2003/909/EC: Council Decision of 22 December 2003 amending Decisions 97/375/EC, 98/23/EC and 98/198/EC authorising the United Kingdom to apply measures derogating from Articles 28e(1), 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: 2003-12-22
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, derogation from EU law, tax harmonisation, tax relief

30.12.2003

EN

Official Journal of the European Union

L 342/49

COUNCIL DECISION

of 22 December 2003

amending Decisions 97/375/EC, 98/23/EC and 98/198/EC authorising the United Kingdom to apply
measures derogating from Articles 28e(1), 6 and 17 of the Sixth Directive 77/388/EEC on the
harmonisation of the laws of the Member States relating to turnover taxes

THE COUNCIL OF THE EUROPEAN UNION,

(4)

(2003/909/EC)

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), and in particular
Article 27(1) thereof,

Having regard to the proposal from the Commission,

Whereas:

(5)

(1)

(2)

(3)

received by the Secretariat-General of

By letter
the
Commission on 22 October 2003 the United Kingdom
requested the extension of Council Decisions 92/546/
EEC of 23 November 1992 (2), 95/252/EC of 29 June
1995 (3) and 97/375/EC of 9 June 1997 (4) authorising it
to apply measures derogating from Articles 28e(1), 6
and 17 of the Sixth Directive 77/388/EEC. The United
Kingdom also requested to increase the turnover limit
for the simplified cash accounting authorised by Deci-
sion 97/375/EC from 600 000 GBP to 660 000 GBP.

Council Decision 98/23/EC of 19 December 1997 (5)
authorises the United Kingdom to combat tax avoidance
intra-Community acquisitions
and tax evasion for
between related parties until 31 December 2003.

Council Decision 98/198/EC of 9 March 1998 (6) allows
the United Kingdom to restrict to 50 % the right of the
hirer or lessee to deduct input tax on charges for hire or
lease of a business passenger car where the car is used
for private purposes and not to treat as supplies of
services for consideration the private use of a business
car hired or leased by a taxable person. The derogation
removes the need for the hirer or lessee to keep records
of private mileage travelled in business cars and to
account for tax on the actual mileage of each car and it
is therefore a simplification; the derogation in question
applies until 31 December 2003, when it expires.

Decision 97/375/EC authorises the United Kingdom to
operate a special optional scheme in which tax is
accounted for on the basis of the cash paid and received
(cash accounting) by enterprises with a turnover limit set
at 600 000 GBP; the scheme is a simplification for small
and medium enterprises and applies until 31 December
2003, when it expires.

The matters of law and of fact which justified the appli-
cation of the special measures in question have not been
changed and still pertain. However,
the measures
authorised under Decision 98/198/EC allowing the
United Kingdom to restrict to 50 % the right of the hirer
or lessee to deduct input tax on charges for hire or lease
of a business passenger car where the car is used for
private purposes and not to treat as supplies of services
for consideration the private use of a business car hired
or leased by a taxable person, might be affected by a
preliminary ruling (Case C-17/01), which the Court has
yet to deliver. Subject of this Court proceeding is the
practice to limit to 50 % the right to deduct the VAT
charged on all expenditure relating to vehicles (purchase,
hire, running costs). The outcome of this preliminary
ruling might therefore be of a considerable importance
for
such measures could be
authorised in future under Article 27 of the Sixth Direc-
tive 77/388/EEC. The requested increase of the turnover
limit for the simplified cash accounting in Decision 97/
375/EC from 600 000 GBP to 660 000 GBP, is in line
with inflation.

the question whether

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

2003/92/EC (OJ L 260, 11.10.2003, p. 8).

(2) OJ L 351, 2.12.1992, p. 34.
(3) OJ L 159, 11.7.1995, p. 19.
(4) OJ L 158, 17.6.1997, p. 43. Decision as last amended by Decision

2000/435/EC (OJ L 172, 12.7.2000, p. 24).

(5) OJ L 8, 14.1.1998, p. 24. Decision as amended by Decision 2000/

435/EC.

(6) OJ L 76, 13.3.1998, p. 31. Decision as last amended by Decision

2000/747/EC (OJ L 302, 1.12.2000, p. 63).

(6)

The authorisation granted by Decisions 98/23/EC and
97/375/EC should therefore be extended until 31
December 2006. The prolongation of the authorisation
granted by Decision 98/198/EC should be extended until
31 December 2004. This maximum period will allow
the derogation to be evaluated in the light of the ruling
on Case C-17/01. The requested increase of the turnover
to 660 000 GBP corresponds to inflation and
limit
should therefore be authorised.

L 342/50

EN

Official Journal of the European Union

30.12.2003

(7)

(8)

The derogation in question has no impact on the Euro-
pean Communities' own resources from valued added
tax.

Given the urgency of the matter,
in order to avoid a
legal gap, it is imperative to grant an exception to the
six-week period mentioned in point I(3) of the Protocol
on the role of national Parliaments in the European
Union, annexed to the Treaty on European Union and to
the Treaties establishing the European Communities,

turnover not higher than GBP 660 000 must postpone the
right of deduction of tax until
it has been paid to the
supplier.’

Article 2

In Article 1 of Decision 98/23/EC, the date 31 December 2003
shall be replaced by 31 December 2006.

In Article 3 of Decision 98/198/EC, the date 31 December
2003 shall be replaced by 31 December 2004.

HAS ADOPTED THIS DECISION:

Article 3

Article 1

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

Article 1 of Decision 97/375/EC shall be replaced by the
following:

‘Article 1

By way of derogation from the provisions of Article 17(1)
of Sixth Directive 77/388/EEC,
the United Kingdom is
hereby authorised, until 31 December 2006, to provide,
within an optional scheme, that enterprises with an annual

Done at Brussels, 22 December 2003.

For the Council

The President

A. MATTEOLI