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 Articles 168 and 168a of Directive 2006/112/EC on the common system of value added tax
Date: 2024-10-10
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, 10.10.2024  COM(2024) 448 final 2024/0247 (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 Articles 168 and 168a 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  tax1  (‘the  VAT  Directive’),  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 
collecting value added tax (‘VAT’) or to prevent certain forms of tax evasion or avoidance. 

By  letter  registered  with  the  Commission  on  20  March  2024,  Austria  requested  an 
authorisation to continue to apply a special measure derogating from Articles 168 and 168a of 
the VAT Directive in order to exclude from the right to deduct the VAT borne on goods and 
services which are used for more than 90 % by the taxable person for their private use or for 
the  use  of  their  employees,  or  more  generally,  for  non-business  purposes  or  non-economic 
activities. The request was accompanied by a report on the application of this special 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) 2021/17793. 

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States by letter dated 16 May 2024 of the request made by Austria. By letter dated 17 
May  2024,  the  Commission  notified  Austria  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. 

Pursuant  to  Article  395  of  the  VAT  Directive,  Member  States  may  apply  special  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  special  measure  derogating  from 
Articles 168 and 168a of the VAT Directive allowing it to entirely exclude from the right to 
deduct  the  VAT  borne  on  goods  and  services  which  are  used  for  more  than  90  %  by  the 
taxable person for private or non-business purposes, including non-economic activities.  

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OJ 347, 11.12.2006, p.1.  
Council  Implementing  Decision  (2009/1013/EU)  of  22  December  2009  authorising  the  Republic  of 
Austria to continue to apply a measure derogating from Articles 168 of Directive 2006/112/EC on the 
common system of value added tax, OJ L 348, 29.12.2009, p. 21. 
Council Implementing Decision (EU) 2021/1779 of 5 October 2021 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, OJ L 360, 11.10.2021, 
p. 120. 

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This special measure was initially granted to Austria by Council Decision 2004/866/EC of 13 
December  20044  for  a  period  until  31  December  2009  and  was  again  granted  by  Council 
Implementing  Decision  2009/1013/EU  of  22  December  2009  until  31  December  2012.  The 
latter  had  subsequently  been  prolonged  until  31  December  2015  by  Council  Implementing 
Decision  2012/705/EU  of  13  November  20125,  until  31  December  2018  by  Council 
Implementing Decision (EU) 2015/2428 of 10 December 20156, until 31 December 2021 by 
Council Implementing Decision (EU) 2018/1487 of 2 October 20187 and until 31 December 
2024 by Council Implementing Decision (EU) 2021/1779 of 5 October 2021. 

In  its  current  request,  Austria  informed  the  Commission  that  the  application  of  the  special 
measure  has  proved  to  be  effective  in  simplifying  VAT  collection  since  it  reduces 
administrative  costs  and  increases  legal  certainty  for  both  the  tax  administration  and 
taxpayers. There is no need to determine the actual use of goods and services in cases where 
their use for business purposes represents less than 10%. Otherwise, personal use would have 
to be documented and determined, and would have to be subject to taxation under Article 26 
of the VAT Directive. The correct taxation of the personal use would have to be monitored by 
the tax administration. Thanks to the special measure, it is possible to dispense with extensive 
documentation,  monitoring  and  verification  measures,  thus  relieving  the  burden  on  both  tax 
authorities and taxpayers. 

Moreover, minimal changes in the ratio of private and business use of a good or service only 
marginally  used  for  business  purposes  would  result  in  an  adjustment  of  the  VAT  deducted. 
This  minor  adjustment  would  be  disproportionate  both  from  the  taxpayers’  and  tax 
administration’s point of view. 

Austria further indicates that the special measure has also proved to be effective in preventing 
tax  evasion  or  avoidance  as  it  prevents  unjustified  and  fraudulent  deduction  of  input  VAT. 
The  special  measure  helps  to  enhance  fairness  by  preventing  distortions  due  to  unjustified 
cash  flow  advantages  obtained  by  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.  

According  to  the  report  submitted  by  Austria,  the  review  of  the  minimum  percentage  of 
business use of goods and services required to allow the deduction of input VAT shows that 
the 10% threshold for business purposes is low enough to have no significant impact on the 
total  amount  of  VAT  actually  collected  at  the  final  consumption  stage  and  thus,  does  not 
affect the Union's VAT own resources in a negative way. 

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Council  Decision  2004/866/EC  of  13  December  2004  authorising  the  Republic  of  Austria  to  apply  a 
measure  derogating  from  Article  17  of  the  Sixth  Directive (77/388/EEC)  on  the  harmonisation  of  the 
laws of the Member States relating to turnover taxes, OJ L 371, 18.12.2004, p. 47. 
Council Implementing Decision 2012/705/EU of 13 November 2012 amending Decision 2009/791/EC 
and Implementing Decision 2009/1013/EU authorising Germany and Austria respectively 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 319, 16.11.2012, p.8. 
Council  Implementing  Decision  (EU)  2015/2428  of  10  December  2015  amending  Decision 
2009/791/EC and Implementing Decision 2009/1013/EU authorising Germany and Austria respectively 
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 334, 22.12.2015, p.12. 
Council Implementing Decision (EU) 2018/1487 of 2 October 2018 amending Implementing Decision 
2009/1013/EU  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, OJ L 251, 
5.10.2018, p. 33. 

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Based  on  the  information  provided  by  Austria,  the  Commission  understands  that  the  10%  / 
90% 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 
administration 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 special measure is therefore appropriate. 

