2000/747/EC: Council Decision of 27 November 2000 amending Article 3 of Decision 98/198/EC authorising the United Kingdom to extend application of a measure derogating from Articles 6 and 17 of the sixth Directive (77/388/EEC) on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2000-11-27
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, derogation from EU law, hire purchase, tax relief, vehicle rental

1.12.2000

EN

Official Journal of the European Communities

L 302/63

COUNCIL DECISION

of 27 November 2000

amending Article 3 of Decision 98/198/EC authorising the United Kingdom to extend application of
a measure derogating from Articles 6 and 17 of the sixth Directive (77/388/EEC) on the harmonisa-
tion of the laws of the Member States relating to turnover taxes

(2000/747/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), hereinafter referred
to as the ‘Sixth VAT Directive’, and in particular Article 27
thereof,

Having regard to the proposal from the Commission,

(7)

(8)

The objective of that proposal
is to bring about an
approximation of the limitations of the right to deduct
VAT in order to reduce the disparities between the rules
applicable in the Community, particularly where expen-
diture on passenger cars is concerned.

the

granted

It is appropriate, therefore, to extend the period of the
authorisation
abovementioned
until
Directive enters into force. However, this authorisation
will expire on 31 December 2003 at the latest if the
Directive has not entered into force by that date,
enabling an assessment to be made at that time of the
necessity for a derogation in the light of the discussions
held within the Council.

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

Pursuant to Article 27(1) of the sixth VAT Directive, the
Council, acting unanimously on a proposal from the
Commission, may authorise any Member State to intro-
duce 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.

By letter registered with the Commission's Secretariat-
General on 16 June 2000, the United Kingdom Govern-
ment requested authorisation to extend the application
of the derogation previously granted to it by Decisions
95/252/EC (2), 98/198/EC (3) and 1999/79/EC (4).

The other Member States were informed on 28 July
2000 of the United Kingdom's request.

The derogation in question is designed, firstly, to restrict
to 50 % the right of the hirer or lessee of a passenger 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.

The legal and factual circumstances which justified
granting authorisation to apply a derogation have not
changed and still obtain.

On 17 June 1998 the Commission presented a proposal
for a Directive (5) amending the sixth VAT Directive as
regards the rules governing the right to deduct VAT.

(9)

The derogation has no adverse impact on the European
Communities' own resources accruing from VAT,

HAS ADOPTED THIS DECISION:

Article 1

Article 3 of Decision 98/198/EC shall be replaced by the
following:

‘Article 3

This authorisation shall expire on the date of the entry into
force of the Community rules determining what expendi-
ture is not to be eligible for the deduction of value added
tax, in accordance with the first subparagraph of Article
17(6) of the sixth VAT Directive, but on 31 December
2003 at the latest.’

Article 2

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.

Done at Brussels, 27 November 2000.

For the Council

The President

L. FABIUS

(1) OJ L 145, 13.6.1977, p. 1. Directive as last amended by Directive

2000/65/EC (OJ L 269, 21.10.2000, p. 44).

(2) OJ L 159, 11.7.1995, p. 19.
(3) OJ L 76, 13.3.1998, p. 31.
(4) OJ L 27, 2.2.1999, p. 22.
(5) OJ C 219, 15.7.1998, p. 16.