2006/659/EC: Council Decision of 25 September 2006 authorising the United Kingdom to introduce a special measure derogating from Articles 5(6) and 11(A)(1)(b) of Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes
Date: 2006-09-25
Institutions: Council of the European Union
Subjects: United Kingdom, VAT rate, derogation from EU law, fuel tax, motor vehicle, tax harmonisation, type of business

3.10.2006

EN

Official Journal of the European Union

L 272/15

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 25 September 2006

authorising the United Kingdom to introduce a special measure derogating from Articles 5(6) and
11(A)(1)(b) of Directive 77/388/EEC on the harmonisation of the laws of the Member States relating
to turnover taxes

(2006/659/EC)

THE COUNCIL OF THE EUROPEAN UNION,

(3)

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
Member States relating to turnover taxes — Common system
of value added tax: uniform basis of assessment (1), and in
particular Article 27(1) thereof,

the laws of

Having regard to the proposal from the Commission,

(4)

Whereas:

(1)

(2)

the
By letter registered by the Secretariat-General of
Commission on 7 April 2005,
the United Kingdom
requested authorisation to derogate from Articles 5(6)
and 11(A)(1)(b) 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 26 October 2005 of the
request made by the United Kingdom. By letter dated 27
the Commission notified the United
October 2005,
Kingdom that it had all the information it considered
necessary for appraisal of the request.

The United Kingdom wishes to replace the derogation,
provided for by Council Decision 86/356/EEC of 21 July
1986 authorising the United Kingdom to apply flat-rate
measures in respect of the non-deductible value added
tax charged on fuel expenditure in company cars (2),
which authorised special
in
order to determine on a flat-rate basis the proportion
of value added tax (VAT) relating to expenditure on
fuel
in business cars partly used for private purposes.
This procedure relieves taxable persons of the need to
keep detailed mileage records in order to calculate, for
each car, the exact amount of VAT related to private and
business motoring. Like this system, the proposed new
system will be optional for taxable persons.

simplification measures

The current system is based on the type of fuel used and
the engine size of the car. The United Kingdom wishes to
amend this system and base it on the level of carbon
dioxide (CO2) emissions from the car, as there is a
proportional correlation between emissions and fuel
consumption and therefore with expenditure on fuel.
This means that a flat-rate scale system based on CO2
emissions could achieve the same objective of taxing fuel
expenditure incurred by a business for private motoring.
At the same time, the United Kingdom also expects to
achieve greater accuracy in determining the charge for
private
therefore
refining, the number of scale bands in comparison with
the existing bands.

consumption by

increasing,

and

(5)

This arrangement has effectively enabled the United
Kingdom to simplify the procedure for charging tax in
relation to expenditure on fuel for business cars and the
proposed system, based on CO2 emissions, will have a
similar effect. Private consumption should be more accu-
rately reflected under the new system.

(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).

(2) OJ L 212, 2.8.1986, p. 35.

L 272/16

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Official Journal of the European Union

3.10.2006

(6)

(7)

(8)

The authorisation should be limited in time, so that in
the light of the experience gained up to that date an
assessment may be made as to whether or not the dero-
gation is still justified.

Decision 86/356/EEC should be repealed after a certain
period but in any case at the entry into force of the
national
new special
introducing
measure, in order to avoid a situation in which author-
isations for both systems exist at the same time.

provisions

the

The United Kingdom should inform the Commission of
introducing the new special
the national provisions
measure as soon as they have been adopted and should
ensure that this measure will not enter into force before
30 April 2007.

Article 2

The proportion of the tax referred to in Article 1 shall be
expressed in fixed amounts, established on the basis of the
CO2 emissions level of the type of vehicle, that reflect fuel
these fixed
consumption. The United Kingdom shall adjust
amounts annually to reflect changes in the average cost of fuel.

Article 3

The system set up on the basis of this Decision shall be optional
for taxable persons.

Article 4

Decision 86/356/EEC is repealed on 30 April 2007.

The United Kingdom shall
the
national provisions referred to in Article 1 as soon as they
have been adopted.

inform the Commission of

(9)

The derogation has no negative impact on the Commu-
nity's own resources accruing from VAT,

Article 5

HAS ADOPTED THIS DECISION:

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.

Article 1

Done at Brussels, 25 September 2006.

By way of derogation from Articles 5(6) and 11(A)(1)(b) of
Directive 77/388/EEC,
the United Kingdom is authorised,
from 1 May 2007 until 31 December 2015, to fix on a flat-
rate basis the proportion of value added tax relating to expen-
diture on fuel used for private purposes in business cars.

For the Council
The President

M. PEKKARINEN