Proposal for a COUNCIL IMPLEMENTING DECISION authorising the Kingdom of Denmark and the Kingdom of Sweden to extend the application of a special measure derogating from Articles 168, 169, 170 and 171 of Directive 2006/112/EC on the common system of value added tax
Date: 2013-08-09
Institutions: European Commission
Subjects: Denmark, Sweden, VAT, administrative formalities, derogation from EU law, internal border of the EU, tax relief, toll













EUR-Lex - 52013PC0584 - EN











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52013PC0584

Proposal for a COUNCIL IMPLEMENTING DECISION authorising the Kingdom of Denmark and the Kingdom of Sweden to extend the application of a special measure derogating from Articles 168, 169, 170 and 171 of Directive 2006/112/EC on the common system of value added tax /* COM/2013/0584 final - 2013/0283 (NLE) */









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[1] (hereafter ‘the VAT Directive’)
the Council, acting unanimously on a proposal from the Commission, may
authorise any Member State to apply special measures for derogation from that
Directive in order to simplify the procedure for charging the tax or to prevent
certain types of tax evasion or avoidance.
By letters registered with the
Secretariat-General of the Commission on, respectively, 3 and 4 April 2013, Denmark and Sweden requested an extension to their existing derogation firstly granted by Decision
2000/91/EC[2]
and extended by Decisions 2003/65/EC[3]
and 2007/132/EC[4].
In accordance with Article 395(2) of the VAT Directive, the Commission, in a
letter dated 12 June 2013, informed the other Member States of the request by Denmark and Sweden. By letter dated 14 June 2013, the Commission notified Denmark and Sweden that it had all the information it considered necessary for the appraisal of the
request.
General context
Denmark and Sweden have jointly introduced simplified rules on the recovery of VAT in connection with tolls on
the Öresund fixed link between Denmark and Sweden. This was deemed necessary as
the normal VAT rules would create excessive paperwork for taxpayers and
administrations alike.
Under the normal VAT rules as contained in
Articles 168, 169, 170 and 171 of the VAT Directive, VAT must be deducted in or
refunded by the Member State in which it was due or paid. As the Öresund fixed
link is located partly in the territory of Denmark and partly in the territory of Sweden the VAT paid on the toll charge for using the link would be recoverable
from either of these countries to the extent that the charge relates to their
territory. Specifically 50% would be recoverable from Denmark and 50% from   Sweden.
In practice this would mean that taxable
persons established in either Denmark or Sweden would only be able to recover
50% of the VAT on their periodic VAT returns in the Member State of registration. The remaining 50% would have to be claimed back as a refund from the
other Member State via Directive 2008/9/EC[5].
Also, taxable persons established in Member States other than Denmark and Sweden would be required to recover VAT via two separate refund claims under Directive
2008/9/EC, one submitted to Denmark and the other to Sweden. Likewise taxable
persons established outside the territory of the Union would under Directive
86/560/EEC[6]
need to send refund claims both to Denmark and to Sweden.
The existing derogation for Denmark and Sweden simplifies the VAT rules concerning the recovery of VAT. In effect, under that
derogation, they allow a single claim for the recovery of VAT in relation to
the toll. The simplified rules applied are as follows:
–          Taxable persons established in
Denmark and Sweden are entitled to deduct, on their domestic VAT return, the
full amount of deductible VAT on the tolls including that part relating to the
use of the link in the territory of the Member State in which they are not
established.
–          To recover VAT deductible under
the procedure laid down in Directive 2008/9/EC regarding taxable persons
established in a Member State other than Denmark or Sweden or under the
procedure laid down in Directive 86/560/EEC for taxable persons established
outside of the Member States, the application should be made to the Swedish
authorities only.
Denmark and Sweden request that these existing simplification rules be extended for a further period. 
According to the statistical information
provided by Sweden in Annex I of its request, the derogation created for the
taxable persons is a significant simplification of the VAT recovery of the
Öresund link tolls, and has proven successful. It is also the Commission's view
that this type of cross-border deduction is a model of simplification of
business obligations that could be extended through a generalised One Stop Shop
in the long term.
The Commission therefore considers that a
further extension is appropriate. It proposes a 7 year extension, in line with
the period of application of Decision 2007/132/EC. 
Existing provisions in the area of the
proposal
An existing derogation granted to Denmark and Sweden on 24 January 2000 and extended on 21 January 2003 and on 30 January 2007.
Consistency with other policies and
objectives of the Union
Not applicable.
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 recovery of VAT on tolls for taxable persons using the
Öresund fixed link between Denmark and Sweden and therefore potentially has a
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
