Council Directive 2006/69/EC of 24 July 2006 amending Directive 77/388/EEC as regards certain measures to simplify the procedure for charging value added tax and to assist in countering tax evasion or avoidance, and repealing certain Decisions granting derogations
Date: 2006-07-24
Institutions: Council of the European Union
Subjects: VAT, delivery, goods and services, provision of services, tax avoidance, tax evasion, tax harmonisation

12.8.2006

EN

Official Journal of the European Union

L 221/9

COUNCIL DIRECTIVE 2006/69/EC

of 24 July 2006

amending Directive 77/388/EEC as regards certain measures to simplify the procedure for charging
value added tax and to assist in countering tax evasion or avoidance, and repealing certain
Decisions granting derogations

(4)

(5)

(6)

(7)

(8)

(9)

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),

Whereas:

(1)

(2)

(3)

In order to combat tax evasion or avoidance and to
simplify the procedure for charging value added tax,
covering similar problems were
certain derogations
granted under varying terms
to individual Member
States by the Council pursuant to Article 27(1) of 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 (3). A solution to the said
problems should be made available to all Member States
through
that Directive. Those
into
measures should be proportionate and limited to coun-
tering the problem concerned. Given that the Member
States have different needs,
incorporation should
be limited to extending the option of adopting the
rules concerned to all Member States, as and when the
need arises.

incorporation

that

Member States should be able to take action to ensure
that measures provided for
in Directive 77/388/EEC
relating to the taxable person and the transfer of a
business as a going concern are not being exploited to
evade and avoid tax.

It should be possible for Member States to intervene as
regards the value of supplies and acquisitions in specific
limited circumstances, to ensure that there is no loss of
tax through the use of connected parties to derive tax
benefits.

(1) Opinion of 6 July 2006 (not yet published in the Official Journal).
(2) OJ C 65, 17.3.2006, p. 103.
(3) 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).

It should be possible for Member States to include,
within the taxable amount of a transaction which
involves the working of investment gold provided by a
customer, the value of that investment gold where, by
virtue of being worked,
the gold loses its status of
investment gold.

It should be emphasised that certain services with the
nature of capital items may be included in the scheme
which allows the adjustment of deductions for capital
items over the lifetime of
the asset, according to its
actual use.

the

recipient of

in specific cases,

to
Member States should be able,
designate
the person
responsible for paying and accounting for value added
tax. This should assist Member States in simplifying the
rules and countering tax evasion and avoidance in iden-
tified sectors and on certain types of transactions.

supplies

as

Directive 77/388/EEC should therefore be amended
accordingly.

Consequently, Member States should not be able to
continue to avail themselves of
individual derogations
granted to them by certain Council Decisions adopted
pursuant to Article 27(1) of Directive 77/388/EEC and
which are covered by the provisions in this Directive. The
Decisions
explicitly
concerned should therefore be
repealed. This Directive should not affect measures
applied by Member States pursuant to Article 27(5) of
Directive 77/388/EEC; nor should it affect derogations
which have been granted pursuant to Article 27(1) of
that Directive and which have not been repealed by
this Directive.

The application of certain provisions in this Directive
should be optional and they should allow Member
States a certain degree of discretion. Where appropriate
for reasons of transparency, it should be provided that
Member States should inform the other Member States
through the Advisory Committee on value added tax
established under Article 29 of Directive 77/388/EEC
of
to those
provisions. Such information should not be necessary
with respect
a
Decision which is repealed by this Directive, or which
expires at the date of this Directive's entry into force, but
which a Member State continues to apply under the
provisions of this Directive,

law adopted pursuant

to national measures

any national

taken under

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Official Journal of the European Union

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HAS ADOPTED THIS DIRECTIVE:

The option in the first subparagraph may apply only in
any of the following circumstances:

Article 1

Directive 77/388/EEC is amended as follows:

1. In Article 4(4), the following subparagraph shall be added:

‘A Member State exercising the option provided for in the
second subparagraph, may adopt any measures needed to
prevent tax evasion or avoidance through the use of this
provision.’.

2. In Article 5(8) the second sentence shall be replaced by the

following:

is not wholly liable to tax,

‘Where appropriate, Member States may, in cases where the
recipient
take the measures
necessary to prevent distortion of competition. They may
also adopt any measures needed to prevent tax evasion or
avoidance through the use of this provision.’.

