Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2009/1013/EU authorising the Republic of Austria to continue to apply a measure derogating from Article 168 of Directive 2006/112/EC on the common system of value added tax
Date: 2021-08-06
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Austria, VAT, derogation from EU law, goods and services, tax relief

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   EUROPEAN COMMISSION  Brussels, 6.8.2021  COM(2021) 458 final 2021/0258 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2009/1013/EU authorising the Republic of Austria to continue to apply a measure derogating from Article 168 of Directive 2006/112/EC on the common system of value added tax    
 
 
EXPLANATORY MEMORANDUM 

Pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 on the common 
system  of  value  added  tax  (‘the  VAT  Directive1’),  the  Council,  acting  unanimously  on  a 
proposal  from  the Commission,  may authorise any Member State to  apply special measures 
derogating  from  the  provisions  of  this  Directive,  in  order  to  simplify  the  procedure  for 
charging VAT or to prevent certain forms of tax evasion or avoidance. 

By  letter  registered  with  the  Commission  on  19  March  2021,  the  Republic  of  Austria 
(hereinafter  Austria)  requested  an  authorisation  to  continue  to  apply  a  measure  derogating 
from Articles 168 and 168a of Directive 2006/112/EC, to exclude from the right of deduction 
the  VAT  borne  on  goods  and  services  which  are  used  for  more  than  90  %  by  the  taxable 
person  for  their  private  use  or  for  that  of  their  employees,  or  in  general,  for  non-business 
purposes  or  non-economic  activities.  The  request  was  accompanied  by  a  report  on  the 
application of this measure including a review of the apportionment rate applied on the right 
to deduct VAT as required by Article 2 of Council Implementing Decision 2009/1013/EU2 as 
amended by Council Implementing Decision (EU) 2018/14873. 

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States by letters dated 7 April 2021 of the request made by Austria. The Commission 
notified  Austria  by  letter  dated  8  April  2021  that  it  had  all  the  information  necessary  to 
consider the request. 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Article 168 of the VAT Directive provides that a taxable person is entitled to deduct the VAT 
charged on purchases made and services received for the purpose of their taxed transactions. 
Article  168a(1)  of  the  VAT  Directive  provides  that  the  VAT  on  expenditure  related  to 
immovable property forming part of the business assets of a taxable person and used both for 
business  and  non-business  purposes  shall  be  deductible  only  up  to  the  proportion  of  the 
property's use for purposes of the taxable person's business. Pursuant to Article 168a(2) of the 
VAT Directive Member  States may also  apply this rule in  relation  to expenditure related to 
other goods forming part of the business assets as they specify. Article 168a was inserted in 
the  VAT  Directive  by  Council  Directive  2009/162/EU  of  22  December  20094,  in  order  to 
limit the deduction to the proportion of effective business use and apply thus more effectively 
the principle whereby the deduction arises only in so far as the goods and services concerned 
are used for the purpose of the taxable person’s business. 

Pursuant to Article 395 of the VAT Directive, Member States may apply measures derogating 
from the provisions of the VAT Directive to simplify the procedure for collecting VAT or to 
prevent certain forms of tax evasion or avoidance if they have been authorised by the Council. 

Austria  requested  an  authorisation  to  continue  to  apply  a  measure  derogating  from  Articles 
168 and 168a of the VAT Directive allowing it to entirely exclude from the right of deduction 
the VAT borne on goods and services that are used for more than 90 % by the taxable person 
for  his  private  use  or  for  that  of  his  employees,  or  in  general,  for  non-business  purposes  or 
non-economic activities. 

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OJ 347, 11.12.2006, p.1.  
OJ L 348, 29.12.2009, p. 21. 
OJ L 251, 5.10.2018, p. 33. 
Council  Directive  2009/162/EU  of  22  December  2009  amending  various  provisions  of  Directive 
2006/112/EC on the common system of value added tax, OJ L 10, 15.1.2010, p. 14–18. 

