2005/568/: Commission Decision of 11 July 2005 concerning a request from the Republic of Hungary to apply a reduced rate of VAT to the supply of natural gas (notified under document number C(2005) 2514)
Date: 2005-07-11
Institutions: European Commission
Subjects: Hungary, VAT, delivery, natural gas, tax relief

L 190/28

EN

Official Journal of the European Union

22.7.2005

COMMISSION DECISION

of 11 July 2005

concerning a request from the Republic of Hungary to apply a reduced rate of VAT to the supply of
natural gas

(notified under document number C(2005) 2514)

(Only the Hungarian text is authentic)

(2005/568/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

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), as last amended by
Directive 2004/66/EC (2), and in particular Article 12(3)(b)
thereof,

Whereas:

(5)

(6)

(1)

(2)

(3)

By letter registered at the Commission on 12 April 2005
the Republic of Hungary informed the Commission of its
intention of applying a reduced rate of VAT to the
supply of natural gas.

According to Annex X of the Accession Treaty, Hungary
is allowed to apply the reduced VAT rate for the supply
of natural gas and electricity until one year after
accession to the EU. As from 1 January 2004, Hungary
has applied the standard VAT rate to the supply of elec-
tricity.

a

shift

competition, nor

Hungary intends to continue to apply a reduced rate to
the supply of gas (15 %) and the standard rate to elec-
tricity (25 %). This differentiation of rates neither causes
from the
distortion of
consumption of electricity to the consumption of gas.
This is mainly due to national rules for the establishment
of prices, which are quite different between natural gas
and electricity, and to the fact that, from a technical-
technological point of view, the two products can be
substitute goods only for heating purposes. According
to the information given by Hungarian authorities, the
price for electricity is about
three times the one for
natural gas.

Moreover, the VAT rules regarding the place of supply of
natural gas, as laid down in the Sixth VAT Directive,
were amended by Directive 2003/92/EC (3). The supply
of natural gas in the final stage, from traders and distri-
butors to final consumer, is taxed at the place where the
customer has effective use and consumption of
the
goods,
in order to ensure that taxation takes place in
the country where actual consumption takes place.

The planned measure is a general one applying a reduced
rate of VAT to the supply of natural gas under Article
12(3)(b) of the Sixth VAT Directive.

Since the measure is a general one with no provision for
exceptions, the risk of distortion of competition must be
deemed non-existent. Since the condition laid down by
Article 12(3)(b) of the Sixth Directive is thus fulfilled,
Hungary
the measure
concerned as soon as this Decision is notified,

should be

to apply

able

HAS ADOPTED THIS DECISION:

Article 1

Hungary may apply the measure notified in its letter of 12 April
2005, applying a reduced rate of VAT to the supply of natural
gas irrespective of the conditions of production and supply.

Article 2

This Decision is addressed to the Republic of Hungary.

Done at Brussels, 11 July 2005.

For the Commission

László KOVÁCS
Member of the Commission

(1) OJ L 145, 13.6.1977, p. 1.
(2) OJ L 168, 1.5.2004, p. 35.

(3) OJ L 260, 11.10.2003, p. 8.