3. Article 11(A) shall be amended as follows:

(a) in paragraph (1)(d)

the second subparagraph shall be

deleted;

(b) the following paragraphs shall be added:

‘5. Member States shall have the option of including
in the taxable amount in respect of the supply of goods
and services, the value of exempt investment gold within
the meaning of Article 26b, which has been provided by
the customer to be used as a basis for working and
which as a result,
investment
gold status when such goods and services are supplied.
The value to be used is the open market value of the
investment gold at the time that those goods and services
are supplied.

loses its VAT exempt

In order

to prevent

6.
tax evasion or avoidance,
Member States may take measures to ensure that the
taxable amount
in respect of a supply of goods or
services shall be the open market value. The option
shall be applied only in respect of supplies of goods
and services involving family or other close personal
ties, management, ownership, membership, financial or
ties as defined by the Member State. For these
legal
purposes
relationship
between an employer and employee or the employee's
family, or any other closely connected persons.

ties may

include

legal

the

(a) where the consideration is lower

than the open
market value and the recipient of the supply does
not have a full right of deduction under Article 17;

(b) where the consideration is lower

than the open
market value and the supplier does not have a full
right of deduction under Article 17 and the supply is
subject to an exemption under Article 13 or Article
28(3)(b);

(c) where the consideration is higher than the open
market value and the supplier does not have a full
right of deduction under Article 17.

Member States may restrict the categories of suppliers or
recipients to whom the measures in the first and the
second subparagraph shall apply.

Member States shall inform the Committee established in
accordance with Article 29 of any new national measure
adopted pursuant to the provisions of this paragraph.

that,

For the purposes of this Directive, “open market
7.
value” shall mean the full amount
in order to
obtain the goods or services in question at that time, a
customer at
the same marketing stage at which the
supply of goods or services takes place, would have to
pay, under conditions of fair competition, to a supplier at
arm's length within the territory of the Member State in
which the supply is subject to tax.

Where no comparable supply of goods or services can be
ascertained, “open market value” shall mean, in respect of
goods, an amount that is not less than the purchase price
of the goods or of similar goods or, in the absence of a
purchase price, the cost price, determined at the time of
supply; in respect of services it shall mean not less than
the full cost
to the taxable person of providing the
service.’.

4. Article 17(4), in the version set out in Article 28f(1), shall be

amended as follows:

(a)

in point (a) of the second subparagraph ‘Article 21(1)(a)
and (c)’ shall be replaced by ‘Article 21(1)(a), (1)(c) or
(1)(f) or Article 21(2)(c)’;

(b) in point (b) of the second subparagraph ‘Article 21(1)(a)’
shall be replaced by ‘Article 21(1)(a), or (1)(f) or Article
21(2)(c)’.

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5. In Article 18(1)(d), in the version set out in Article 28f(2),
‘Article 21(1)’ shall be replaced by ‘Article 21(1) or Article
21(2)(c)’.

6. In Article 20(4), the following subparagraph shall be added:

‘Member States may also apply paragraphs 2 and 3 to
services which
to those
characteristics
normally attributed to capital goods.’.

similar

have

7. In Article 21(2), in the version set out in Article 28g, the

following point shall be added:

‘(c) where the following supplies are carried out, Member
States may lay down that the person liable to pay tax
is the taxable person to whom those supplies are made:

(i)

the supply of construction work,
including repair,
cleaning, maintenance, alteration and demolition
services in relation to immovable property, as well
as
construction works
considered to be a supply of goods by virtue of
Article 5(5);

the handing over of

this point, Member States may
For the purposes of
provide that a taxable person who also carries out
activities or transactions that are not considered to be
taxable supplies of goods or services in accordance with
Article 2 shall be deemed to be a taxable person in
respect of supplies received as referred to in the first
subparagraph. A non-taxable body governed by public
law, may be deemed to be a taxable person in respect
of supplies received as referred to in (v), (vi) and (vii).

For the purposes of
this point, Member States may
specify the supplies of goods and services covered, and
the categories of suppliers or recipients to whom these
measures may apply. They may also limit the application
of this measure to some of the supplies of goods and
services listed in Annex M.

Member States shall inform the Committee established in
accordance with Article 29 of any new national measure
adopted pursuant to the provisions of this point.’.

8. Annex M set out in Annex I to this Directive shall be added.

(ii)

the supply of staff engaged in activities covered
by (i);

Article 2

Decisions listed in Annex II of this Directive shall be repealed
with effect from 1 January 2008.

(iii)

the supply of immovable property, as referred to in
Article 13(B)(g) and (h), where the supplier has
opted for taxation of the supply pursuant to point
(C)(b) of that Article;

(iv)

the supply of used material, used material which
cannot be re-used in the same state, scrap, industrial
and non industrial waste,
recyclable waste, part
processed waste and certain goods and services, as
identified in Annex M;

(v)

the supply of goods provided as security by one
taxable person to another
that
security;

in execution of

Article 3

Member States shall bring into force the laws, regulations and
administrative provisions necessary
to comply with this
Directive.