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This  derogating  measure  for  Austria  had  initially  been  granted  by  Council  Decision 
2004/866/EC  of  13  December  20045  for  a  period  until  31  December  2009  and  was  again 
granted  by  Council  Implementing  Decision  2009/1013/EU  of  22  December  20096  until  31 
December  2012.  The  latter  had  subsequently  been  prolonged  until  31  December  2015  by 
Council  Implementing  Decision  2012/705/EU  of  13  November  20127,  until  31  December 
2018 by Council Implementing Decision (EU) 2015/2428 of 10 December 20158 and until 31 
December 2021 by Council Implementing Decision (EU) 2018/14879. 

In its current request, Austria informed the Commission that the application of the derogating 
measure  has  proven  to  be  very  successful  and  effective  in  terms  of  simplifying  VAT 
collection  and  preventing  tax  evasion  and  avoidance,  as  well  as  enhancing  fairness  by 
preventing distortions due to unjustified cash flow advantages and imporving tax compliance 
as  a  result  of  the  simplified  VAT  collection.  According  to  Austria,  the  abolition  of  the 
derogating  measure  would  lead  to  an  unjustified  cash  flow  advantage  for  a  taxable  person 
who  uses  a  good  or  service  only  marginally  for  business  purposes  and  who  is  allowed  to 
deduct VAT for this minor business use compared to a taxable person who uses the good or 
service  for  business  purposes  only.  Moreover,  a  subsequent  minimal  change  in  the  ratio  of 
private  and  business  use  of  a  good  or  service  only  marginally  used  for  business  purposes 
would  lead  to  an  adjustment  of  the  VAT  deducted.  This  minor  adjustment  would  be 
disproportionate both from the taxpayer's and tax administration's perspective. 

The requested minimal use of goods and services for at least 10 % for  business purposes in 
order to allow to deduct input VAT is relatively low. According to Austria, the prolongation 
of  this  measure  will  therefore  only  have  little  impact  on  the  total  amount  of  VAT  revenue 
collected  at  the  final  stage  of  consumption  and  thus,  does  not  affect  the  Union's  VAT  own 
resources in a negative way. 

Derogations are in  general granted for a limited time as to allow an assessment whether the 
special  measure  is  appropriate  and  effective.  In  this  respect,  based  on  the  information 
provided by Austria, the Commission understands that the 90% - 10% apportionment between 
business and non-business use still represents a sound basis to sort out transactions in respect 
of which the business use can be considered as negligible.  

As  a  consequence,  the  special  measure  in  question  provides  a  facilitation  for  both  tax 
administrations and businesses as there is no need for any monitoring of the subsequent use of 
the  goods  and  services  to  which  the  exclusion  from  deduction  applied  at  the  time  of  their 
acquisition, particularly with respect to a possible taxation of private use pursuant to Articles 
16 or 26 of the VAT Directive or adjustments to the deduction as required under Articles 184 
– 192 of that Directive. An extension of the derogating measure is therefore appropriate. 

However, any extension should be limited in time in order to assess whether the conditions, 
on which the derogation is based, would still be valid. Therefore, it is proposed to extend the 
derogation until the end of 2024 and to request Austria to present, together with the extension 
request,  a  report  by  31  March  2024  at  the  latest  including  a  review  of  the  applied 
apportionment  rate  between  business  and  non-business  use  on  which  the  exclusion  from 
deduction is based in case a further extension would be envisaged beyond 2024.  

Council  Decision  2009/1013/EU  of  22  December  2009  was  adopted  at  the  same  time  as 
Council  Directive  2009/162/EU  of  22  December  2009,  which  inserted  Article  168a  in  the 

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OJ L 371, 18.12.2004, p. 47. 
OJ L 348, 29.12.2009, p. 21. 
OJ L 319, 16.11.2012, p.8. 
OJ L 334, 22.12.2015, p.12. 
OJ L 251, 5.10.2018, p. 33. 

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VAT  Directive.  However,  the  title  of  Council  Decision  2009/1013/EU  does  not  refer  to 
Article  168a.  To  eliminate  this  inconsistency  between  the  title  and  the  content  of  Council 
Decision  2009/1013/EU,  the  title  of  Council  Decision  2009/1013/EU  should  therefore  be 
amended by including a reference to Article 168a of the VAT Directive. 