However,  any  extension  should  be  limited  in  time  in  order  to  assess  whether  the  special 
measure is appropriate and effective and 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 
2027 and, in case a further extension would be envisaged beyond 2027, to request Austria to 
present, together with the extension request, a report by 31 March 2027 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.  

• 

Consistency with existing policy provisions in the policy area 

A similar derogation in relation to the exclusion of input VAT 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 the taxable person’s employees or, in general, 
for  non-business  purposes  or  non-economic  activities,  has  been  granted  to  another  Member 
State (Germany8). 

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  deduct9,  such  derogation  is  appropriate  in  the 
awaiting of a harmonisation of these rules at EU level. 

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

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive. 

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Council Implementing Decision (EU)  2021/1776 of  5 October 2021 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 360, 11.10.2021, p. 112. 
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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• 

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.  

The derogation is also limited in time and a report on the functioning and the effectiveness of 
the special measure is to be prepared in case Austria wishes to prolong the special measure.  

• 

Choice of the instrument 

The instrument proposed is a Council Implementing Decision. 

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. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

No stakeholder consultation has been conducted. This proposal is based on a request made by 
Austria and concerns only this particular 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  special  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.  

According to Austria, the special measure reduces administrative burdens for businesses and 
tax administration, 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 special 
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. 

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4. 

BUDGETARY IMPLICATIONS 

The proposal will have no negative impliations for the EU budget.  

5. 

OTHER ELEMENTS 

The proposal is limited in time and includes a sunset clause set at 31 December 2027. 

In  case  Austria  would  consider  another  extension  of  the  special  measure  beyond  2027,  a 
report on the application of the special measure, including a review of the apportionment rate 
applied should be submitted to the Commission together with the extension request no later 
than 31 March 2027. 

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2024/0247 (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 Articles 168 and 168a 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) 

1 
2 

Articles 168 and 168a of Directive 2006/112/EC govern the right of taxable persons to 
deduct value added tax (VAT) charged on goods and services supplied to them for the 
purposes of their taxed transactions.  
Council  Implementing  Decision  2009/1013/EU2  authorised  Austria  to  continue  to 
apply  a  special  measure  derogating  from  Articles  168  and  168a  of  Directive 
2006/112/EC  to completely exclude VAT borne on goods and services from the right 
to  deduct  VAT  when  those  goods  and  services  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  (‘the  special 
measure’).  The  authorisation  to  apply  the  special  measure  expires  on  31  December 
2024. 

By  letter  registered  by  the  Commission  on  20  March  2024,  Austria  requested  an 
authorisation,  in  accordance  with  Article  395(2),  first  subparagraph,  of  Directive 
2006/112/EC, to continue to apply the special measure.  

Pursuant  to  Article  2  of  Council  Implementing  Decision  2009/1013/EU,  Austria 
submitted,  together  with  the  extension  request,  a  report  on  the  application  of  the 
special measure including a review of the  apportionment  rate  applied on  the right to 
deduct VAT. 

In  accordance  with  Article  395(2),  second  subparagraph,  of  Directive  2006/112/EC, 
the  Commission  transmitted  the  request  submitted  by  Austria  to  the  other  Member 
States by letter dated 16 May 2024.  

OJ 347, 11.12.2006, p.1, ELI: http://data.europa.eu/eli/dir/2006/112/oj. 
Council  Implementing  Decision  (2009/1013/EU)  of  22  December  2009  authorising  the  Republic  of 
Austria to continue to apply a measure derogating from Articles 168 of Directive 2006/112/EC on the 
21, 
tax 
common 
ELI: http://data.europa.eu/eli/dec_impl/2009/1013/oj). 

29.12.2009, 

system 

added 

value 

348, 

(OJ 

of 

p. 

L 

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(6) 

(7) 

(8) 

By  letter  dated  17  May  2024,  the  Commission  notified  Austria  that  it  had  all  the 
information it considered necessary for appraisal of the request. 

According to Austria, the special measure has proved very effective in simplifying the 
collection  of  VAT  and  preventing  tax  evasion  and  avoidance.  The  special  measure 
reduces  administrative  burdens  for  businesses  and  tax  administration,  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.  

Based on the report submitted by Austria, the minimum apportionment rate of 10 % of 
business  use  of  goods  and  services  required  to  allow  the  deduction  of  input  VAT  is 
low  enough  to  have  no  significant  impact  on  the  total  amount  of  VAT  actually 
collected at the final consumption stage.  

(9) 

Taking  into  account    the  positive  impact  for  both  businesses  and  tax  administration, 
the Commission considers it to be appropriate to extend the special measure. 

(10)  The special measure should be limited to the time needed to evaluate its effectiveness 
and the appropriateness of the apportionment rate applied on the right to deduct VAT. 
Austria  should  therefore  be  authorised  to  continue  to  apply  the  special  measure  for 
another 3 years, it should expire on 31 December 2027. 

(11)  The special measure is proportionate to the objectives pursued, namely, to simplify the 
procedure  for  collecting  VAT  and  to  prevent  certain  forms  of  tax  evasion  or 
avoidance, since it is limited in time and scope.  

(12) 

In the event that Austria considers an extension of the special measure beyond 2027 to 
be  necessary,  it  should  submit  a  request  for  an  extension  to  the  Commission  by  31 
March  2027  accompanied  by  a  report  on  the  application  of  the  special  measure, 
including a review of the apportionment rate applied.   

(13)  The  special  measure  will  have  no  adverse  impact  on  the  Union's  own  resources 

accruing from VAT. 

(14) 

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

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HAS ADOPTED THIS DECISION:  

Article 2 of Implementing Decision 2009/1013/EU  is replaced by the following: 

Article 1 

This Decision shall expire on 31 December 2027. 

‘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 2027. 

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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