Proposal for a Council implementing decision authorising France and Italy to introduce a special measure derogating from Article 5 of Directive 2006/112/EC on the common system of value added tax
Date: 2010-06-10
Institutions: European Commission
Subjects: France, Italy, VAT, derogation from EU law, tax system, transport network, tunnel

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EUROPEAN COMMISSION 

Brussels, 10.6.2010 
COM(2010)305 final 

2010/0166 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France and Italy to introduce a special measure derogating from Article 5 of 
Directive 2006/112/EC on the common system of value added tax 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Pursuant to Article 395 of Council Directive 2006/112/EC of 28 November 2006 on 
the  common  system  of  value  added  tax1  (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  registered  with  the  Secretariat-General  of  the  Commission  on  19 
November  2009  and  19  June  2009  respectively,  the  Republic  of  France  and  the 
Italian  Republic  requested  authorisation  to  introduce  a  measure  derogating  from 
Article 5 of the VAT Directive.  

With a view to facilitating road traffic between their two countries, the Republic of 
France  and  the  Italian  Republic  reached  an  agreement  on  12  March  2007  on 
implementing a unified management structure for the Col de Tende Road Tunnel, a 
permanent  road  link  between  the  two  Member  States.  In  particular,  the  agreement 
allocates  to  Italy  the  task  of  the  operation,  maintenance  and  safety  of  the  existing 
tunnel, as well as the construction, and subsequent operation, maintenance and safety 
of a new tunnel to run alongside the existing tunnel. The new tunnel will carry traffic 
in one direction, with the existing tunnel carrying traffic in the other direction. 

As the old and the new tunnels lie within both the territory of the Republic of France 
and the Italian Republic, without a simplification measure it would be necessary to 
establish  the  exact  place  of  each  taxable  transaction  according  to  the  territory  in 
which each part of the operation, maintenance and safety of both tunnels, as well as 
in the construction of the new tunnel, is carried out. 

Therefore  the  Republic  of  France  and  the  Italian  Republic  request  authorisation  to 
consider the entire perimeter of the site of current tunnel, along with the construction 
site  of  the  new  tunnel,  as  being  within  the  territory  of  the  Italian  Republic  for  the 
purposes  of  supplies  of  goods,  services,  intra-Community  acquisitions  and  imports 
intended for the relevant construction, operation, maintenance and safety of the two 
tunnels.  

Similar derogations have been granted to other Member States. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

There was no need for consultation or external expertise. 

1 

OJ L 347, 11.12.2006, p. 1  

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3. 

LEGAL ELEMENTS OF THE PROPOSAL 

The Decision authorises the Republic of France and the Italian Republic to introduce 
a  special  measure  derogating  from  Article  5  of  the  VAT  Directive  as  regards  the 
construction, operation, maintenance and safety of the Col de Tende Road Tunnel.  

This Decision is based on Article 395 of the VAT Directive. 

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

Given  the  limited  scope  of  the  derogation,  the  special  measure  appears  to  be 
proportionate to the aim pursued. 

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

4. 

BUDGETARY IMPLICATION 

The proposal has no negative implications for the Union's budget. 

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2010/0166 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France and Italy to introduce a special measure derogating from Article 5 of 
Directive 2006/112/EC on the common system of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of value added tax2, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

By letters registered with the Secretariat-General of the Commission on 19 November 
2009  and  19  June  2009  respectively,  France  and  Italy  requested  authorisation  to 
introduce a special tax measure in relation to the operation, maintenance and safety of 
the  existing  Col  de  Tende  Road  Tunnel,  as  well  as  the  construction,  operation, 
maintenance and safety of a new tunnel to run alongside the existing one. 

The  Commission  informed  the  other  Member  States  by  letters  dated  14  December 
2009 of the requests made by France and Italy. By letters dated 17 December 2009 the 
Commission  notified  France  and  Italy  that  it  had  all  the  information  necessary  to 
consider the requests. 

The Col de Tende Road Tunnel is a permanent road link between France and Italy. An 
agreement of 12 March 2007 between those two Member States has designated Italy 
as being responsible for the operation, maintenance and safety of the existing tunnel, 
as  well  as  for  the  construction,  operation,  maintenance  and  safety  of  the  new  tunnel 
which,  when  completed,  will  carry  traffic  in  the  opposite  direction  to  the  existing 
tunnel. 

Through  the  measure,  the  entire  site  of  the  existing  tunnel,  and  the  perimeter  and 
construction site of the new tunnel, will be deemed to be on the territory of Italy for 
the purposes of supplies of goods, services, intra-Community acquisitions and imports 
intended  for  the  relevant  construction,  operation,  maintenance  and  safety  of  the  two 
tunnels.  In  the  absence  of  such  a  measure,  it  would  be  necessary,  according  to  the 
principle  of  territoriality,  to  ascertain  for  each  supply  whether  the  place  of  taxation 
was within France or Italy.  

2 

OJ L 347, 11.12.2006, p. 1 

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(5) 

(6) 

The purpose of the measure is therefore to simplify the procedure for charging value 
added tax on the operation, maintenance and safety of the existing tunnel, as well as 
the construction, operation, maintenance and safety of the new tunnel. 

The  derogation  has  no  negative  impact  on  the  Union's  own  resources  accruing  from 
value added tax, 

HAS ADOPTED THIS DECISION:  

Article 1 

By way of derogation from Article 5 of Directive 2006/112/EC, France and Italy are 
authorised to consider the entire site of the existing Col de Tende Road Tunnel, along with the 
construction site of the new Col de Tende Road Tunnel which will run alongside the existing 
tunnel, as being on the territory of Italy for the purposes of supplies of goods, services, intra-
Community acquisitions of goods and imports intended for the construction and subsequent 
operation, maintenance and safety of the new tunnel, as well as the operation, maintenance 
and safety of the existing tunnel. 

Article 2 

This Decision is addressed to the French Republic and the Italian Republic. 

Done at Brussels, 

For the Council 
The President 

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