• 

Consistency with existing policy provisions in the policy area 

Similar derogations in relation to the exclusion of VAT due on goods and services from the 
right to deduct VAT where the goods and services in question are used for more than 90 % for 
the private purposes of a taxable person or of that person’s employees or, in general, for non-
business  purposes  or  non-economic  activities,  have  been  granted  to  other  Member  States 
(Germany10, the Netherlands11).  

Article 176 of the VAT Directive stipulates that the Council shall determine the expenditure 
on which the VAT is not deductible. Until such time, it authorises Member States to maintain 
exclusions, which were in place on 1 January 1979. There are therefore a number of "stand 
still" provisions restricting the right to deduct for taxable persons. 

Notwithstanding previous initiatives to establish rules on which categories of expenditure may 
be  subject  to  a  restriction  on  the  right  to  deduct12,  such  derogation  is  appropriate  in  the 
awaiting of a harmonisation of these rules at EU level. 

The  proposed  measure  is,  therefore,  consistent  with  the  existing  provisions  of  the  VAT 
Directive. 

2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 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. 

• 

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 simplify the procedure for collecting VAT and to prevent certain forms of tax 
evasion or avoidance. It does not go beyond what is required to fulfil this aim.  

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision. 

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Council  Implementing  Decision  (EU)  2018/2060  of  20  December  2018  amending  Decision 
2009/791/EC  authorising  Germany  to  continue  to  apply  a  measure  derogating  from  Articles  168  and 
168a of Directive 2006/112/EC on the  common  system of  value added tax, OJ L 329, 27.12.2018, p. 
20–21. 
Council Implementing Decision (EU) 2020/2189 of 18 December 2020 authorising the Netherlands to 
introduce  a  special  measure  derogating  from  Articles  168  and  168a  of  Directive  2006/112/EC  on  the 
common system of value added tax, OJ L 434, 23.12.2020, p. 1–2. 
COM (2004) 728 final - Proposal for a Council Directive amending Directive 77/388/EEC with a view 
to simplifying value added tax obligations (OJ C 24, 29.1.2005, p.10) withdrawn on 21 May 2014 (OJ 
C 153 21. 05. 2014, p. 3)  

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Under Article 395 of the VAT Directive, a derogation from the common VAT provisions 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. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

This proposal is based on a request made by Austria 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 is designed to simplify the procedure for 
collecting VAT by allowing Austria to continue to apply a derogating measure allowing it to 
entirely  exclude  from  the  right  of  deduction  the  VAT  borne  on  goods  and  services  that  are 
used by a taxable person for more than 90 % for private or non-business purposes, including 
non-economic activities.  

The measure reduces administrative burdens for businesses and tax administrations, as there is 
no  need  for  any  monitoring  of  the  subsequent  use  of  the  goods  and  services  to  which  the 
exclusion from deduction applied at the time of their acquisition, particularly with respect to a 
possible taxation of private use or adjustments to the deduction. 

The requested minimal use of goods for at least 10 % for business purposes in order to allow 
to deduct input VAT is relatively low. According to Austria, the prolongation of this measure 
will  therefore  only  have  little  impact  on  the  total  amount  of  VAT  revenue  collected  at  the 
final  stage  of  consumption  and  thus,  does  not  affect  the  Union's  VAT  own  resources  in  a 
negative way. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will not adversely affect the Union's own resources from VAT. 

5. 

OTHER ELEMENTS 

The  proposal  is  limited  in  time  and  includes  a  sunset  clause  set  at  31  December  2024.

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2021/0258 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2009/1013/EU authorising the Republic of Austria to 
continue to apply a measure derogating from Article 168 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), first subparagraph, thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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Council Implementing Decision 2009/1013/EU2 authorised Austria to apply a special 
measure  derogating  from  Directive  2006/112/EC  (‘the  special  measure’).  Following 
successive extensions, that authorisation is due to expire on 31 December 2021. 
Council  Directive  2009/162/EU3  of  22  December  2009  inserted  Article  168a  in 
Directive  2006/112/EC  in  order  to  limit  the  deduction  to  the  proportion  of  effective 
business  use  and  apply  thus  more  effectively  the  principle  whereby  the  deduction 
arises only in so far as the goods and services concerned are used for the purpose of 
the taxable person’s business. The title of Decision 2009/1013/EU therefore needs to 
refer to Article 168a of Directive 2006/112/EC as well. 

