CELEX: 51994PC0506
Language: en
Date: 1994-11-18
Title: Proposal for a COUNCIL DECISION Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to apply a measure derogating from Article 3 of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                      COM(94) 506 final
                                                      Brussels, 18.11.1994
                                    Proposal for a
                                  COUNCIL DECISION
   Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to
  apply a measure derogatingfromArticle 3 of the Sixth Council Directive 77/388/EEC of
  17 May 1977 on the harmonisation of the laws of the Member States relating to turnover
                                          taxes.
                           (presented by the Commission)
 ---pagebreak---                             EXPLANATORY MEMORANDUM
 By letters received by the General Secretariat of the Commission on 4 July 1994 and 17
 August 1994 respectively, the German and Luxembourg Governments submitted requests
 for an authorisation based on Article 27(1) of the Sixth Council Directive of 17 May 1977
 on the harmonization of the laws of the Member States relating to turnover taxes1. The
 special measure which is the object of the present Decision derogates from Article 3 of the
 Sixth VAT Directive, which determines the territorial application of the common VAT
 system. The justification for this authorisation is in order to simplify the procedures for
 charging value added tax.
 In accordance with Article 27(3) of the Sixth VAT Directive, thé Commission informed
 the other Member States, by letter dated 16 September 1994, of the requests submitted by
 the German and Luxembourg Governments.
 The special measure requested by the Federal Republic of Germany and the Grand Duchy
 of Luxembourg concerns the building of a motorway bridge over the river Moselle to the
 north of Perl and Schengen linking the German A8 motorway from Saarbriicken to the
 west with the Luxembourg A13 motorway from the Dudelange motorway junction to the
 east.
 The bridge is located partly on the sovereign territory of the Federal Republic of Germany
 and the Grand Duchy of Luxembourg, but also partly over the river Moselle, which, as the
 frontier between the two countries, is the joint territory of both.
 Under the principle of territoriality laid down by Articled of the Sixth VAT Directive,
 German value added tax would be applied to the construction work carried out on
 German territory, and work carried out on Luxembourg territory would be subject to
Luxembourg taxation. However, it would not be clear how the work carried out between
 the two Member States would be taxed. Without a simplification of the taxation
 arrangements the firms involved in constructing the bridge would be faced with a
 considerable problem. For every single supply of goods and services involved in building
 the bridge it would have to be established whether it occurred on German or Luxembourg
territory or on the joint territory. Single transactions covering both sovereign territories
 and the joint territory would have to be apportioned.
In order to simplify the practical arrangements for the carrying out of the construction
project and to ensure that goods and services supplied on the joint territory are taxed, it
has been agreed between the German and Luxembourg authorities that, subject to
authorisation of the present measure by the Council, taxation of the construction work
will be subject to value added tax in the Grand Duchy of Luxembourg alone. The same
problem also arises in respect of the maintenance of the bridge once delivery of it has
taken place. Consequently, maintenance - unlike construction - will be subject to value
added tax in the Federal Republic of Germany.
1
   OJ N° L 145, 13.6.1977, p. 1. Directive as last amended by Directive 94/5/EC (OJ N° L
60, 3.3.94, p. 16).
                                             A
 ---pagebreak---   Article 27(1) of the Sixth VAT Directive provides for the introduction of special measures
  derogating from the provisions of the Directive in order to simplify the procedure for
  charging the tax. As explained, the proposed arrangements serve the purpose of
  simplification.
  Since, under the proposed arrangements, the entire construction of the bridge would be
  subject to value added tax in the Grand Duchy of Luxembourg and its maintenance
  subject to value added tax in the Federal Republic of Germany, the amount of tax due at
  the final consumption stage is not affected. Consequently, there is no adverse impact on
 the Community's VAT own resources.
 It should be noted that by Decision 83/333/EEC of 18 March 19832, the Council
 authorised a similar derogation to Article 3, on the basis of Article 27(1), for the purpose
 of constructing a bridge over theriverSûre between the same two Member States.