Summary of the proposed action
Authorisation for Denmark and Sweden to
apply a measure derogating from Articles 168, 169, 170 and 171 of the VAT
Directive as regards the right of deduction for taxable persons.
Legal basis
Article 395 of Directive 2006/112/EC of 28
November 2006 on the common system of value added tax.
Subsidiarity principle
The proposal falls under the exclusive
competence of the Union. The subsidiarity principle therefore does not apply.
Proportionality principle
The proposal complies with the
proportionality principle for the following reasons:
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 is proportionate to the aim pursued.
Choice of instruments
Proposed instruments: other.
Other means would not be adequate for the
following reasons:
Under Article 395 of the Directive
2006/112/EC of 28 November 2006 on the common system of value added tax,
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 Implementing
Decision is the only suitable instrument since it can be addressed to an
individual Member State.
4.           BUDGETARY IMPLICATION 
The proposal has no implication for the Union's budget.
5.           OPTIONAL ELEMENTS 
Review/revision/sunset clause
The proposal includes a sunset clause.
2013/0283 (NLE)
Proposal for a
COUNCIL IMPLEMENTING DECISION
authorising the Kingdom of Denmark and the
Kingdom of Sweden to extend the application of a special measure derogating
from Articles 168, 169, 170 and 171 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 on 28 November 2006 on the common system of value added tax[7] , and in particular Article
395(1) thereof,
Having regard to the proposal from the
European Commission,
Whereas:
(1)       By letters registered with
the Secretariat-General of the Commission on 3 and 4 April 2013 respectively,
Denmark and Sweden requested authorisation to extend the application of a
special measure derogating from Articles 168, 169, 170 and 171 of Directive
2006/112/EC requiring taxable persons to exercise their right to deduct or
obtain a refund of value added tax (hereinafter VAT) in the Member State where
it was paid. 
(2)       The Commission informed
the other Member States by letter dated 12 June 2013 of the requests made by Denmark and Sweden. By letter dated 14 June 2013, the Commission notified Denmark and Sweden that it had all the information it considered necessary for appraisal of the
requests.
(3)       These requests for
derogation relate to the recovery of VAT paid on tolls for the use of the
Öresund fixed link between Denmark and Sweden. Under the VAT rules on the place
of supply of services connected with immovable property, part of the VAT on
tolls for the Öresund fixed link is payable to Denmark and part to Sweden.
(4)       By way of derogation from
the requirement for taxable persons to exercise their right to deduct or obtain
a refund of VAT in the Member State where it was paid, Denmark and Sweden were authorised to introduce a special measure enabling taxpayers to recover VAT
from a single administration. The authorisation was first granted by Council
Decision 2000/91/EC of 24 January 2000 authorising the Kingdom of Denmark and
the Kingdom of Sweden to apply a special measure derogating from Article 17 of
the Sixth Council Directive (77/338/EEC) on the harmonisation of the laws of
the Member States relating to turnover taxes[8]
and extended by Decisions 2003/65/EC[9]
and 2007/132/EC[10].
(5)       The legal and factual
situation which justified that derogation has not changed and continues to
exist. Denmark and Sweden should therefore be authorised to apply the special
measure during a further limited period. 
(6)       The derogation has no
negative effect on the Union's own resources accruing from VAT,
HAS ADOPTED THIS DECISION: 
Article 1
By way of derogation from the provisions of
Articles 168, 169, 170 and 171 of Directive 2006/112/EC, Sweden and Denmark are hereby authorised to apply the following procedure for the recovery of VAT on
tolls paid for the use of the Öresund fixed link between the two countries:
(a)        taxable persons established in
Denmark may exercise their right to deduct the VAT paid when using the part of
the link located on Swedish territory by entering it in the periodic returns to
be lodged in Denmark;
(b)        taxable persons established in
Sweden may exercise their right to deduct the VAT paid when using the part of
the link located on Danish territory by entering it in the periodic returns to
be lodged in Sweden;
(c)        taxable persons who are not
established in either of the above Member States must apply to the Swedish
authorities to obtain refunds of the VAT on tolls, including that paid for
using the section of the link located on Danish territory, under the procedure
laid down in Directive 2008/9/EC or Directive 86/560/EEC.
Article 2
This Decision shall apply from 1 January
2014 until 31 December 2020.
Article 3
This Decision is addressed to the Kingdom of Denmark and to the Kingdom of Sweden.
Done at Brussels, 
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 347, 11.12.2006, p. 1.
[2]               OJ L 28, 3.2.2000, p. 38.
[3]               OJ L 25, 30.1.2003, p. 40.
[4]               OJ L 57, 24.2.2007, p. 10.
[5]               OJ L 44, 20.2.2008, p. 23.
[6]               OJ L 326, 21.11.1986, p. 40.
[7]               OJ L 347, 11.12.2006, p.1.
[8]               OJ L 28, 3.2.2000, p. 38.
[9]               OJ L 25, 30.1.2003, p. 40.
[10]             OJ L 57, 24.2.2007, p. 10.