2004/855/EC: Council Decision of 7 December 2004 amending Article 3 of Decision 98/198/EC authorising the United Kingdom to extend application of a measure derogating from Articles 6 and 17 of the Sixth Council Directive (77/388/EEC) on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2004-12-07
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, derogation from EU law, tax harmonisation, tax relief, vehicle rental

16.12.2004

EN

Official Journal of the European Union

L 369/61

COUNCIL DECISION

of 7 December 2004

amending Article 3 of Decision 98/198/EC authorising the United Kingdom to extend application of
a measure derogating from Articles 6 and 17 of the Sixth Council Directive (77/388/EEC) on the
harmonisation of the laws of the Member States relating to turnover taxes

(2004/855/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 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:

Pursuant to Article 27(1) of Directive 77/388/EEC, the
from the
Council, acting unanimously on a proposal
Commission, may authorise
to
introduce or extend special measures for derogation
from that Directive, in order to simplify the procedure
of charging the tax or to prevent certain types of tax
evasion or avoidance.

any Member State

By Decisions 95/252/EC (2)
the
Council authorised the United Kingdom to apply a
measure derogating from Articles 6 and 17 of Directive
77/388/EEC.

and 98/198/EC (3),

By letter registered with the Commission's Secretariat-
General on 14 June 2004, and subsequently circulated
to all Member States on 7 July 2004,
the United
Kingdom Government has requested an extension of
the abovementioned derogation.

(1)

(2)

(3)

(4)

business passenger car where the car is also used for
private purposes.
It also allows the United Kingdom
not to treat as supplies of services for consideration the
private use of a car hired or leased by a taxable person
for business purposes. The derogation removes the need
for the hirer/lessee to keep records of private mileage
travelled in business cars and to account for tax on the
actual private mileage of each car. It is therefore a simpli-
fication measure but also limits the scope for abuse
through incorrect record keeping.

The legal and factual circumstances which justified
granting authorisation to apply the original derogation
have not changed and are therefore still relevant.

In the light of Commission proposals to amend Directive
77/388/EEC with regard to restrictions on the right to
deduct VAT, it is appropriate to extend the period of the
authorisation until such relevant amendments come into
this authorisation will expire on 31
force. However,
December 2007 at the latest if no such amendments
have entered into force by that date, enabling an
assessment to be made at that time of the necessity for
a derogation in the light of further discussions of the
proposals held in the Council.

(5)

(6)

(7)

An extension will have no impact on the European
Communities' own resources accruing from value added
tax,

HAS ADOPTED THIS DECISION:

Article 1

Article 3 of Decision 98/198/EC shall be replaced by the
following:

The extant derogation allows the United Kingdom to
restrict
the hirer or lessee to
deduct input tax on charges for the hire or lease of a

to 50 % the right of

‘Article 3

(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 159, 11.7.1995, p. 19.
(3) OJ L 76, 13.3.1998 p. 31. Decision as last amended by Decision

2003/909/EC (OJ L 342, 30.12.2003, p. 49).

This authorisation shall expire on the date of entry into
force of Community rules determining what expenditure
relating to motorised road vehicles is not to be eligible
for
added tax, but on 31
full deduction of value
December 2007 at the latest.’

L 369/62

EN

Official Journal of the European Union

16.12.2004

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

Article 2

Done at Brussels, 7 December 2004.

For the Council
The President

G. ZALM