2007/250/EC: Council Decision of 16 April 2007 authorising the United Kingdom to introduce a special measure derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax
Date: 2007-04-16
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, delivery, derogation from EU law, electronic component, mobile phone

L 109/42

EN

Official Journal of the European Union

26.4.2007

COUNCIL DECISION

of 16 April 2007

authorising the United Kingdom to introduce a special measure derogating from Article 193 of
Directive 2006/112/EC on the common system of value added tax

(2007/250/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Directive 2006/112/EC of 28
November 2006 on the common system of value added
tax (1), and in particular Article 395(1) thereof,

Having regard to the proposal from the Commission,

Whereas:

place that liability on the taxable person to whom the
supplies are made, but only under certain conditions and
exclusively in the
and
computer chips/microprocessors.

case of mobile

telephones

(5) Within that sector, a significant number of traders engage
in tax evasion by not paying VAT to the tax authorities
after selling the products. Their customers, however,
being in receipt of a valid invoice, remain entitled to a
tax deduction. In the most aggressive forms of this tax
evasion, the same goods are, via a ‘carousel’ scheme,
supplied several times without payment of the VAT to
the tax authorities. By designating in those cases the
person to whom the goods are supplied as the person
liable for the VAT, the derogation would remove the
opportunity to engage in that
tax evasion.
However, it would not affect the amount of VAT due.

form of

(1)

(2)

(3)

(4)

In a letter registered by the Secretariat-General of the
the United
Commission on 10 February 2006,
Kingdom requested authorisation to introduce a special
measure derogating from Article 21(1)(a) of 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 values added
tax: uniform basis of assessment (2).

27(2)

accordance with Article

of Directive
In
the Commission informed the other
77/388/EEC,
Member States by letter dated 18 July 2006 of
the
request made by the United Kingdom. By letter dated
19 July 2006,
the Commission notified the United
Kingdom that it had all the information it considered
necessary for appraisal of the request.

(6)

(7)

Directive 77/388/EEC has been recast and repealed by
Directive 2006/112/EC. References to the provisions of
the former are to be construed as references to the latter.

(8)

The person liable for payment of the value added tax
(VAT), under Article 193 of Directive 2006/112/EC,
is
the taxable person supplying the goods. The purpose of
the derogation requested by the United Kingdom is to

For the purposes of ensuring the effective operation of
the derogation and preventing the tax evasion from being
shifted to other products or towards the retail level, the
United Kingdom should introduce appropriate control
and reporting obligations. The Commission should be
informed of
the specific measures adopted, and the
monitoring and overall evaluation of the operation of
the derogation.

The measure is proportionate to the objectives pursued
since it is not intended to apply generally, but only to a
specific high risk sector comprising certain carefully
defined products in relation to which the scale and size
of the tax evasion has resulted in considerable tax losses.
Furthermore, since that sector is a small one, the dero-
gation cannot be considered equivalent
to a general
measure.

The authorisation should be valid only for a short period,
because it cannot be ascertained with certainty that the
objectives of the measure will be achieved, nor can the
impact of the measure on the functioning of the VAT
system in the United Kingdom and in other Member
States be gauged in advance; moreover, the impact of
the measure and its implementation on the functioning
of the internal market will have to be properly assessed.

(1) OJ L 347, 11.12.2006, p. 1. Directive as last amended by Directive

2006/138/EC (OJ L 384, 29.12.2006, p. 92).

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

2006/98/EC (OJ L 363, 20.12.2006, p. 129).

(9)

The derogation has no negative
Community’s own resources accruing from VAT,

impact on the

26.4.2007

EN

Official Journal of the European Union

L 109/43

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 193 of Directive
2006/112/EC, the United Kingdom is authorised to designate
the taxable person to whom supplies of the following goods are
made as the person liable to pay VAT:

Article 3

The United Kingdom shall inform the Commission where it has
adopted the measures referred to in Articles 1 and 2 and shall,
by 31 March 2009, submit a report to the Commission on the
overall evaluation of the operation of the measures concerned,
in particular as regards the effectiveness of the measure and any
evidence of the shifting of tax evasion to other products or to
the retail level.

1. mobile telephones, being devices made or adapted for use in
connection with a licensed network and operated on
specified frequencies, whether or not they have any other
use;

Article 4

This Decision shall expire on 30 April 2009.

2.

integrated circuit devices such as microprocessors and central
processing units in a state prior to integration into end user
products.

The derogation shall apply in respect of supplies of goods
for which the taxable amount
to or higher than
GBP 5 000.

is equal

Article 5

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

Article 2

Done at Luxembourg, 16 April 2007.

The derogation provided for in Article 1 is subject to the United
Kingdom introducing appropriate and effective control and
reporting obligations on taxable persons that supply goods to
which the reverse charge applies
in accordance with this
Decision.

For the Council
The President

H. SEEHOFER