Proposal for a Council Decision Authorising the Federal Republic of Germany and the Republic of Poland to apply measures derogating from Article 5 of Council Directive 2006/112/EC on the common system of value added tax (only the German and the Polish versions are authentic)
Date: 2007-12-05
Institutions: European Commission
Subjects: Germany, Poland, derogation from EU law, engineering structure, rail transport, territorial law

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.12.2007 
COM(2007) 771 final 

Proposal for a 

COUNCIL DECISION 

Authorising the Federal Republic of Germany and the Republic of Poland to apply 
measures derogating from Article 5 of Council Directive 2006/112/EC on the common 
system of value added tax 

(only the German and the Polish versions are authentic) 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

110 

•  Grounds for and objectives of the proposal 

Pursuant  to  Article  395  of  Directive  2006/112/EC  of  28  November  2006  on  the 
common  system  of  value  added  tax  (hereafter:  'VAT  Directive'),  the  Council,  acting 
unanimously on a proposal from the Commission, may authorise any Member State to 
apply special measures for derogation from the provisions of that Directive, in order to 
simplify the procedure for collecting value added tax (VAT) or to prevent certain forms 
of tax evasion or avoidance. 

By  letters  of  May  and  July  2007,  and  registered  with  the  Secretariat-General  of  the 
Commission  on  22  October  and  27  July  2007,  the  Federal  Republic  of  Germany  and 
the Republic of Poland requested authorisation to apply derogating measures in relation 
to  the  construction  and  the  maintenance  of  border  bridges  forming  part  of  the 
respective rail networks of the two countries. 

In accordance with Article 395(2) of the VAT Directive, the Commission informed the 
other  Member  States  by  letter  dated  24  October  2007  of  the  requests  made  by  the 
Federal Republic of Germany and the Republic of Poland. By letter dated 25 October 
2007, the Commission notified the Federal Republic of Germany and the Republic of 
Poland that it had all the information necessary to consider the requests. 

120 

•  General context 

With a view to facilitate rail traffic between their two countries, the Federal Republic 
of  Germany  and  the  Republic  of  Poland  decided  to  adopt  an  agreement  on  the 
construction (and subsequent maintenance) of two border bridges and the maintenance 
of  eleven  other  existing  border  bridges  over  the  Oder  river  (Odra)  and  the  Lausitzer 
Neiße river (Nysa Łużycka). This agreement would contain measures which derogate 
from the VAT Directive as regards the principle of territoriality. 

According  to  the  agreement,  the  Federal  Republic  of  Germany  or  the  Republic  of 
Poland would become responsible for the construction or the maintenance of a number 
of  individual  bridges.  The  agreement  provides  that  the  construction  sites  at  border 
bridges and the bridges themselves, which are (partly) located on the territory of one 
country, shall be deemed to be on the territory of the other country when that country is 
responsible for the construction or maintenance. This implies that for VAT purposes, 
as  regards  the  supply  of  goods  or  services  or  intra-Community  acquisitions  of  goods 
for  the  construction  or  maintenance  of  these  border  bridges,  the  Polish  part  of  the 
border  bridge  will  be  considered  as  being  on  German  territory  when  Germany  is 
responsible for the construction or maintenance of this bridge and vice versa. 

Under  the  agreement,  the  Federal  Republic  of  Germany  will  be  responsible  for  the 
construction and maintenance of one new bridge and the maintenance of four existing 
bridges.  The  Republic  of  Poland  will  be  responsible  for  the  construction  and 
maintenance of one new bridge and the maintenance of seven existing bridges. 

Under the normal rules, the principle of territoriality laid down in the VAT Directive 

EN 

2 

   EN 

 
would  require  supplies  of  goods  and  services  and  intra-Community  acquisitions  of 
goods  in  the  Federal  Republic  of  Germany  to  be  subject  to  German  VAT.  Likewise, 
supplies  of  goods  and  services  and  intra-Community  acquisitions  of  goods  in  the 
Republic of Poland would be subject to Polish VAT. Applying the normal rules would 
imply establishing the exact place of taxable transactions according to the territory in 
which each part of the works was carried out. 

The Federal Republic of Germany and the Republic of Poland consider that applying 
these  rules  would  involve  major  tax  complications  for  the  businesses  responsible  for 
the work in question. They consider the tax provisions in the agreement are justified in 
order  to  simplify  the  business'  tax  responsibilities.  The  Commission  accepts  that  in 
these cases, uniform taxation of the construction and maintenance works will represent 
a simplification which will make it easier for the businesses concerned to apply the tax 
rules than would be the case if the normal tax rules were applied. 

