2004/737/EC:Council Decision of 21 October 2004 authorising Italy to apply a measure derogating from Article 2(1) of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2004-10-21
Institutions: Council of the European Union
Subjects: Italy, VAT, VAT resource, derogation from EU law, tax harmonisation, tax system, toll

L 325/60

EN

Official Journal of the European Union

28.10.2004

COUNCIL DECISION

of 21 October 2004

authorising Italy to apply a measure derogating from Article 2(1) of the Sixth Directive 77/388/EEC
on the harmonisation of the laws of the Member States relating to turnover taxes

(2004/737/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to the Sixth Council Directive 77/388/EEC of
17 May 1977 on the harmonisation of
the
Member States relating to turnover taxes — Common system
of value added tax: uniform basis of assessment (1), and in
particular Article 30 thereof,

the laws of

(4)

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

In a request submitted to the Commission and registered
by the Commission's Secretariat-General on 24 March
2004, the Italian Government sought authorisation to
conclude an agreement with Switzerland which includes
provisions derogating from Article 2(1) of Directive
77/388/EEC.

ticket

season

in multi-journey

The reasons for this request are twofold. Firstly the intro-
duction of VAT on tolls for the Gran San Bernardo
tunnel as of 1 January 2003 has led to competitive
distortions
sales.
Secondly the breakdown of proceeds for VAT purposes
in proportion to the physical demarcation between the
countries causes high administrative costs because the
proceeds are calculated and distributed in accordance
with economic criteria reflecting the breakdown of
tunnel management and maintenance costs. These costs
do not only concern the tunnel
include a
highway linking the tunnel on Italian territory to the
Italian road net.

itself but

any similar tax on the toll; under the 1958 Convention
concluded between Italy and Switzerland before the
introduction of a common VAT system, Switzerland
cannot be obliged to apply and collect Italian VAT on
tolls for the Gran San Bernardo tunnel. Therefore the
introduction of VAT only on tolls collected by the
Italian operator led to a difference in user costs and
distorted competition in season-ticket sales. Users can
pay for their multi-journey season tickets at either end
of the tunnel and purchase them where they are cheaper,
which is in Switzerland.

a

joint

the proceeds of

The tunnel crosses an international border and is run by
and two operating
an Italian-Swiss
venture
companies, based in their
respective countries. The
Italian operator,
in line with the territoriality principle,
should levy VAT only in respect of the part of the tunnel
on Italian soil. However, under
legally binding
agreement between the operators concluded in 1963
and applied until today,
the toll are
not shared out in proportion to the physical demarcation
between the countries but must be shared in line with
tunnel
economic criteria reflecting the breakdown of
management
tunnel
costs. The
and maintenance
management and maintenance costs also include the
use of a section of motorway which gives access to the
tunnel. This means that the exact amount of the proceeds
divided and distributed in accordance with these criteria
can only be established a posteriori. For VAT purposes this
established amount must
then be broken down in
accordance with the territoriality principle, extrapolating
management and maintenance costs for the use of a
section of motorway which gives access to the tunnel.
This ex-post calculation and the collection of VAT is
burdensome and generates high administrative costs. It
cannot be rendered consistent with a consumption tax
system requiring that VAT is levied and collected imme-
diately.

(5)

Against this background, the only viable option is in fact
not to impose VAT on tolls for the Gran San Bernardo
tunnel. The derogation represents a major simplification
for the Italian-Swiss joint venture and its two operating
companies.

(3)

As of 1 January 2003, the Italian tunnel operator levies
and collects VAT on tolls for the Gran San Bernardo
tunnel. However, Switzerland does not apply VAT or

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

2004/66/EC (OJ L 168, 1.5.2004, p. 35).

(6)

However, the requested derogation will have an impact
on the Communities’ own resources accruing from VAT
and therefore require compensatory measures,

28.10.2004

EN

Official Journal of the European Union

L 325/61

HAS ADOPTED THIS DECISION:

Article 2

Article 1

This Decision is addressed to the Italian Republic.

By way of derogation from Article 2(1) of Directive
77/388/EEC,
the Italian Republic is hereby authorised to
conclude an agreement with Switzerland in view of not
imposing VAT on tolls for the Gran San Bernardo tunnel.
The authorisation is granted under the condition that
the
Italian Republic estimates every year the amount of losses in
VAT at the stage of final consumption and adds an equivalent
compensation to the VAT base which is used for establishing its
contributions to the Community's own resources.

Done at Luxembourg, 21 October 2004.

For the Council

The President

G. ZALM