authorities only.

The Commission considers the procedure in question, which derogates from the rules
laid down in Article 17(2), (3) and (4) of the Sixth Directive, as amended by Article
28f of that Directive, a simplification satisfying the conditions of Article 27 of the
Directive.

The Commission would, however, emphasise that the adoption of the proposal for a
Council Directive regarding the rules governing the right to deduct value added tax,
which it presented to the Council on 17 June 1998,2 would render the measure in
question unnecessary for taxable persons established in the Community.

The authorisation should therefore be for a limited period, expiring at the entry into
force of the said Directive and on 31 December 2001 at the latest. This will enable
the need for the derogation to be reviewed in the light of the Council's discussions of
the proposal for a Directive, should the Directive not yet have entered into force.

2

OJ C 219,15.7.98, p.16.

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Proposal for a

COUNCIL DECISION

authorising the Kingdom of Denmark and the Kingdom of Sweden to apply a measure
derogating from Article 17 of the Sixth Council Directive (77/388/EEC) on the
harmonisation 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
harmonisation of the laws of the Member States relating to turnover taxes - Common system
of value added tax: uniform basis of assessment, and in particular Article 27 thereof,1

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

Article 27(1) of the Directive allows the Council, acting unanimously on a proposal
from the Commission, to authorise any Member State to introduce special measures
derogating from the provisions of the Directive to simplify the procedure for charging
the tax or prevent certain types of tax evasion or avoidance.

The Danish and Swedish governments have requested authorisation to apply a
measure derogating from Article 17 of the Directive.

The other Member States were informed of the requests from Denmark and Sweden
on 3 September 1999.

These requests relate to the operation of the Öresund fixed link between Denmark and
Sweden, and in particular to the recovery of VAT paid on tolls for the use of the link.
Under the rules of territoriality, part of the VAT on tolls is payable to Denmark and
part to Sweden.

In derogation from the provisions of Article 17, as amended by Article 28f, requiring
taxable persons to exercise their right to deduct or obtain a refund of VAT in the
Member State where it was paid, the Swedish and Danish authorities intend to
introduce a special measure enabling taxpayers to recover VAT from a single
administration.

(6)

The intended measure fulfils the conditions laid down in Article 27 of the Directive by
virtue of its limited scope and the fact that it is intended to simplify matters.

1

OJ L 145; 13.06.1977, p. 1. Last amended by Directive 99/59/EC (OJ L 162, 26.06.1999, p. 63).

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(7)

(8)

On 17 June 1998 the Commission presented a proposal for a Council Directive
amending the Sixth Directive as regards the rules governing the right to deduct value
added tax,2 adoption of which would render the special measures unnecessary in the
majority of cases, which involve taxable persons established in the Community.

Authorisation should therefore be granted until the new Directive enters into force, but
expires on 31 December 2001 if the Directive has still not entered into force, thereby
enabling the need for the derogation to be reviewed in the light of the Council's
discussions on the proposal.

(9)

The derogation does not adversely affect the own resources derived by the European
Communities from value added tax.

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from the provisions of Article 17(2), (3) and (4) of the Sixth Council
Directive 77/388/EEC of 17 May 1977, as amended by Article 28f thereof, the Kingdom of
Sweden and the Kingdom of Denmark are hereby authorised to apply the following procedure
for the recovery of VAT on tolls paid for the use of the Öresund fixed link between the two
countries:

– Taxable persons established in Denmark may exercise their right to deduct the VAT paid
when using the part of the link located on Swedish territory by entering it in the periodic
returns to be lodged in Denmark.

– Taxable persons established in Sweden may exercise their right to deduct the VAT paid
when using the part of the link located on Danish territory by entering it in the periodic
returns to be lodged in Sweden.

– Taxable persons who are not established in either of the above Member States must apply
to the Swedish authorities to obtain refunds of the VAT on tolls, including that paid for
using the section of the link located on Danish territory, under the procedure laid down in
Directive 79/1072/EEC or Directive 86/560/EEC.

Article 2

This authorisation shall expire on the date of entry into force of Community rules determining
the expenditure not eligible for the deduction of value added tax, in accordance with the first
subparagraph of Article 17(6) of the Sixth Directive, and by 31 December 2001 at the latest.

2

OJ C 219,15.7.98, p.16.

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Article 3

This Decision is addressed to the Kingdom of Sweden and the Kingdom of Denmark.

Done at Brussels,

For the Council
The President

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