Proposal for a COUNCIL DECISION authorising the Czech Republic and Poland to apply special measures derogating from Article 5 of Directive 2006/112/EC on the common system of value added tax
Date: 2013-03-06
Institutions: European Commission
Subjects: Czechia, Poland, VAT, bridge, derogation from EU law, frontier, maintenance, road building

EUROPEAN 
COMMISSION 

Brussels, 6.3.2013  
COM(2013) 116 final 

2013/0069 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising the Czech Republic and Poland to apply special measures 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 

Grounds for and objectives of the proposal 

Pursuant to Article 395(1) 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 to 
derogate  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  Commission  on,  respectively,  26  September  2011  and  8  June 
2012,  the  Czech  Republic  and  Poland  requested  authorisation  to  apply  measures  derogating 
from  Article  5  of  the  VAT  Directive.  By  letter  registered  on  5  November  2012  the  Czech 
Republic completed its initial request by agreeing to certain additions mentioned in the Polish 
request. In accordance with Article 395(2) of the VAT Directive, the Commission informed 
the other Member States by letters dated 5 December 2012 of the requests made by the Czech 
Republic and Poland. By letter dated 10 December 2012, the Commission notified the Czech 
Republic and Poland that it had all the information necessary to consider the request. 

General context 

With  a  view  to  facilitate  road  transport  between  the  Czech  Republic  and  Poland,  and  to 
regulate  the  construction  and  maintenance  of  road  infrastructure  on  the  Czech-Polish  state 
border,  both  states  have  agreed  to  enter  into  an  Agreement  on  the  construction  and 
maintenance  of  bridges  and  the  maintenance  of  common  road  sections  on  the  Czech-Polish 
State border. This draft agreement contains simplification measures which derogate from the 
VAT Directive as regards the principle of territoriality. 

According  to  the  draft  agreement,  the  Czech  Republic  and  Poland  would  each  become 
responsible  for  the  maintenance  of  the  border  bridges  and  common  road  sections  in 
accordance with the division of responsibilities set out in Annex A of the agreement.  

The  Czech  Republic  and  Poland  would  each  become  responsible  for  the  construction  and 
subsequent  maintenance  of  the  border  bridges  in  accordance  with  the  division  of 
responsibilities set out in Annex B of the agreement.  

For  VAT  purposes,  in  respect  of  the  supply  of  goods  or  services  and  intra-Community 
acquisitions of goods intended for the construction or maintenance of the border bridges and 
common  road  sections  under  Annexes  A  and  B  of  the  agreement,  the  bridges  and  common 
road sections in question as well as their construction sites shall be considered as being on the 
territory of the state which is responsible for their construction or maintenance as laid down 
under Annexes A and B of the agreement.  

Under the normal rules, the principle of territoriality laid down in the VAT Directive would 
require  supplies  of  goods  and  services,  as  well  as  intra-Community  acquisitions  of  goods 
carried out in the Czech Republic to be subject to Czech VAT. Likewise, supplies of goods 
and services as well as intra-Community acquisitions of goods carried out in Poland would be 
subject  to  Polish  VAT.  Applying  these  provisions  would  imply  breaking  down  operations 
according to the territory in which each part of the works was carried out. 

The Czech Republic and 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  draft  agreement  which  is  subject  to  the  present  request  for  derogation  as 
justified  in  order  to  ease  the  administrative  burden  on  those  businesses.  The  Commission 

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agrees that, in this case, uniform taxation of the construction and maintenance 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  occasions  authorised  Member  States  to  derogate  from  the 
territoriality principle with regard to transport infrastructure projects in frontier areas. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

Consultation of interested parties 

Not relevant. 

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

The proposed Decision aims at simplifying the procedure for charging VAT in relation to the 
construction  and  maintenance  of  bridges  and  common  road  sections  between  the  Czech 
Republic and Poland and has therefore a potential positive economic impact. 

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

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

Authorisation for the Czech Republic and Poland to derogate from the territorial application 
of VAT as regards to the construction and maintenance of border bridges and common road 
sections. 

Legal basis 

Article 395 of the VAT Directive. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Union's budget. 

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2013/0069 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising the Czech Republic and Poland to apply special measures 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 tax1, 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  Commission  on  26  September  2011  and  5  November 
2012 the Czech Republic and on 8 June 2012 Poland requested authorisation to apply 
special  measures  for  derogation  from  the  provisions  of  Directive  2006/112/EC  in 
relation  to  the  construction  and  maintenance  of  border  bridges  and  common  road 
sections between the two Member States. 