The special measure derogates from Articles 168 and 168a of Directive 2006/112/EC 
which  govern  taxable  persons'  right  to  deduct  value  added  tax  (VAT)  charged  on 
goods and services supplied to them for the purposes of their taxed transactions. The 
special  measure  is  intended  to  exclude  VAT  borne  on  goods  and  services  from  the 
right of deduction where those goods and services are used by the taxable person for 
more  than  90  %  for  their  private  purposes  or  for  purposes  of  their  employees,  or  in 
general, for non-business purposes or non-economic activities. 

The  objective  of  the  special  measure  is  to  simplify  the  procedure  for  charging  and 
collecting  VAT.  The  amount  of  tax  due  at  the  level  of  final  consumption  is  only 
affected to a negligible extent. 

By letter registered with the Commission on 19 March 2021, Austria requested to be 
authorised to continue to apply the special measure (‘the request’). 

OJ 347, 11.12.2006, p. 1. 
Council Implementing Decision of 22 December 2009 authorising the Republic of Austria to continue 
to apply a  measure derogating  from  Article 168 of Directive 2006/112/EC on the common  system of 
value added tax (OJ L 348, 29.12.2009, p. 21). 
Council  Directive  2009/162/EU  of  22  December  2009  amending  various  provisions  of  Directive 
2006/112/EC on the common system of value added tax, OJ L 10, 15.1.2010, p. 14–18. 

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(6) 

(7) 

(8) 

In accordance with Article 395(2), second subparagraph, of Directive 2006/112/EC, by 
letters dated 7 April 2021, the Commission informed the other Member States of the 
request  made  by  Austria.  By  letter  dated  8  April  2021,  the  Commission  notified 
Austria that it had all the information necessary to consider the request. 

According to Austria, the special measure has proven very effective in simplifying the 
collection of VAT and preventing tax evasion and avoidance. It reduces administrative 
burdens for businesses and tax administrations, as there is no need for any monitoring 
of the subsequent use of the goods and services to which the exclusion from deduction 
applied  at  the  time  of  their  acquisition.  Austria  should  therefore  be  authorised  to 
continue to apply the special measure for a further limited period until 31 December 
2024. 

In the event that Austria considers an extension beyond 2024 to be necessary, it should 
submit a request to the Commission by 31 March 2024 accompanied by a report on the 
application  of  the  special  measure,  including  a  review  of  the  apportionment  rate 
applied.   

(9) 

The  derogating  measure  will  have  no  adverse  impact  on  the  Union's  own  resources 
accruing from VAT. 

(10) 

Implementing Decision 2009/1013/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

Decision 2009/1013/EU is amended as follows: 

(1) The title is replaced by the following: 

Article 1 

“Council Implementing Decision of 22 December 2009 authorising the Republic of Austria to 
continue to apply a measure derogating from Articles 168 and 168a of Directive 2006/112/EC 
on the common system of value added tax”; 

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(2) Articles 1 and 2 are replaced by the following: 

“Article 1 

By  way  of  derogation  from  Articles  168  and  168a  of  Directive  2006/112/EC,  Austria  is 
authorised to  completely exclude value added tax (VAT) borne on  goods and services from 
the right to deduct VAT when the goods and services in question are used for more than 90 % 
for  the  private  purposes  of  a  taxable  person  or  of  a  taxable  person’s  employees,  or,  more 
generally, for non-business purposes or non-economic activities. 

This Decision shall expire on 31 December 2024. 

Article 2 

Any request for the extension of the derogating measure provided for in this Decision shall be 
submitted to the Commission by 31 March 2024 at the latest. 

Such  request  shall  be  accompanied  by  a  report  on  the  application  of  this  measure  which 
includes a review of the apportionment rate applied on the right to deduct VAT on the basis of 
this Decision.”. 

This Decision is addressed to the Republic of Austria. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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