2006/181/EC: Council Decision of  27 February 2006  authorising the Kingdom of the Netherlands to apply a measure derogating from Article 11 of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2006-02-27
Institutions: Council of the European Union
Subjects: Netherlands, VAT, delivery, derogation from EU law, provision of services, tax evasion, tax harmonisation

7.3.2006

EN

Official Journal of the European Union

L 65/45

COUNCIL DECISION

of 27 February 2006

authorising the Kingdom of the Netherlands to apply a measure derogating from Article 11 of the
Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to
turnover taxes

(Only the Dutch text is authentic)

(2006/181/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)

By letter registered with the Secretariat-General of the
Commission on 4 October 2004, the Kingdom of the
Netherlands sought authorisation to introduce a special
measure derogating from Article 11(A)(1)(a) of Directive
77/388/EEC.

27(2)

accordance with Article

of Directive
In
77/388/EEC,
the Commission informed the other
Member States by letter dated 1 December 2004 of the
request made by the Kingdom of the Netherlands. By
the Commission
letter dated 2 December 2004,
notified the Kingdom of the Netherlands that it had all
the information it considered necessary for appraisal of
the request.

The aim of the derogation is to prevent the avoidance of
value added tax (VAT) through the undervaluation of
the
supplies
recipient is not entitled to full or almost full deduction
of VAT. It is designed to circumvent abuses in the supply

persons, where

connected

between

(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).

of capital items or in the supply of services in relation to
capital
items, such as leasing or letting or any other
arrangement whereby the goods are put at the disposal
of the recipient. Because of the relationship between the
parties, the consideration is often fixed at a non-market
value, resulting in significantly lower VAT revenues.

The special measure should apply only in cases where the
administration is able to conclude that
the taxable
amount, as determined in accordance with Article
11(A)(1)(a) of Directive 77/388/EEC, has been influenced
by the relationship between the parties. That conclusion
should,
in each case, be based on manifest facts, not
presumptions.

It is therefore appropriate and proportionate to permit
the Kingdom of the Netherlands to treat the open-market
value of those supplies as the taxable amount.

to Article 27 of Directive
The derogations pursuant
77/388/EEC which counter avoidance of VAT linked to
the taxable amount of supplies between related parties
are included in a proposal for a Directive rationalising
some of the derogations pursuant to that Article. It is
therefore necessary to cause the application period of this
derogation to end when that Directive enters into force.

(4)

(5)

(6)

(7)

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

HAS ADOPTED THIS DECISION:

Article 1

the Kingdom of

By way of derogation from Article 11(A)(1)(a) of Directive
is hereby
77/388/EEC,
authorised to take the open-market value, as defined in
Article 11(A)(1)(d) of Directive 77/388/EEC, as the taxable
amount for the supply of capital
items or any other supply
of services whereby the capital item is put at the disposal of
the recipient, where the following conditions are met:

the Netherlands

L 65/46

EN

Official Journal of the European Union

7.3.2006

1. the recipient does not have the right to full or almost full

deduction of VAT;

2. the supplier and the recipient are directly or

indirectly

connected persons according to national legislation;

3. facts make it possible to conclude from the circumstances of
the relationship between those connected
the case that
persons has influenced the taxable amount, as determined
in accordance with Article 11(A)(1)(a)
of Directive
77/388/EEC.

For the purposes of this Article, capital item shall mean capital
goods as defined by the Kingdom of
the Netherlands in
accordance with Article 20(4) of Directive 77/388/EEC and,
as far as they are not covered by this definition, services of
substantial value which can be amortised.

Article 2

The authorisation granted under Article 1 shall expire on the
date of entry into force of a Directive rationalising the dero-
gations pursuant to Article 27 of Directive 77/388/EEC which
counter avoidance of VAT linked to the taxable amount, or on
31 December 2009, whichever is the earlier.

Article 3

This Decision is addressed to the Kingdom of the Netherlands.

Done at Brussels, 27 February 2006.

For the Council
The President

U. PLASSNIK