Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to conclude an agreement with Switzerland that includes provisions derogating from Article 5 of Directive 2006/112/EC as regards the airport of Bâle-Mulhouse
Date: 2017-01-10
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Alsace, France, Switzerland, VAT, airport, bilateral agreement, customs regulations, derogation from EU law, tax convention

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   EUROPEAN COMMISSION  Brussels, 10.1.2017  COM(2017) 2 final 2017/0006 (NLE)   Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to conclude an agreement with Switzerland that includes provisions derogating from Article 5 of Directive 2006/112/EC as regards the airport of Bâle-Mulhouse  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Pursuant  to  Article  396  of  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of value added tax (hereafter 'the VAT Directive'), the Council, acting unanimously on 
a proposal from the Commission, may authorise any Member State to conclude with a third 
country or an international body an agreement which may contain derogations from the VAT 
Directive. 

By  letter  registered  with  the  Commission  on  24  September  2015,  France  requested  an 
authorisation to conclude an agreement with Switzerland as regards the territorial application 
of the VAT system at the airport of Bâle-Mulhouse. In accordance with Article 396(2) of the 
VAT Directive, the Commission informed the other Member States by letter dated 24 October 
2016.  By  letter  dated  25  October  2016,  the  Commission  notified  France  that  it  had  all  the 
information necessary to consider the request. 

The airport of Bâle-Mulhouse is entirely situated on the territory of France and therefore part 
of the so-called 'VAT territory' as defined in Article 5 of the VAT Directive. 

As regards the construction and exploitation of the airport, France and Switzerland concluded 
a Convention in 19491 (hereafter the 'Convention'). Article 8 of this Convention foresees the 
creation  of  a  so-called  Swiss  customs  sector,  a  delimited  area  within  the  airport  where  the 
Swiss  authorities  are  allowed  to  control  goods  and  passengers  coming  from  or  going  to 
Switzerland.  Furthermore,  it  is  stipulated  in  annex  to  the  Convention  that  an  agreement 
between  the  respective  governments  would  be  concluded  on,  inter  alia,  the  tax  rules  which 
would  be  applicable to  businesses  installed in  this  sector. However,  such  an  agreement  was 
never concluded. 

In 2015, France and Switzerland decided to conclude an international agreement which would 
exclude  the  Swiss  customs  sector  from  the  territorial  scope  of  the  VAT  Directive  by 
considering  this  area  as  part  of  the  Swiss  VAT  territory.  As  a  result,  Switzerland  would  be 
allowed to apply its own VAT rules. 

Since such an international agreement would contain a measure that derogates from the VAT 
Directive  as  regards  the  principle  of  territoriality,  an  authorisation  by  the  Council,  upon 
proposal of the Commission, is therefore required.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 396 of the VAT Directive. 

• 

Subsidiarity (for non-exclusive competence)  

Considering  the  provision  of  the  VAT  Directive  on  which  the  proposal  is  based,  the 
subsidiarity principle does not apply. 

1 

Original title of the Convention: 'Convention Franco-Suisse du 4 juillet 1949 relative à la construction 
et à l'exploitation de l'aéroport de Bâle-Mulhouse, à Blotzheim' (as amended) 

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• 

Proportionality 

The Decision concerns an authorisation granted to a Member State upon its own request and 
does not constitute any obligation. 

Given  the  limited  scope  of  the  derogation,  the  special  measure  is  proportionate  to  the  aim 
pursued, i.e. to regulate the particular situation as regards the so-called Swiss customs sector 
in the airport of Bâle-Mulhouse where, according to France, the control by French authorities 
on the application of EU VAT legislation is impractical. 

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision. 

Under  Article  396  of  Council  Directive  2006/112/EC,  derogation  from  the  common  VAT 
rules  is  only  possible  upon  authorisation  of  the  Council  acting  unanimously  on  a  proposal 
from the Commission. A Council Implementing Decision is the most suitable instrument since 
it can be addressed to an individual Member State. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

This proposal is based on a request made by France and concerns only this Member State. 

• 

Collection and use of expertise 

There was no need for external expertise. 

