WRITTEN QUESTION P-3171/02 by Werner Langen (PPE-DE) to the Commission. VAT exemption for private management companies in Germany.
Date: 2002-10-30
Institutions: European Parliament, Provisional data
Subjects: Germany, VAT, application of EU law, armed forces, interpretation of the law, subcontracting, tax exemption, tax harmonisation, wage cost

14.8.2003

EN

Official Journal of the European Union

C 192 E/101

(2003/C 192 E/098)

WRITTEN QUESTION P-3171/02

by Werner Langen (PPE-DE) to the Commission

(30 October 2002)

Subject: VAT exemption for private management companies in Germany

for

the German Army. The Army provides manpower

Private management companies have been established in the military sector in the Federal Republic of
Germany to provide services
for GEBE
(Development, Procurement and Operations Company) and other companies involved in fleet manage-
ment, clothing management and land valuation. The companies pay the wages of such personnel who may
be employed, for example, as drivers in a fleet management company. Such private companies are
exempted from VAT in respect of the wages component of the services that they provide. Without such
exemption, the German Army would have to pay VAT in respect of the driving services and wages
invoiced by the private companies. The Sixth VAT Directive established a uniform basis of assessment in
the EU and largely harmonised the scope of VAT. Pursuant to that Directive, the Member States may not,
of
the management
companies acting for the German Army do not involve the manufacture of or trade in armaments, they
cannot be excluded from the scope of the EC Treaty.

their own account, create new exemption categories. Since the operations of

Is such VAT exemption compatible with the Sixth VAT Directive?

If not, what will the Commission do to put an end to this breach of European Union law?

Answer given by Mr Bolkestein on behalf of the Commission

(4 December 2002)

According to the question, private management companies, working with manpower provided by the
German Army, are not charging VAT on the ‘labour costs’ component of their services to the Army. The
services in question do not involve the manufacture of or trade in armaments. The Honourable Member
wonders whether it contravenes the 6th VAT Directive (1) not to charge VAT on labour costs as the
German Army should normally pay VAT on services and salaries for which it is invoiced by private
companies.

The question would appear to relate to operations other than intra-Community imports and acquisitions
on which the armed forces may claim exemption under Articles 14(1)(g) and 28c(B)(b) of the 6th VAT
Directive.

Under Article 11 of the 6th VAT Directive, taxable companies are required to charge VAT on ‘everything
which constitutes the consideration which has been or is to be obtained’
in respect of the taxable
transactions which they carry out. As labour costs are included in the price invoiced, VAT must be
charged on that component too.

The Commission intends to contact the German authorities about this matter.

(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States

relating to turn-over taxes (cid:1) common system of value added tax (cid:1) OJ L 145, 13.6.1977.

(2003/C 192 E/099)

WRITTEN QUESTION E-3176/02

by Charles Tannock (PPE-DE) to the Commission

(7 November 2002)

Subject: Debt and the Growth and Stability Pact

In his extremely helpful answer to Written Question E-1621/02 (1), Commissioner Solbes Mira confirmed
the Commission’s willingness to take into account ‘the relevant cyclical and structural characteristics of the
economy of each Member State’ when assessing compliance with the Growth and Stability Pact.