2006/42/EC: Council Decision of  24 January 2006  authorising Latvia to extend the application of a measure derogating from Article 21 of the Sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2006-01-24
Institutions: Council of the European Union
Subjects: Latvia, VAT, derogation from EU law, tax evasion, tax harmonisation, wood product

28.1.2006

EN

Official Journal of the European Union

L 25/31

COUNCIL DECISION

of 24 January 2006

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

(Only the Latvian version is authentic)

(2006/42/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 thereof,

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

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

any Member State

in order

By letter registered with the Secretariat-General of the
Commission on 16 March 2005, Latvia requested
authorisation to extend the application of a derogation
measure on timber transactions.

27(2)

accordance with Article

of Directive
In
the Commission informed the other
77/388/EEC,
Member States by letter dated 10 May 2005 of
the
request made by Latvia. By letter dated 31 May 2005,
the Commission notified Latvia that it had all the infor-
mation it considered necessary for appraisal of
the
request.

The timber market in Latvia is dominated by small local
companies and individual suppliers. The nature of the
involved have generated tax
market and businesses
fraud which the tax authorities have found difficult to
this abuse, a special
control.
to combat
provision was included in Latvia’s law on VAT,
laying

In order

down that the person liable to pay tax is, under certain
circumstances, the taxable person for whom the taxable
supply of goods or services is carried out.

(5)

(6)

(7)

Article 21(1) of Directive 77/388/EEC, in the version set
out in Article 28g of the said Directive, stipulates that
under the internal system the taxable person supplying
goods or services is normally liable for payment of the
tax. However,
the 2003 Act of Accession, and in
particular Chapter 7, point 1(b) of Annex VIII thereto,
authorised Latvia for a limited period to continue to
apply its procedure for charging VAT on timber trans-
actions.

The Commission understands that this arrangement has
effectively enabled Latvia to reduce the risk of VAT
evasion and to simplify the procedure for charging the
tax in the timber market.

The derogation has no adverse impact on the Commu-
nities’ own resources accruing from VAT,

HAS ADOPTED THIS DECISION:

Sole Article

in the version set out

By way of derogation from Article 21(1)(a) of Directive
77/388/EEC,
in Article 28g thereof,
Latvia is hereby authorised to continue to designate the
recipient as the person liable to pay VAT in the case of
timber transactions from 1 May 2005 to 31 December 2009.

This Decision is addressed to the Republic of Latvia.

Done at Brussels, 24 January 2006.

For the Council

The President

K.-H. GRASSER

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

2005/92/EC (OJ L 345, 28.12.2005, p. 19).