They shall apply the provisions necessary to comply with
Article 1(3), as concerns a new Article 11A(7) of Directive
77/388/EEC, and with Article 1(4), as concerns the reference
in Article 17(4) points (a) and (b) of Directive 77/388/EEC in
the version set out in Article 28f(1) to Article 21(1)(f) of that
Directive, from 1 January 2008 at the latest.

(vi)

the supply of goods following the cession of the
reservation of ownership to an assignee and the
exercising of this right by the assignee;

(vii) the supply of

immovable property sold by the

judgment debtor in a compulsory sale procedure.

When Member States adopt provisions under this Directive,
they shall forthwith communicate to the Commission the text
of those provisions, which shall contain a reference to this
Directive or shall be accompanied by such a reference on the
occasion of their official publication. The methods of making
such reference shall be laid down by Member States.

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

Article 4

This Directive is addressed to the Member States.

Article 5

Done at Brussels, 24 July 2006.

For the Council
The President

K. RAJAMÄKI

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ANNEX I

‘ANNEX M

List of supplies of goods and services as referred to in Article 21(2)(c)(iv)

(a)

the supply of ferrous and non ferrous waste, scrap, and used materials including that of semi-finished products
resulting from the processing, manufacturing or melting down of ferrous and non-ferrous metals and their alloys;

(b)

the supply of ferrous and non-ferrous semi-processed products and certain associated processing services;

(c)

(d)

the supply of residues and other recyclable materials consisting of ferrous and non-ferrous metals, their alloys, slag,
ash, scale and industrial residues containing metals or their alloys and the supply of selection, cutting, fragmenting
and pressing services for these products;

the supply of, and certain processing services relating to, ferrous and non-ferrous waste as well as parings, scrap,
waste and used and recyclable material consisting of cullet, glass, paper, paperboard and board, rags, bone, leather,
imitation leather, parchment, raw hides and skins, tendons and sinews, twine, cordage, rope, cables, rubber and
plastic;

(e)

the supply of the materials referred to in this annex after processing in the form of cleaning, polishing, selection,
cutting, fragmenting, pressing or casting into ingots;

(f)

the supply of scrap and waste from the working of base materials.’

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ANNEX II

List of Decisions under Article 27 of Directive 77/388/EEC repealed by this Directive

The Council Decision deemed to have been adopted on 15 April 1984 authorising the United Kingdom to apply a
measure derogating from the Sixth Directive with a view to avoiding certain types of fraud or tax evasion on supplies of
gold, gold coins and gold scrap between taxable persons by a special tax accounting scheme (1).

The Council Decision deemed to have been adopted on 11 April 1987 authorising the United Kingdom to apply a
measure derogating from Article 11 of Directive 77/388/EEC (2).

Council Decision 88/498/EEC (3) authorising the Kingdom of the Netherlands to apply a measure derogating from Article
21(1)(a) of Directive 77/388/EEC.

A Council Decision deemed to have been adopted on 18 February 1997 under the procedure contained in Article 27(4)
of Directive 77/388/EEC in its version of 17 May 1977 authorising the Republic of France to apply a measure derogating
from Articles 2 and 10 of Directive 77/388/EEC. This decision follows notification of the request to Member States on 18
December 1996.

Council Decision 98/23/EC (4) authorising the United Kingdom to extend application of a measure derogating from
Article 28e(1) of Directive 77/388/EEC.

Council Decision 2002/439/EC (5) authorising Germany to apply a measure derogating from Article 21 of Directive
77/388/EEC.

Council Decision 2002/880/EC (6) authorising Austria to apply a measure derogating from Article 21 of Directive
77/388/EEC.

Council Decision 2004/290/EC (7) authorising Germany to apply a measure derogating from Article 21 of Directive
77/388/EEC.

Council Decision 2004/736/EC (8) authorising the United Kingdom to introduce a special measure derogating from
Article 11 of Directive 77/388/EEC.

Council Decision 2004/758/EC (9) authorising Austria to apply a measure derogating from Article 21 of Directive
77/388/EEC.

(1) OJ L 264, 5.10.1984, p. 27.
(2) OJ L 132, 21.5.1987, p. 22.
(3) OJ L 269, 29.9.1988, p. 54.
(4) OJ L 8, 14.1.1998, p. 24. Decision as last amended by Decision 2003/909/EC (OJ L 342, 30.12.2003, p. 49).
(5) OJ L 151, 11.6.2002, p. 12.
(6) OJ L 306, 8.11.2002, p. 24.
(7) OJ L 94, 31.3.2004, p. 59.
(8) OJ L 325, 28.10.2004, p. 58.
(9) OJ L 336, 12.11.2004, p. 38.