•  Existing provisions in the area of the proposal 

The Council has on several previous occasions authorised Member States to derogate 
from the territoriality principle with regard to projects in frontier areas. 

•  Consistency with other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

130 

141 

•  Consultation of interested parties 

219 

Not relevant. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

229 

230 

The  Decision  proposal  aims  at  simplifying  the  procedure  for  charging  the  tax  in 
relation  to  the  construction  and  maintenance  of  frontier  bridges  and  has  therefore  a 
potential positive economic impact. 

The impact will in any case be limited because of the narrow scope of the derogation. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

305 

•  Summary of the proposed action 

Authorisation  for  Germany  and  Poland  to  derogate  from  the  territorial  application  of 
VAT as regards the construction and maintenance of border bridges between the two 
countries. 

EN 

3 

   EN 

 
 
 
310 

•  Legal basis 

Article 395 of the VAT Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax. 

329 

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

The  Decision  concerns  an  authorisation  granted  to  Member  States  upon  their  own 
request and does not constitute any obligation. 

Given the very limited scope of the derogation, the special measure is proportionate to 
the aim pursued. 

•  Choice of instruments 

Proposed instruments: other. 

Other means would not be adequate for the following reason(s). 

Under  Article  395  of  the  VAT  Directive,  derogation  from  the  common  VAT  rules  is 
only possible with the authorisation of the Council acting unanimously on a proposal 
from  the  Commission.  A  Council  Decision  is  therefore  the  most  suitable  instrument 
since it can be addressed to individual Member States. 

331 

332 

341 

342 

4)  BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

409 

E-4295 

EN 

4 

   EN 

 
 
 
 
 
Proposal for a 

COUNCIL DECISION 

Authorising the Federal Republic of Germany and the Republic of Poland to apply 
measures derogating from Article 5 of Council Directive 2006/112/EC on the common 
system of value added tax 

(only the German and the Polish versions are authentic) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of value added tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the Commission2, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

By  letters  registered  with  the  Secretariat-General  of  the  Commission  on  22  October 
2007 and 27 July 2007, the Federal Republic of Germany and the Republic of Poland 
requested  authorisation  to  apply  special  tax  measures  in  relation  to  the  construction 
and maintenance of certain border bridges between the two countries. 

In  accordance  with  Article  395(2)  of  Directive  2006/112/EC,  the  Commission 
informed  the  other  Member  States  by  letter  dated  24  October  2007  of  the  requests 
made by the Federal Republic of Germany and the Republic of Poland. By letter dated 
25 October 2007, the Commission notified the Federal Republic of Germany and the 
Republic of Poland that it had all the information necessary to consider the requests. 

The  purpose  of  the  special  measure  is,  for  supplies  of  goods  or  services  and  intra-
Community  acquisitions  of  goods  intended  for  the  construction  and  maintenance  of 
the  cross-border  bridges,  to  regard  the  bridges,  and  its  construction  site  in  case  of 
building, as being entirely on the territory of one of the Member States in accordance 
with  an  agreement  concluded  between  them  on  the  division  of  responsibility  for  the 
construction or maintenance of these cross-border bridges. 

In  absence  of  a  special  measure,  it  would  be  necessary,  for  each  supply  of  goods  or 
services  or  intra-Community  acquisition  of  goods,  to  ascertain  whether  the  place  of 
taxation was the Federal Republic of Germany or the Republic of Poland. Work at a 
border bridge carried out on German territory would be subject to value added tax in 

1 
2 

OJ L 347, 11.12.2006, p. 1. Directive amended by Directive 2006/138/EC (OJ L 384, 29.12.2006, p. 92) 
OJ C , , p. . 

EN 

5 

   EN 

 
                                                 
Germany  while  that  carried  out  on  Polish  territory  would  be  subject  to  Polish  value 
added tax. 

The purpose of the derogation is therefore to simplify the procedure for charging the 
tax on the construction and maintenance of the bridges in question. 

The  derogation  will  have  no  negative  impact  on  the  Community's  own  resources 
provided from value added tax. 

