CELEX: 51989PC0158
Language: en
Date: 1989-04-03
Title: Proposal for a COUNCIL DECISION authorizing the United Kingdom to apply in respect of certain transfers of assets to groups of firms a measure derogating from Article 21(1)(a) of Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (89) 158
Vol. 1989/0045
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
lieu par le règlement (UE) 2015/496 du Conseil du 17 mars 2015 (JO L79 du 25. 3.2015, p. 1), ce
dossier est ouvert au public. Le cas échéant, les documents classifiés présents dans ce dossier
ont été déclassifiés conformément à l'article 5 dudit règlement ou sont considérés déclassifiés
conformément aux articles 26(3) et 59(2) de la décision (UE, Euratom) 2015/444 de la
Commission du 13 mars 2015 concernant les règles de sécurité aux fins de la protection des
informations classifiées de l'Union européenne.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as last amended by Council
Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
public. Where necessary, classified documents in this file have been declassified in conformity
with Article 5 of the aforementioned regulation or are considered declassified in conformity with
Articles (26.3) and 59(2) of the Commission Decision (EU, Euratom) 2015/444 of 13 March 2015
on the security rules for protecting EU classified information.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in diesem Akt in
Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben; beziehungsweise werden
sie auf Grundlage von Artikel 26(3) und 59(2) der Entscheidung der Kommission (EU, Euratom)
2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  COM ( 89) 158 final
                                                  Brussels, 3 April 1989
                         Proposai for a
                        COUNCIL DECISION
    authorizing the United Kingdom to apply in respect of
        certain transfers of assets to groups of firms
          a measure derogating from Article 2l(l)(a )
       of Council Directive 77/388 /EEC of 17 May 1977
    on the harmonization of the laws of the Member States
                   relating to turnover taxes
                 (presented by the Commission )
                                               fé
                                              C'
                                  l>
                          03
                          Ο
                             z          fit .
                          O      ■С-, V-4
                                                   O
                              Λ'
 ---pagebreak---                              EXPLANATORY MEMORANDUM
 1 . On 8 January 1987 United Kingdom submitted to the Commission a request
     for a derogation under Article 27 of the Sixth Directive for a special
     measure to prevent the tax avoidance which arises when groups which
     are not entitled to deduct tax in full acquire capital assets through
     companies outside the group for VAT purposes .
     Member States were informed of the proposed derogation in a letter
     from the Commission dated 13 February 1987 . In accordance with Arti ¬
     cle 27(4 ) of the Sixth VAT Directive and as neither the Commission nor
     any Member State requested that the matter be raised by the Council ,
     the Council 's decision authorising the derogation was deemed to have
     been adopted with effect from 14 April 1987 .
2 . In its original notification , the United Kingdom Government recogni2ed
     that the tax avoidance problem it faced could be eliminated by the im¬
     plementation of Article 20 of the Sixth VAT Directive and requested
     that the special measure should be in force for a period of two years ,
     only to allow time for that Article to be implemented .
3 . During 1988 the United Kingdom Government was engaged in a process of
     consultation with interested organizations on the detail of implemen ¬
     ting Article 20 and responses from these organizations have indicated
     that the proposed new legislation could raise considerable practical
     difficulties for many taxpayers . The United Kingdom Government is
     therefore now engaged in further discussions on the form which the
     legislation should take , so as to ensure that this technically complex
     change is implemented without unnecessary difficulty for taxpayers .
 ---pagebreak---                                                                              2
4 . The United Kingdom Government intends to introduce the legislation im¬
    plementing Article 20 on 1 April 1989 . By letter registered at the Se ¬
    cretariat General of the Commission on 9 January 1989 the United King ¬
    dom Government therefore requested that the period of derogation be
    extended to three years , an extension of an additional twelve months ,
    to enable the implementation of Article 20 to take place smoothly .
5 . Under United Kingdom legislation where assets are totally or partially
    transferred to a company which is a member of a group of businesses
    treated as a single taxable person within the meaning of Article 4(4 )
    of the Sixth Directive , that company becomes liable to VAT .
    This provision is intended to ensure that the company in question does
    not have assets in respect of which VAT has been fully deducted while
    the company itself has the right only to partial deduction .
6 . The Commission informed the other Member States of the United King ¬
    dom 's request by letter dated 9 February 1989 .
 ---pagebreak---                                    Proposai for a
                                  COUNCIL DECISION
              authorizing the United Kingdom to apply in respect of
                  certain transfers of assets to groups of firms
                    a measure derogating from Article 21 C1 ) ( a )
                  of Council Directive 77/388 /EEC of 17 May 1977
              on the harmonization of the laws of the Member States
                            relating to turnover taxes
 THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
 Having regard to the Treaty establishing the European Economic Community ,
 Having regard to the Sixth Council Directive ( 77/388 /EEC ) of 17 May 1977
 on the harmonization of the laws of the Member States relating to turn ¬
 over taxes - Common system of value added tax : uniform basis of assess ¬
ment'<
ment     1
         1 >
             hereinafter referred to as the "Sixth Directive" and in particu ¬
 lar Article 27 thereof ,
Having regard to the proposal from the Commission ,
Whereas , under Article 27(1 ) of the Sixth Directive , the Council acting
unanimously on a proposal from the Commission , may authorize any Member
State to introduce 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 ;
Whereas the United Kingdom was authorized by Council Decision deemed to
have been adopted on 14 April 1987 , in accordance with the procedure laid
down by Article 27(4 ) of the Sixth Directive , to introduce , for a period
of two years from 1 April 1987 , a derogation to combat tax avoidance ;
«. i i
       O.J. N° L 145 , 13.6.1977 , p. 1
                                                                        H
 ---pagebreak---                                                                            2
Uhereas the purpose of that measure is to prevent groups of businesses
which are treated as a single taxable person within the meaning of Arti ¬
cle 4(4 ) of the Sixth Directive and are not entitled to deduct tax in
full from being able to enjoy full deduction of the tax on certain trans ¬
fers of assets ;
Uhereas to prevent tax avoidance of this type the United Kingdom applies
a legislative provision laying down that the company to which such assets
are transferred becomes liable to tax ;
Uhereas the measure envisaged is a derogation from Article 21(1 ) ( a ) of
the Sixth Directive ,  whereby , under the   internal  system , the person
liable for the tax is the taxable person who carries out the taxable
transaction ;
Uhereas the United Kingdom has requested authorization to extend this
measure by one year while awaiting adoption of other provisions to be
based on Article 20 of the Sixth Directive ;
Uhereas the derogation will have a favourable effect on the European Com ¬
munities' own resources arising from value added tax ,
HAS ADOPTED THIS DECISION :
                                                                    S
 ---pagebreak---                                                                                3
                                      Article 1
By way of derogation from the provisions of Article 21(1 ) ( a ) of the Sixth
Directive ( 77 / 388 / EEC ), the United Kingdom is hereby authorized to apply
until 31 March 1990 a provision whereby , when assets are totally or par ¬
tially transferred to a company which is a member of a group of busines ¬
ses treated as a single taxable person within the meaning of Article 4(4 )
of the Directive and which is not entitled to full deduction of tax , the
company to which the assets are transferred becomes liable to tax .
                                      Article 2
This Decision is addressed to the United Kingdom .
Done at Brussels ,                              For the Council
                                                The President
                                                                           éf