CELEX: 51991PC0082
Language: en
Date: 1991-03-14
Title: PROPOSAL FOR A COUNCIL DECISION AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY TO APPLY A MEASURE DEROGATING FROM ARTICLE 2 ( 1 ) OF THE SIXTH COUNCIL DIRECTIVE ( 77/388/EEC ) OF 17 MAY 1977 ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES RELATING TO TURNOVER TAXES

COMMISSION OF THE EUROPEAN COMVIUNITIES
                                   COM(91)82  final
                                   Brussels,14 March 1991
                         Proposal for a
                        COUNCIL DECISION
    authorizing the Federal Republic of Germany to apply a
  measure derogating from Article 2 (1) of the Sixth 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)
 ---pagebreak---                                                             ^
                   EXPLANATORY MEMORANDUM
Subject to Article 1(2)(b) of the Eighteenth Council
Directive of 18 July 1989f1', the Federal Republic of
Germany was required to abolish, with effect from 1 January
1991, its exemption from tax of the management of credit
and credit guarantees by a person or a body other than the
one which granted the credits.
By letter received by the Secretariat-General of the
Commission on 19 December 1990, the Government of the
Federal Republic of Germany submitted a request for a
derogation based on Article 27 of the Sixth Council
Directive of 17 May 1977 on the common system of value
added tax* 2 ', designed to simplify the procedure for
charging the tax.
In accordance with Article 27(3) of the Sixth Directive,
the other Member States were informed by letter dated 18
January 1991 of the German request.
The measure requested by the Federal Republic of Germany is
the retention of the tax exemption for the management of
credit and credit guarantees by a person or a body other
than the one which granted the credits.
(1) O.J. n*L 226, 3.8.1989
(2) O.J. n'L 145, 13.6.1977
 ---pagebreak--- In support of its request the Government of the Federal
Republic of Germany explains the considerable difficulties
that would be encountered as regards the establishment by
the undertakings concerned of the taxable transactions and
the deductible amounts of input tax relating to them and as
regards control by the tax administration. Since the
amounts of tax are small in very many cases the burden
involved in adapting the system would be unjustified in
relation to the tax yield.
The Government of the Federal Republic of Germany points
out that the derogation would have only a limited effect on
the VAT yield, a fact which has been acknowledged by the
Commission as regards VAT own resources, most recently in
the Commission Decision of 23 March 199u'3', Article 2,
point 3.
The Commission is convinced that the measure in question,
which derogates from Article 2 (1) of the Sixth Directive,
read in conjunction with Article 13 B(d)(1) and (2), is
designed to simplify the procedure for the application of
VAT within the meaning of Article 27 of that Directive.
The Commission therefore considers it appropriate for the
Federal Republic of Germany to be authorized to apply the
planned special measure. It nevertheless takes the view
that the derogation should be limited as to its duration,
and authorized until 31 December 1995, and that before the
expiration of this authorization the Federal Republic of
Germany should endeavour to overcome the practical
difficulties giving rise to this derogation.
(3) O.J. n'L 99, p. 28
 ---pagebreak---                                                                *
                        Proposal for a
                       COUNCIL DECISION
authorizing the Federal Republic of Germany to apply a
measure derogating from Article 2 (1) of the Sixth 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)
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 turnover taxes - Common system of value
added tax : uniform basis of assessment ' ' , as last
amended by the Eighteenth Council Directive 89/465/EEC ( 2 ),
and in particular Article 27* thereof,
Having regard to the proposal from the Commission,
Whereas the Eighteenth Directive 89/465/EEC repeals, as
from 1 January 1991, the transitional derogation provided
for in Article 28(3)(b) of the Sixth Directive 77/388/EEC
read in conjunction with point 13 of Annex F thereto, which
permitted   Member   States   to continue    to   exempt   the
management of credit and credit guarantees by a person or a
body other than the one which granted the credits;
(1) O.J. n"L 145, 13.6.1977, p. 1
(2) O.J. n'L 226, 3.8.1989, p. 21
 ---pagebreak--- Whereas, under Article 27(1) of the afore-mentioned
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 Federal Republic of Germany, by letter received
by the Commission      on   19 December    1990, requested
authorization to retain the tax . exemption         for the
management of credit and credit guarantees by a person or a
body other than the one which granted the credit; whereas
this measure constitutes a derogation from Article 2(1),
read in conjunction with Article 13 B (d) (1) and (2) , of
the Sixth Directive 77/388/EEC, according to which such
services effected for consideration within the territory of
a country by a taxable person acting as such shall be
subject to value added tax;
Whereas the other Member States were informed of the
Federal Republic of Germany's request on 18 January 1991;
Whereas arrangements for taxing such supplies would pose
considerable technical difficulties in Germany as regards
establishment by the undertakings concerned of the taxable
transactions and the deductible amounts of input tax
relating to them and as regards control by the tax
administration;
Whereas the authorization requested can be granted under
certain conditions;
 ---pagebreak--- Whereas the derogation, shall be temporary, in order to
allow an assessment of the effects of the authorization
granted by this Decision after a certain period of
application;    whereas    before  expiration    of    this
authorization the Federal Republic of Germany shall
endeavour    to   overcome    the practical    difficulties
necessitating this derogation»;
Whereas   this   derogation^ will   affect   the   European
Communitiesown resources accruing from value added tax
only to a negligible extent;
HAS ADOPTED THIS DECISION :^
 ---pagebreak---                          Article 1
By way of derogation from Article 2 (1) , read in
conjunction with Article 13 B(d) (1) and (2), of the Sixth
Directive 77/388/EEC, the Federal Republic of Germany is
hereby authorized until 31 December 1995 to exempt the
supply of services in respect of the management of credit
and credit guarantees by a person or a body other than the
one which granted the credits.
                         Article 2
This decision   is addressed   to the Federal   Republic of
Germany.
Done at Brussels,               For the Council
                                President
 ---pagebreak---  ---pagebreak---                                                                                             - s>
                                                                                ISSN 0254-1475
                                                                    COM(91) 82 final
                                                      DOCUMENTS
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