2004/758/EC: Council Decision of 2 November 2004 authorising Austria 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: 2004-11-02
Institutions: Council of the European Union
Subjects: Austria, VAT, auction sale, derogation from EU law, real property, tax harmonisation

L 336/38

EN

Official Journal of the European Union

12.11.2004

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 2 November 2004

authorising Austria 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

(2004/758/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard the Sixth Council Directive 77/388/EEC of
the
17 May 1977 on the harmonisation of
Member States relating to turnover taxes — Common system
of VAT: uniform basis of assessment (1) and in particular Article
27(1) thereof,

the laws of

Having regard to the proposal from the Commission,

Whereas:

requested measures are to be considered as measures to
prevent certain types of tax evasion or avoidance in the
above sectors.

(3) Where goods are supplied as collateral by one VAT
taxable person to the recipient of security in execution
of the security, this usually reflects a situation where the
guarantor supplying the goods has a limited capacity to
including his tax debts. When the
settle his debts,
collateral
taker who received the goods exercises his
rights and sells the collateral to a third party, this sale
also generates a supply from the guarantor
to the
collateral taker. In such scenarios VAT losses occurred
in many cases because the collateral taker could not be
refused his right to deduct and the supplying guarantor
could not be held responsible because he was insolvent
or had disappeared. The dimension of
the problems
encountered by the Austrian administration requires
legal measures. A similar derogation has already been
granted to Germany by Decision 2002/439/EC (2).

(1)

(2)

In a request submitted to the Commission and registered
by the Commission's Secretariat-General on 3 March
2004,
the Austrian Government sought authorisation
to introduce three measures derogating from Article
21(1)(a) of Directive 77/388/EEC.

(4)

The purpose of the derogation requested by Austria is to
make the recipient
liable for the VAT due in three
specific cases: Firstly on the supply of goods provided
as security by one VAT taxable person to another
person in execution of that security, secondly on the
supply of goods following the cession of the reservation
of ownership to an assignee and the exercising of this
right by the assignee and thirdly on the supply of
immovable property by a
in a
compulsory sale procedure to another person. The

judgment debtor

In cases where a buyer of goods has a limited capacity to
settle his debts for a purchase, the supplier of the goods
will reserve the ownership and may cede the right to
exercise this reservation as well as the purchase price
claim to a third party, usually a bank, as a security for
a loan granted by the bank to the buyer. If the buyer of
the goods discontinues settling his debts for the loan, the
bank will exercise its right of ownership; this involves a
supply of the goods from the original buyer to the bank.
In such a case the bank would usually not pay the
original buyer the turnover tax due on the supply to it,
but use it to settle the original buyer's debt for the loan,
with the consequence of VAT losses
the fiscal
authorities because the original buyers are usually in-
solvent or have disappeared before the tax administration
can identify them and recover VAT. Therefore this
scenario is
to the execution of a security
described above.

similar

for

(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).

(2) OJ L 151, 11.6.2002, p. 12.

12.11.2004

EN

Official Journal of the European Union

L 336/39

Article 1

as

By way of derogation from Article 21(1)(a) of Directive
77/388/EEC,
the
Republic of Austria is hereby authorised to designate the
recipient of the supplies of goods referred to in Article 2 of
this Decision as the person liable to pay VAT.

amended by Article 28(g)

thereof,

Article 2

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

1. the supply of goods provided as security by one VAT taxable
person to another person in execution of that security;

2. the supply of goods following the cession of the reservation
of ownership to an assignee and the exercising of this right
by the assignee;

3. the supply of immovable property sold by the judgment
debtor in a compulsory sale procedure to another person.

Article 3

This Decision shall expire on 31 December 2008.

Article 4

This Decision is addressed to the Republic of Austria.

Done at Brussels, 2 November 2004.

For the Council
The President

B. R. BOT

(5)

tax liability although at

VAT losses also occurred in cases of taxable supplies of
immovable property sold by the judgment debtor in a
compulsory sale procedure to another person. This is
particularly relevant for such cases where the supplier
the time of
had opted for
supply he was not in a financial position to pay the
tax authorities the tax which he has invoiced to the
purchaser. The buyer could usually exercise his right to
deduct and the supplier did not pay VAT to the fiscal
authorities. The dimension of the problem encountered
by the Austrian administration requires legal measures.
Immovable property is a high value good; thus also the
taxable amount and the losses in terms of VAT — even
on one single transaction — are particularly high. The
value of the immovable property usually contains hidden
VAT and the maintaining of the option is necessary to
keep the VAT system neutral. Against this background, it
appears that the envisaged liability of the recipient for
VAT is the most appropriate solution in the specific
circumstances
the particularly high risk
involved. The requested derogation avoids the loss of
VAT because there is no VAT paid from the fiscal autho-
rities to one of the economic operators involved. The
solution also avoids a double tax responsibility of
supplier and recipient, which would involve a higher
recipient
economic
and burdensome
risk for
recovery procedures
the fiscal authorities which
could only address the recipient, when recovery from
It avoids the
the supplier proved to be impossible.
fiscal responsibility of a third person like the notary,
which would result
supplier
and recipient. Similar derogations have already been
granted to Germany by Decisions 2002/439/EC and
2004/290/EC (1).

in higher charges

the
for

and

for

for

(6)

The derogation in question does not affect the amount of
VAT due at the final consumption stage and has no
adverse impact on the Communities' own resources
accruing from VAT,

HAS ADOPTED THIS DECISION:

(1) OJ L 94, 31.3.2004, p. 59.