2006/637/EC: Commission Decision of 13 September 2006 concerning a request from the Republic of Lithuania to apply a reduced rate of VAT to the supply of district heating (notified under document number C(2006) 4049)
Date: 2006-09-13
Institutions: European Commission
Subjects: Lithuania, VAT rate, fiscal policy, heating

22.9.2006

EN

Official Journal of the European Union

L 261/35

COMMISSION DECISION

of 13 September 2006

concerning a request from the Republic of Lithuania to apply a reduced rate of VAT to the supply
of district heating

(notified under document number C(2006) 4049)

(Only the Lithuanian text is authentic)

(2006/637/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Moreover, as there are in principle no cross-border trans-
actions with district heating, there is no risk of distortion
of competition in the meaning of Article 12(3)(b) of the
Sixth VAT Directive for either such heating supplied by
suppliers in Lithuania to private consumers residing in
other Member States or for heating supplied by suppliers
from outside Lithuania to private consumers residing in
this country.

The planned measure is a general one applying a reduced
rate of VAT to the supply of district heating under
Article 12(3)(b) of the Sixth VAT Directive.

Since the measure is a general one with no provision for
exceptions, the risk of distortion of competition must be
deemed non-existent. Since the condition laid down by
Article 12(3)(b) of the Sixth Directive is thus fulfilled,
Lithuania
the measure
concerned as soon as this Decision is notified,

should be

to apply

able

(4)

(5)

HAS ADOPTED THIS DECISION:

Article 1

Lithuania may apply the measure notified in its letter on 20
June 2006, applying a reduced rate of VAT to the supply of
district heating irrespective of the conditions of production and
supply.

Article 2

This Decision is addressed to the Republic of Lithuania.

Done at Brussels, 13 September 2006.

For the Commission

László KOVÁCS
Member of the Commission

Having regard to the Treaty
Community,

establishing the European

Having regard to the Sixth Council Directive 77/388/EEC of
the
17 May 1977 on the harmonisation of
Member States relating to turnover taxes — Common system
of value added tax: uniform basis of assessment (1), and in
particular Article 12(3)(b) thereof,

the laws of

Whereas:

(1)

(2)

By letter registered at the Commission on 20 June 2006
the Republic of Lithuania informed the Commission of
its intention of applying a reduced rate of VAT to the
supply of district heating.

Lithuania intends to apply a reduced rate (5 %) to the
supply of district heating, whereas natural gas and elec-
tricity will continue to be subject to the standard rate
(18 %). This differentiation of rates causes no shift from
the consumption of electricity or natural gas for heating
to the consumption of district heating. This is mainly due
to national rules for the establishment of prices, which
are quite different between natural gas, electricity and
district heating, and to the fact that, from a technical-
technological point of view,
those products can be
substitute goods only for heating purposes. Moreover,
in Lithuania electricity for heating is generally used
only by households which do not have any technical
possibilities to use gas or to connect to networks of
district heating. In this context, those households which
currently use electricity will not switch to district heating
because they are not connected to the district heating
network. Those ones which use gas for heating will
unlikely
since,
district
according to the information given by the Lithuanian
the price for district heating, excluding
authorities,
value added tax, is higher than the one for heating by
gas. In any case, they could only do so if connections to
district heating were provided to them.

heating

switch

either

to

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

2006/69/EC (OJ L 221, 12.8.2006, p. 9).