In  accordance  with  Article  395(2)  of  Directive  2006/112/EC,  the  Commission 
informed  the  other  Member  States  by  letter  dated  5  December  2012  of  the  requests 
made  by the Czech Republic  and  by Poland. By letter dated 10 December 2012, the 
Commission  notified  the  Czech  Republic  and  Poland  that  it  had  all  the  information 
necessary to consider the requests.  

The  purpose  of  the  special  measures  is  that  with  respect  to  the  supply  of  goods  or 
services  and  intra-Community  acquisition  of  goods  intended  for  the  maintenance  of 
border  bridges  and  common  road  sections  listed  in  Annex  I  and  for  the  construction 
and  subsequent  maintenance  of  border  bridges  listed  in  Annex  II,  the  bridges  and 
common road sections, as well as their construction sites, should be regarded as being 
entirely  within  the  territory  either  of  the  Czech  Republic  or  of  Poland  in  accordance 
with  an  Agreement  to  be  concluded  between  them  on  the  construction  and 
maintenance  of  bridges  and  maintenance  of  common  road  sections  on  the  Czech  – 
Polish State border. 

In the absence of special measures, it would be necessary, for each supply of goods or 
services and intra-Community acquisition of goods, to ascertain whether the place of 
taxation was the Czech Republic or Poland. Work at a border bridge and common road 
section carried out within the territory of the Czech Republic would be subject to value 
added tax in the Czech Republic while that carried out within Poland's territory would 
be subject to value added tax in Poland. 

(5) 

The purpose of the derogation is therefore to simplify the procedure for collecting the 
tax  with  respect  to  the  construction  and  maintenance  of  the  border  bridges  and 
common road sections in question. 

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OJ L 347, 11.12.2006, p. 1. 

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(6) 

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

HAS ADOPTED THIS DECISION:  

Article 1 

Subject to the entry into force of an Agreement to be concluded between the Czech Republic 
and Poland on the maintenance of bridges and common road sections on the Czech – Polish 
State  border,  as  referred  to  in  Annex  I  to  this  Decision,  and  on  the  construction  and 
subsequent  maintenance  of  bridges  on  the  Czech  –  Polish  State  border,  as  referred  to  in 
Annex II to this Decision, the Czech Republic and Poland are hereby authorised to apply, in 
accordance  with  Articles  2  and  3,  measures  derogating  from  Directive  2006/112/EC  in 
relation  to  the  construction  and  maintenance  of  those  border  bridges  and  common  road 
sections, all of which are partly within the territory of the Czech Republic and partly within 
the territory of Poland. 

Article 2 

By  way  of  derogation  from  Article  5  of  Directive  2006/112/EC,  the  border  bridges  and 
common  road  sections  for  the  construction  or  maintenance  of  which  the  Czech  Republic  is 
responsible,  and,  where  appropriate,  the  corresponding  construction  site,  insofar  as  they  are 
within Poland's territory, shall be deemed to be part of the territory of the Czech Republic for 
the purposes of the supply of goods and services and intra-Community acquisition of goods 
intended for the construction or maintenance of those bridges and common road sections. 

Article 3 

By  way  of  derogation  from  Article  5  of  Directive  2006/112/EC,  the  border  bridges  and 
common  road  sections  for  the  construction  or  maintenance  of  which  Poland  is  responsible, 
and,  where  appropriate,  the  corresponding  construction  site,  insofar  as  they  are  within  the 
territory  of  the  Czech  Republic,  shall  be  deemed  to  be  part  of  Poland’s  territory  for  the 
purposes  of  the  supply  of  goods  and  services  and  intra-Community  acquisition  of  goods 
intended for the construction or maintenance of those bridges and common road sections. 

This Decision is addressed to the Czech Republic and the Republic of Poland.  

Done at Brussels,  

Article 4 

For the Council 
The President 

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The  Czech  Republic  shall  be  responsible  for  the  maintenance  of  the  following  bridge 
structures and common road sections on the Czech – Polish State border: 

ANNEX I 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

(15) 

