2004/290/EC: Council Decision of 30 March 2004 authorising Germany to apply a measure derogating from Article 21 of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2004-03-30
Institutions: Council of the European Union
Subjects: Germany, VAT, derogation from EU law, provision of services

31.3.2004

EN

Official Journal of the European Union

L 94/59

COUNCIL DECISION

of 30 March 2004

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

(2004/290/EC)

THE COUNCIL OF THE EUROPEAN UNION,

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:

(1)

(2)

(3)

In a request submitted in the form of
two letters
addressed to the Commission, registered by the Commis-
sion's General-Secretariat on 1 September 2003 and 12
November 2003,
sought
authorisation to introduce three measures derogating
from Article 21(1)(a) of Directive 77/388/EEC in order
to prevent tax evasion and avoidance.

the German Government

lost VAT. The number of

Considerable value added tax (VAT) losses were estab-
lished in the construction and in the building-cleaning
businesses, where VAT was openly invoiced but not paid
to the fiscal authorities, while the recipient exercised his
right to deduct. The non-compliant operators could not
be identified or identification was achieved too late to
recover
such cases has
increased to an extent requiring legal measures. The
envisaged liability of the recipient for VAT only concerns
businesses which can exercise their right to deduct and
does not cover private persons.
It is limited to two
specific branches, where the losses in terms of VAT have
achieved an intolerable dimension. A similar derogation
has already been granted to Austria by Decision 2002/
880/EC (2).

VAT losses were also identified for supplies of immo-
vable property pursuant
to Article 13(B)(g) and (h),
appearing particularly vulnerable to fraud and avoidance
of VAT, where the supplier has exercised the option to
make the supply taxable. Immovable property is a high-
value good; thus the taxable amount and the losses in
terms of VAT — even on one single transaction — are
particularly high. The maintaining of
the option to
render a supply of immovable property taxable is neces-
sary to keep the VAT system neutral. In the specific
circumstances of the supply of immovable property, the

envisaged liability of the recipient for VAT appears the
most appropriate solution for addressing the particularly
high risk involved. It avoids a double tax responsibility
of supplier and recipient, which would involve a higher
the
and burdensome
risk for
economic
recipient
the fiscal authorities, and
recovery procedures
for
like a
prevents fiscal responsibility of a third person,
notary,
for
suppliers and recipients. In practice the derogation will
only cover supplies between taxable persons and is
therefore limited to specific cases.

resulting in higher

economic

charges

(4)

The derogation does not affect the amount of value
added tax due at the final consumption stage and has no
impact on the Communities' own resources from VAT,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 21(1)(a) of Directive 77/
the Federal
388/EEC, as worded in Article 28(g)
Republic of Germany is hereby authorised, with effect from 1
April 2004, to designate the recipients of the supplies of goods
and services referred to in Article 2 of this Decision as the
persons liable to pay VAT.

thereof,

Article 2

In the following instances the recipient of the supply of goods
and services may be designated as the person liable to pay
VAT:

1. where building-cleaning services are supplied to a taxable
person, except where the recipient of the supply exclusively
rents not more than two residences or where construction
work is supplied to a taxable person;

2. where immovable property is supplied to a taxable person
under Article 13(B)(g) and (h) and where the supplier has
exercised his right to tax the supply.

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

2004/15/EC (OJ L 52, 21.2.2004, p. 61).

(2) OJ L 306, 8.11.2002, p. 24.

This Decision shall expire on 31 December 2008.

Article 3

L 94/60

EN

Official Journal of the European Union

31.3.2004

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 30 March 2004.

For the Council

The President

M. McDOWELL