2006/387/EC: Council Decision of  15 May 2006  authorising the Kingdom of Spain to apply a measure derogating from Article 11 and Article 28e of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2006-05-15
Institutions: Council of the European Union
Subjects: Spain, VAT, delivery, derogation from EU law, provision of services, tax evasion, tax harmonisation

3.6.2006

EN

Official Journal of the European Union

L 150/11

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 15 May 2006

authorising the Kingdom of Spain to apply a measure derogating from Article 11 and Article 28e of
the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to
turnover taxes

(2006/387/EC)

THE COUNCIL OF THE EUROPEAN UNION,

measure derogating from the provisions of Directive
77/388/EEC governing the taxable amount
for value
added tax (VAT) purposes.

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 in relation 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)

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,
to simplify the procedure
charging the tax or to prevent certain types of
tax
evasion or avoidance.

any Member State

in order

(2)

In a letter dated 21 June 2005 and received in the Secre-
tariat-General of the Commission on 22 July 2005, the
Kingdom of Spain sought authorisation to introduce a

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

2006/18/EC (OJ L 51, 22.2.2006, p. 12).

(3)

(4)

(5)

(6)

(7)

27(2)

accordance with Article

of Directive
In
77/388/EEC,
the Commission informed the other
Member States of the request made by the Kingdom of
Spain in a letter dated 7 October 2005. In a letter dated
10 October 2005, the Commission notified the Kingdom
of Spain that it had all the information it considered
necessary for appraisal of the request.

Article 11(A)(1)(a) of Directive 77/388/EEC establishes
the taxable amount of a supply for VAT purposes to
be everything which constitutes the consideration paid
for the supply. Article 28e(1) of that Directive governs
the taxable amount of intra-Community acquisitions, by
reference to Article 11(A).

The measure requiring a derogation is
intended to
counter tax losses arising from the manipulation of the
taxable amount of supplies of goods, services and intra-
Community acquisitions subject to VAT where a vendor
charges a reduced price to a connected purchaser who
does not have a right to full deduction.

The measure should be targeted so that it applies only in
cases of VAT avoidance or evasion and only when a
number of conditions have been met. The measure is
therefore proportionate to the aim pursued.

Similar derogations have been granted to other Member
States in order to counter tax avoidance or evasion and
have been found to be effective.

L 150/12

EN

Official Journal of the European Union

3.6.2006

(8)

to Article 27 of Directive
Derogations pursuant
77/388/EEC which counter VAT avoidance linked to
the taxable amount of supplies between related parties
are included in the Commission proposal of 16 March
the dero-
2005 for a Directive rationalising some of
to that Article (1).
therefore
is
gations pursuant
necessary to bring the application period of this dero-
gation to an end when that Directive enters into force.

It

(9)

This derogation will safeguard the amount of VAT due at
the final consumption stage and has no negative impact
on the Communities' own resources accruing from VAT,

HAS ADOPTED THIS DECISION:

to prevent

tax
This measure may only be used in order
avoidance or evasion and when the consideration on which
the taxable amount would otherwise be based has been
influenced by family, management, ownership,
financial or
legal ties as defined in national legislation. For these purposes,
legal ties shall include the formal relationship between employer
and employee.

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 or evasion of VAT through the valuation of
supplies between connected persons, or on 31 December 2009,
whichever is the earlier.

Article 1

Article 3

By way of derogation from Article 11(A)(1)(a) and Article 28e
of Directive 77/388/EEC,
the Kingdom of Spain is hereby
authorised to provide that the taxable amount of a supply of
goods or services or of an intra-Community acquisition of
goods shall be the same as the open-market value, as defined
in Article 11(A)(1)(d) of the said Directive where the consid-
eration is significantly lower than the open-market value and
the recipient of
in the case of an intra-
Community acquisition, the acquirer, does not have a right to
full deduction under Article 17 of Directive 77/388/EEC.

the supply, or

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 15 May 2006.

For the Council
The President

U. PLASSNIK

(1) OJ C 125, 24.5.2005, p. 12.