(16) 

the bridge structure over the Olecka Potok stream (Oleška) between Jasnowice and 
Bukovec, on border section I between boundary markers 12/6 and I/13, 

the  bridge  structure  (Wolności/Svobody)  over  the  Olza  (Olše)  River  between 
Cieszyn  and  Český  Těšín,  on  border  section  I  between  boundary  markers  I/86  and 
86/1, 

the bridge structure (Przyjaźni/Družby) over the Olza (Olše) River between Cieszyn 
and Český Těšín, on border section I between boundary markers 87/2 and I/88, 

the bridge structure over the Piotrówka Potok stream (Petrůvka) between Gołkowice 
and Závada, on border section I between boundary markers I/156 and 156/1, 

the  bridge  structure  over  the  Odra  (Oder)  River  between  Chałupki  and  Bohumín 
(concrete section of an old bridge), on border section II between boundary markers 
7/4 and 7/5, 

the bridge structure over the Odra (Oder) River between Chałupki and Bohumín (a 
new bridge), on border section II between boundary markers 8/1 and 8/2, 

the  bridge  structure  over  the  Opawa  (Opava)  River  between  Wiechowice  and 
Vávrovice, on border section II between boundary markers 71/4 and II/72, 

the  bridge  structure  over  the  Opawa  (Opava)  River  between  Dzierzkowice  and 
Držkovce, on border section II between boundary markers 74/1 and 74/2, 

the bridge structure over the Opawa (Opava) River between Branice and Úvalno, on 
border section II between boundary markers 85/4 and 85/5, 

the bridge structure over the Opawica (Opavice) River between Krasne Pole and the 
Krásné Loučky district of the town of Krnov, on border section II between boundary 
markers 97/11 and II/98, 

the  bridge  structure  over  the  Opawica  (Opavice)  River  between  Lenarcice  and 
Linhartovy, on border section II between boundary markers 99/8 and 99/9, 

the bridge structure over the Oleśnica Potok stream (Olešnice) between Podlesie and 
Ondřejovice  (by  the  sports  field),  on  border  section  II  between  boundary  markers 
155/3a and 155/3b, 

the bridge structure over the Oleśnica Potok stream (Olešnice) between Podlesie and 
Ondřejovice (at the  junction with  the road to Rejvíz),  on border  section II  between 
boundary markers 155/9 and 155/10, 

the bridge structure over the Oleśnica Potok stream (Olešnice) between Podlesie and 
Ondřejovice  (by  the  Ondřejovice  machinery  plant),  on  border  section  II  between 
boundary markers 157/8 and II/158a, 

the  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Niemojów  and 
Bartošovice  v  Orlických  horách,  on  border  section  III  between  boundary  markers 
III/102 and III/103, 

the  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Mostowice  and 
Orlické Záhoří, on border section III between boundary markers III/113 and III/114, 

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(17) 

(18) 

(19) 

(20) 

(21) 

(22) 

the  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Lasówka  and 
Orlické  Záhoří,  cadastral  district  Bedřichovka,  on  border  section  III  between 
boundary markers 117/8 and III/118, 

the  bridge  structure  over  the  Lubota  Potok  stream  (Oldřichovský  potok)  between 
Kopaczów  and  Oldřichov  na  Hranicích,  on  border  section  IV  between  boundary 
markers IV/144 and 144/1, 

the  bridge  structure  over  the  Lubota  Potok  stream  (Oldřichovský  potok)  between 
Porajów  and  Hrádek  nad  Nisou,  on  border  section  IV  between  boundary  markers 
145/16 and IV/146, 

the  road  between  Leszna  Górna  and  Horní  Lištná,  on  border  section  I  between 
boundary markers I/60 and 60/3a, 60/3b, with the length of 0.333 km, 

the road between Chałupki and Šilheřovice, on border section II between boundary 
markers 11/4a, 11/4b and II/12, with the length of 0.671 km, 

the  road  between  Kopaczów  and  Oldřichov  na  Hranicích,  on  border  section  IV 
between  boundary  markers  IV/142  and  142/14a,  142/14b,  with  the  length  of  0.867 
km. 

Poland shall be responsible for the maintenance of the following bridge structures and 
common road sections on the Czech – Polish State border: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

the  bridge  structure  over  the  Olza  (Olše)  River  between  Cieszyn  and  Chotěbuz,  on 
border section I between boundary markers 91/3 and 91/4, 

the  bridge  structure  over  the  Odra  (Oder)  River  between  Chałupki  and  Bohumín 
(steel section of an old bridge), on border section II between boundary markers 7/4 
and 7/5, 

the bridge structure over the Strachowicki Potok stream (Strahovický potok) between 
Krzanowice  and  Rohov,  on  border  section  II  between  boundary  markers  35/12  and 
35/13, 

the  bridge  structure  over  the  Opawa  (Opava)  River  between  Boboluszki  and 
Skrochovice, on border section II between boundary markers 81/8 and 81/9, 