(5) 

(6) 

HAS ADOPTED THIS DECISION:  

Article 1 

The  Federal  Republic  of  Germany  and  the  Republic  of  Poland  are  authorised,  under  the 
conditions of  Article 2 and 3, to apply measures derogating  from  Directive  2006/112/EC in 
relation  to  the  construction  and  subsequent  maintenance  of  one  border  bridge  crossing  the 
Oder  (Odra)  and  one  border  bridge  crossing  the  Lausitzer  Neiße  (Nysa  Łużycka),  and  the 
maintenance  of  two  existing  border  bridges  over  the  Oder  (Odra)  and  nine  existing  border 
bridges over the Lausitzer Neiße (Nysa Łużycka), all of which are partly on the territory of 
the Federal Republic of Germany and partly on the territory of the Republic of Poland. The 
details of the bridges in question are listed in the Annex to this decision. 

Article 2 

By  way  of  derogation  from  Article  5  of  Directive  2006/112/EC,  with  regard  to  the  border 
bridge  for  which  the  Federal  Republic  of  Germany  is  responsible  for  the  construction  and 
maintenance  and  with  regard  to  the  border  bridges  for  which  the  Federal  Republic  of 
Germany  is  solely  responsible  for  maintenance,  these  bridges  and,  where  appropriate,  the 
construction site in so far as it is on Polish territory, shall be deemed to be part of the German 
territory for the purposes of supplies of goods and services and intra-Community acquisitions 
of goods intended for the construction or maintenance of these bridges. 

Article 3 

By  way  of  derogation  from  Article  5  of  Directive  2006/112/EC,  with  regard  to  the  border 
bridge for which the Republic of Poland is responsible for the construction and maintenance 
and with regard to the border bridges for which the Republic of Poland is solely responsible 
for maintenance, these bridges and, where appropriate, the construction site in so far as it is on 
German  territory,  shall  be  deemed  to  be  part  of  the  Polish  territory  for  the  purposes  of 
supplies  of  goods  and  services  and  intra-Community  acquisitions  of  goods  intended  for  the 
construction or maintenance of these bridges. 

EN 

6 

   EN 

 
Article 4 

This Decision is addressed to the Federal Republic of Germany and the Republic of Poland. 

Done at Brussels,  

For the Council 
The President 

EN 

7 

   EN 

 
 
 
Bridges referred to in Article 1: 

ANNEX  

1. The Federal Republic of Germany shall be responsible for the construction of the following 
border bridge: 

(a) the border bridge over the Oder (Odra) between Frankfurt (Oder) und Kunowice at 

marker 580,640. 

2.  The  Republic  of  Poland  shall  be  responsible  for  the  construction  of  the  following  border 
bridge: 

(a)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Horka  and 

Węgliniec at marker 130,470. 

3. The Federal Republic of Germany shall be responsible for maintaining the following border 
bridges: 

(a)  the  border  bridge  over  the  Oder  (Odra)  between  Neurüdnitz  and  Siekierki  at 

marker 653,903; 

(b)  the  border  bridge  over  the  Oder  (Odra)  between  Küstrin  Kietz  and  Küstrin 

Kostrzyn at marker 615,102; 

(c) the border bridge over die Oder (Odra) between Frankfurt (Oder) und Kunowice at 

marker 580,640; 

(d) the border bridge over the Lausitzer Neiße (Nysa Łużycka) between Hagenwerder 

and Ręczyn at marker 169,611; 

(e)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Hirschfelde 

and Trzciniec Zgorzelecki at marker 186,281. 

4. The Republic of Poland shall be responsible for maintaining the following border bridges: 

(a)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Guben  and 

Gubin at marker 13,375;  

(b)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Guben  and 

Gubinek at marker 17,625; 

(c)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Forst  and 

Tuplice at marker 51,935; 

(d) the border bridge over the Lausitzer Neiße (Nysa Łużycka) between Bad Muskau 

und Łęknica at marker 80,530; 

(e)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Horka  and 

Wegliniec at marker 130,470; 

EN 

8 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
(f)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Görlitz  and 

Zgorzelec at marker 153,885; 

(g)  the  border  brigde  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Krzewina 

Zgorzelecka and Trzciniec Zgorzelecki at marker 184,220; 

(h)  the  border  bridge  over  the  Lausitzer  Neiße  (Nysa  Łużycka)  between  Krzewina 

Zgorzelecka and Trzciniec Zgorzelecki at marker 184,780. 

EN 

9 

   EN