Council Directive 2006/18/EC of  14 February 2006  amending Directive 77/388/EEC with regard to reduced rates of value added tax
Date: 2006-02-14
Institutions: Council of the European Union
Subjects: VAT rate, electrical energy, heating, natural gas, tax harmonisation, tax relief

L 51/12

EN

Official Journal of the European Union

22.2.2006

COUNCIL DIRECTIVE 2006/18/EC

of 14 February 2006

amending Directive 77/388/EEC with regard to reduced rates of value added tax

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 93 thereof,

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Having regard to the opinion of the European Economic and
Social Committee (2),

the said provision in the past should submit a request to
the Commission, together with the relevant particulars
for the purpose of assessment. Such prior assessment
by the Commission does not appear necessary where
Member States have previously benefited from an author-
isation and submitted a report on the matter to the
Commission.

To ensure legal continuity,
applicable as from 1 January 2006.

this Directive should be

Implementation of
change in the legislative provisions of Member States,

this Directive in no way implies

(5)

(6)

Whereas:

(1)

(2)

(3)

(4)

The possibility of applying a reduced rate of value added
tax should be granted in respect of supplies of district
heating as for supplies of natural gas and electricity, for
which the possibility of applying a reduced rate is already
allowed in Sixth Council Directive 77/388/EEC of 17
May 1977 on the harmonisation of
the
Member States relating to turnover taxes — Common
of
system of
assessment (3).

uniform basis

the laws of

added

value

tax:

it

the impact of
To achieve a better understanding of
reduced rates,
is necessary for the Commission to
prepare an assessment report on the impact of reduced
rates applied to locally supplied services, notably in terms
of job creation, economic growth and the proper func-
tioning of the internal market.

The experiment of reduced rates for labour-intensive
until
therefore
should
services
extended
be
31 December 2010 and it
should also be made
possible for all Member States to take part in it under
the same conditions.

Accordingly, Member States wishing to avail themselves,
for the first time, of the option provided for in Article
28(6) of Directive 77/388/EEC and those wishing to
amend the list of services to which they have applied

(1) OJ C 89 E, 14.4.2004, p. 138.
(2) OJ C 32, 5.2.2004, p. 113.
(3) 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).

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 77/388/EEC is hereby amended as follows:

1. Article 12 shall be amended as follows:

(a) paragraph 3(b) shall be replaced by the following:

‘(b) Member States may apply a reduced rate to supplies
electricity and district heating
of natural gas,
provided that no risk of distortion of competition
exists. A Member State intending to apply such a
rate must inform the Commission before doing so.
The Commission shall give a decision on the
existence of a risk of distortion of competition. If
the Commission has not taken that decision within
three months of the receipt of the information a risk
of distortion of competition is deemed not to exist.’;

(b) in paragraph 4,

the following subparagraph shall be

inserted:

‘By 30 June 2007 at the latest the Commission shall
present to the European Parliament and the Council an
overall assessment report on the impact of reduced rates
applying to locally supplied services, including restaurant
job creation, economic
services, notably in terms of
growth and the proper
the internal
market, based on a study carried out by an independent
economic think-tank.’;

functioning of

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Official Journal of the European Union

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2. Article 28(6) shall be amended as follows:

(b) particulars showing that the conditions laid down in
the second and third subparagraphs have been met;

(a)

the first subparagraph shall be replaced by the following:

‘The Council, acting unanimously on a proposal from the
Commission, may authorise any Member State to apply
until 31 December 2010 at the latest the reduced rates
provided for in the third subparagraph of Article 12(3)(a)
to services listed in a maximum of two of the categories
set out in Annex K. In exceptional cases, a Member State
may be authorised to apply the reduced rates to services
belonging to three of the aforementioned categories.’;

(c) particulars

showing the budgetary cost of

the

measure envisaged.’

Article 2

This Directive shall enter into force on the day of its publication
in the Official Journal of the European Union.

(b) the fourth subparagraph shall be replaced by the

It shall be applicable as from 1 January 2006.

following:

‘Any Member State wishing to apply for the first time
after 31 December 2005 a reduced rate to one or more
of
the services mentioned in the first subparagraph
pursuant to this provision shall inform the Commission
before 31 March 2006. It shall communicate to it before
that date all relevant particulars concerning the new
measures it wishes to introduce, and in particular the
following:

(a) scope of the measure and detailed description of the

services concerned;

Article 3

This Directive is addressed to the Member States.

Done at Brussels, 14 February 2006.

For the Council
The President

K.-H. GRASSER