• 

Impact assessment 

The  proposal  for  a  Council  Implementing  Decision  concerns  the  situation  as  regards  the 
'Swiss control sector' in the airport of Bâle-Mulhouse. By considering this part of the airport - 
in  which  the  Swiss  authorities  carry  out  controls  in  accordance  with  a  convention  between 
France  and  Switzerland  -  as  Swiss  territory,  the  situation  is  settled  in  practice.  Although  in 
relation to this particular zone, a difference is created between the VAT and Customs territory 
(of  which  the  latter  remains  unaffected  by  this proposal),  it  is  to  be  pointed  out  that  such  a 
situation  exists  in  several  cases  (e.g.  Mount  Athos,  Canary  Islands)  and  should  not  lead  to 
particular problems. Given the limited scope of this derogation, the impact will in any case be 
limited. 

4. 

BUDGETARY IMPLICATIONS 

France  will  ensure  that  this  derogation  will  have  no  impact  on  the  Union's  own  resources 
accruing from VAT. 

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2017/0006 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France to conclude an agreement with Switzerland that includes provisions 
derogating from Article 5 of Directive 2006/112/EC as regards the airport of Bâle-
Mulhouse 

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, and in  particular  Article 
396(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

In  accordance  with  Article  5  of  the  Directive  2006/112/EC  as  regards  its  territorial 
scope, the value added tax system is, as a rule, applicable in the territory of a Member 
State.  

By letter from France registered with the Commission on 24 September 2015, France 
requested  authorisation  to  conclude  an  agreement  with  Switzerland  in  relation  to  the 
airport of Bâle-Mulhouse which would affect that rule. 

In  accordance  with  the  second  subparagraph  of  Article  396(2)  of  Directive 
2006/112/EC,  the  Commission  informed  the  other  Member  States  by  letter  dated 
24 October 2016 of the request made by France. By letter dated 25 October 2016, the 
Commission  notified  France  that it had  all  the necessary  information  to  consider  the 
request. 

The  airport  of  Bâle-Mulhouse  is  entirely  situated  within  the  European  Union. 
However,  a  convention  of  1949  between  France  and  Switzerland  regarding  the 
construction and exploitation of the airport of Bâle-Mulhouse, stipulated that a special 
Swiss customs sector would be established in a delimited zone of the airport where the 
Swiss  authorities  would  be  allowed  to  exercise  control  over  goods  and  passengers 
leaving  or  going  to  Switzerland.  It  was  further  foreseen  in  this  convention  that  a 
separate agreement between the respective countries would be concluded on, inter alia, 
the fiscal rules governing this particular sector.  

Problems have arisen regarding that Swiss customs sector, in particular as regards the 
control over the application of the Union VAT rules by businesses established within 
that sector.  

France and Switzerland agreed in 2015 to conclude an international agreement which 
would consider the Swiss customs sector as Swiss territory for VAT purposes. Since 
this derogates from the VAT Directive, an authorisation is required. 

France  will  ensure  that  this  derogation  will  have  no  impact  on  the  Union's  own 
resources accruing from VAT, 

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HAS ADOPTED THIS DECISION:  

Article 1 

France  is  hereby  authorised  to  conclude  an  agreement  with  Switzerland  that  includes 
provisions derogating from Directive 2006/112/EC regarding the territorial scope of the value 
added tax system as regards the airport of Bâle-Mulhouse. 

The derogating provision in respect of the agreement is set out in Article 2. 

Article 2 

By way of derogation from Article 5 of Directive 2006/112/EC, the Swiss customs sector in 
the  airport  of  Bâle-Mulhouse,  as  defined  by  Article  8  of  the  French-Swiss  Convention  of 
4 July  1949  as  regards  the  construction  and  exploitation  of  the  airport  of  Bâle-Mulhouse  in 
Blotzheim2, shall not be treated as forming part of the territory of any Member State within 
the meaning of this article. 

This Decision is addressed to the Republic of France. 

Done at Brussels, 

Article 3 

For the Council 
The President 

2 

Convention Franco-Suisse du 4 juillet 1949 relative à la construction et à l'exploitation de l'aéroport de 
Bâle-Mulhouse, à Blotzheim (as amended) 

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