2007/884/EC: Council Decision of 20 December 2007 authorising the United Kingdom to continue to apply a measure derogating from Articles 26(1)(a), 168 and 169 of Directive 2006/112/EC on the common system of value added tax
Date: 2007-12-20
Institutions: Council of the European Union
Subjects: United Kingdom, VAT, derogation from EU law, hire purchase, motor car, provision of services, tax harmonisation, tax relief, tourism, vehicle rental

29.12.2007

EN

Official Journal of the European Union

L 346/21

COUNCIL DECISION

of 20 December 2007

authorising the United Kingdom to continue to apply a measure derogating from Articles 26(1)(a),
168 and 169 of Directive 2006/112/EC on the common system of value added tax

(2007/884/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) (VAT), and in particular Article 395(1) thereof,

Having regard to the proposal from the Commission,

Whereas:

and

Decisions

authorised

95/252/EC (2)

the Council

subsequently
By
98/198/EC (3),
the United
Kingdom to restrict to 50 % the right of the hirer or
lessee to deduct input VAT on charges for the hire or
lease of a passenger car where the car is not used entirely
for business purposes. The United Kingdom was also
allowed not to treat as supplies of services for consid-
eration the private use of a car hired or leased by a
taxable person for his business purposes. This simplifi-
cation measure removed the need for the hirer or the
lessee to keep records of private mileage travelled in
for tax on the actual
business cars and to account
private mileage of each car.

(4)

(5)

(6)

(7)

The legal and factual circumstances which justified
granting the authorisation to apply a derogation have
not changed and are still relevant.

the Commission presented a
On 29 October 2004,
proposal
for a Council Directive amending Directive
77/388/EEC, now Directive 2006/112/EC, that includes
the harmonisation of
the categories of expenses for
to deduct may apply.
the right
which exclusions of
Under this proposal, exclusions to the right to deduct
may be applied to motorised road vehicles.
is
therefore appropriate to extend the period of the author-
isation until that Directive comes into force. However,
expire on 31
the
December 2010 at the latest if that Directive has not
come into force by that date, to enable an assessment
of
the
apportionment between
percentage of
business and private use.

this Decision in the light of

authorisation will

the necessity of

in any case

the overall

It

The derogation, as extended, will not have an adverse
effect on the European Communities’ own resources
accruing from VAT.

Given the urgency of the matter, it is imperative to grant
an exception to the six-week period referred to in
paragraph I(3) of
the
national parliaments in the European Union, annexed
to the Treaty on European Union and to the Treaties
establishing the European Communities,

the Protocol on the role of

By letter registered with the Secretariat-General of the
Commission on 5 February 2007, the United Kingdom
requested an extension of the period of validity of that
derogation, which expires on 31 December 2007.

HAS ADOPTED THIS DECISION:

accordance with Article

of Directive
395(2)
In
2006/112/EC,
the Commission informed the other
Member States by letter dated 15 October 2007 of the
request made by the United Kingdom. By letter dated 17
October 2007,
the Commission notified the United
Kingdom that it had all the information necessary to
consider the request.

Article 1

By way of derogation from Articles 168 and 169 of Directive
2006/112/EC,
the United Kingdom is hereby authorised to
restrict to 50 % the right of the hirer or lessee of a car to
deduct the VAT on the cost of the hiring or leasing of that
car where it is not used entirely for business purposes.

Article 2

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

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

(2) OJ L 159, 11.7.1995, p. 19.
(3) OJ L 76, 13.3.1998, p. 31. Decision as last amended by Directive

2004/855/EC (OJ L 369, 16.12.2004, p. 61).

By way of derogation from Article 26(1)(a) of Directive
2006/112/EC, the United Kingdom is hereby authorised not
to treat as supplies of services for consideration the private
use of a business car hired or leased by a taxable person.

(1)

(2)

(3)

L 346/22

EN

Official Journal of the European Union

29.12.2007

This Decision shall apply with effect from 1 January 2008.

Article 3

It shall expire on the date of entry into force of Community rules determining what expenditure relating to
motorised road vehicles is not to be eligible for full deduction of VAT, but on 31 December 2010 at the
latest.

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

Article 4

Done at Brussels, 20 December 2007.

For the Council
The President

F. NUNES CORREIA