the  bridge  structure  over  the  Opawica  (Opavice)  River  between  Chomiąża  and 
Chomýž, on border section II between boundary markers II/96 and 96/1, 

the  bridge  structure  over  the  Wielki  Potok  stream  (potok  Hrozová)  between 
Pielgrzymów and Pelhřimovy, on border section II between boundary markers 108/2 
and 108/3, 

the bridge structure over the Ciekłec Potok stream (potok Hrozová) between Równe 
and  Slezské  Rudoltice,  on  border  section  II  between  boundary  markers  110/7  and 
110/8, 

the  bridge  structure  (culvert)  on  the  Graniczny  Potok  stream  (Hraniční  potok) 
between Trzebina and Bartultovice, on border section II between boundary markers 
II/135 and 135/1, 

the bridge structure (culvert) on the  Łużyca Potok  stream  (Lužický potok)  between 
Czerniawa  Zdrój  and  Nove  Mesto  pod  Smrkem,  on  border  section  IV  between 
boundary markers 66/23 and IV/67, 

(10) 

the  road  between  Puńców  and  Kojkovice  u  Třince,  on  border  section  I  between 
boundary markers I/65a, I/65b and I/67a, I/67b, with the length of 0.968 km. 

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(11) 

the  road  between  Chałupki/Rudyszwałd  and  Šilheřovice,  on  border  section  II 
between boundary markers II/12 and 12/8, with the length of 0.917 km. 

The  numbers  of  boundary  markers  identifying  the  location  of  bridge  structures  and  shared 
road sections correspond to the border documentation drawn up on the basis of Article 10(4) 
of  the  Agreement  between  the  Republic  of  Poland  and  the  Czech  Republic  on  the  common 
state border, done at Prague on 17 January 1995. 

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ANNEX II 

The  Czech  Republic  shall  be  responsible  for  the  construction  and  subsequent 
maintenance of the following bridge structures on the Czech – Polish State border: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

a  bridge  structure  over  the  Olza  (Olše)  River  between  Cieszyn  and  Český  Těšín  (a 
sports footbridge), on border section I between boundary markers I/85 and 84/4, 

a  bridge  structure  over  the  Olza  (Olše)  River  between  Cieszyn  and  Český  Těšín  (a 
footbridge by a railway bridge), on border section I at the boundary marker 88/7, 

a bridge structure over the Olza (Olše) River between Olza and the Kopytov district 
of  the  town  of  Bohumín  (a  footbridge),  on  border  section  I  between  boundary 
markers I/182 and 182/1, 

a  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Niemojów  and 
Bartošovice  v  Orlických  horách,  on  border  section  III  at  the  boundary  marker 
101/32, 

a  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Poniatów  and 
Bartošovice v Orlických horách, cadastral district Neratov (a footbridge), on border 
section III at the boundary marker III/106, 

a  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Rudawa  and 
Bartošovice  v  Orlických  horách,  cadastral  district  Podlesí  (a  footbridge)  on  border 
section III between boundary markers 107/9 and 107/10. 

Poland  shall  be  responsible  for  the  construction  and  subsequent  maintenance  of  the 
following bridge structures on the Czech – Polish State border: 

(1) 

(2) 

(3) 

(4) 

(5) 

a  bridge  structure  over  the  Olza  (Olše)  River  between  Cieszyn  and  Český  Těšín 
(European Footbridge), on border section I at the boundary marker I/87, 

a bridge structure over the Olza (Olše) River between Hażlach-Pogwizdów  and the 
Louky  nad  Olší  district  of  the  town  of  Karviná  (a  footbridge),  on  border  section  I 
between boundary markers 98/6 and I/99, 

a bridge structure over the Opawica (Opavice) River between Chomiąża and Chomýž 
(a footbridge), on border section II between boundary markers 95/2 and 95/3, 

a  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Niemojów  and 
Bartošovice  v  Orlických  horách,  cadastral  district  Vrchní  Orlice  (a  footbridge),  on 
border section III between boundary markers III/104 and 104/1, 

a  bridge  structure  over  the  Orlica  (Divoká  Orlice)  River  between  Rudawa  and 
Bartošovice v Orlických horách, cadastral district Nová Ves (a footbridge), on border 
section III between boundary markers 108/2 and 108/3. 

The numbers of boundary markers identifying the location of bridge structures correspond to 
the border documentation drawn up on the basis of Article 10(4) of the Agreement between 
the Republic of Poland and the Czech Republic on the common State border, done at Prague 
on 17 January 1995. 

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