2002/880/EC: Council Decision of 5 November 2002 authorising Austria to apply a measure derogating from Article 21 of Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2002-11-05
Institutions: Council of the European Union
Subjects: Austria, VAT, approximation of laws, basis of tax assessment, building industry, derogation from EU law, provision of services, subcontracting

L 306/24

EN

Official Journal of the European Communities

8.11.2002

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 5 November 2002

authorising Austria to apply a measure derogating from Article 21 of Directive 77/388/EEC on the
harmonisation of the laws of the Member States relating to turnover taxes

(2002/880/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to 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(1) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

In a request addressed to the Commission, registered by
the Commission's Secretariat-General on 7 May 2002,
Austria sought authorisation to apply a measure dero-
gating from Article 21(1)(a) of Directive 77/388/EEC.

The other Member States were informed of Austria's
request by letter of 21 June 2002.

Article 21(1) of Directive 77/388/EEC, as worded in
Article 28g thereof, stipulates that, under the internal
system, the taxable person supplying taxable goods or
services is normally liable to pay value added tax (VAT).

The purpose of the requested derogation is to enable
Austria to designate the person to whom the services are
provided as the person liable to pay tax, in the following
cases: where construction work and labour are provided
by a subcontractor to either a general contractor, a
company which carries out its own construction work
or another subcontractor.

The requested measure is to be considered first and fore-
most as a measure to prevent certain types of
tax
evasion or avoidance in the construction sector, such as

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

2002/38/EC (OJ L 128, 15.5.2002, p. 41).

the non-payment of invoiced VAT by a subcontractor
who subsequently becomes untraceable. The measure
also has the effect of simplifying the work of the tax
authorities, which very frequently have major problems
collecting the VAT due by subcontractors in that sector,
without having any effect on the amount of tax due.

The measure is proportionate to the objectives pursued,
since it is not intended to apply to all taxable operations
in the sector concerned but only to specific operations
which pose considerable problems of tax evasion or
avoidance.

The authorisation should apply from the date envisaged
for the application of the corresponding national provi-
sion in the second Abgabenänderungsgesetz 2002.
It
should be limited to 31 December 2007, so that in the
light of experience gleaned up to that date an assessment
may be made of whether or not the derogation remains
justified.

(6)

(7)

(8)

This derogation does not adversely affect the Commu-
nities' own resources from VAT,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 21(1)(a) of Directive 77/
388/EEC, as worded in Article 28(g) thereof, Austria is hereby
authorised, with effect from 1 October 2002, to designate the
recipients of the supplies of services referred to in Article 2 of
this Decision as the persons liable to pay VAT.

8.11.2002

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Official Journal of the European Communities

L 306/25

Article 2

Article 3

The recipient of the supply of services may be designated as
the person liable to pay VAT in the following instances:

1. where construction work and labour are provided by a

subcontractor to a general contractor;

2. where construction work and labour are provided by a
its own

subcontractor to a company which carries out
construction work;

3. where construction work and labour are provided by a

subcontractor to another subcontractor.

This Decision shall expire on 31 December 2007.

This Decision is addressed to the Republic of Austria.

Article 4

Done at Brussels, 5 November 2002.

For the Council

The President

T. PEDERSEN