 The Commission is convinced that the derogation in question, provided that it is restricted
 to the construction and maintenance of thefrontierbridge over theriverMoselle specified
  above, is intended to be a simplification measure within the meaning of Article 27(1) of
 the Sixth VAT Directive.
  The Commission therefore considers it appropriate for the Federal Republic of Germany
 and the Grand Duchy of Luxembourg to be authorised to apply the planned special
 measure.
2
    Decision deemed to have been adopted, in accordance with Article 27(4) of the Sixth
Council Directive 77/388/EEC on turnover taxes (OJ L 181 of 6.7.83, p. 25)
 ---pagebreak---                                        Proposal for a
                                   COUNCIL DECISION
   Authorising the Federal Republic of Germany and the Grand Duchy of Luxembourg to
  apply a measure derogatingfromArticle 3 of the Sixth Council Directive 77/388/EEC of
  17 May 1977 on the harmonisation of the laws of the Member States relating to turnover
                                           taxes.
                               (presented by the Commission)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European 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 assessment1 , and in particular Article 27
thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 27(1) of the Sixth VAT Directive, the Council, acting
unanimously on a proposal from the Commission, may authorise 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 and avoidance;
Whereas, by letters officially received by the Commission on 4 July 1994 and 17 August
 1994 respectively, the Governments of the Federal Republic of Germany and the Grand
Duchy of Luxembourg have requested authorisation to introduce a special measure
concerning the construction and maintenance of a motorway bridge crossing over the river
Moselle to the north of Perl and Schengen linking the German A8 motorway from
Saarbriicken to the west with the Luxembourg A13 motorway from the Dudelange
motorway junction to the east;
Whereas, in accordance with Article 27(3) of the Sixth VAT Directive, the other Member
States were informed on 16 September 1994 of the requests for authorisation received
from the Federal Republic of Germany and the Grand Duchy of Luxembourg;
Whereas in the absence of a special measure, for each supply of goods and services used
for the construction and maintenance of the bridge in question it would have to be
established whether the place of taxation was within the territory of the Federal Republic
of Germany or the Grand Duchy of Luxembourg; whereas such taxation arrangements
would giveriseto considerable practical difficulties;
Whereas the purpose of this derogation is to simplify the procedure for charging the tax
on the construction and maintenance of the bridge in question;
1
   OJ N° L 145, 13.6.1977, p. 1. Directive as last amended by Directive 94/5/EC (OJ N° L
60, 3.3.94, p. 16).
                                          ^ >
 ---pagebreak--- Whereas the derogation will not affect the amount of tax due at the final consumption
stage and will not therefore have an adverse affect on the European Communities' own
resources arising from value added tax,
HAS ADOPTED THIS DECISION:
                                        Article 1
By way of derogation from Article 3 of Directive 77/388/EEC, the Federal Republic of
Germany and the Grand Duchy of Luxembourg are hereby authorised, in respect of the
motorway bridge over the river Moselle to the north of Perl and Schengen linking the
German A8 motorway from Saarbrucken to the west with the Luxembourg A13
motorway from the Dudelange motorway junction to the east, to consider, for the
duration of the construction of the bridge, the whole of the construction site as being
within the territory of the Grand Duchy of Luxembourg, and, with effect from the
completion of the bridge, the whole of the bridge to be within the territory of the Federal
Republic of Germany.
                                        Article 2
This Decision is addressed to the Federal Republic of Germany and the Grand Duchy of
Luxembourg.
Done at Brussels,        1994.
                                                                    For the Council
                                                                     The President
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 ---pagebreak---                                                                       ISSN 0254-1475
                                                               COM(94) 506 final
                                                      DOCUMENTS
EN                                                                          09 06
                                 Catalogue number : CB-CO-94-533-EN-C
                                                             ISBN 92-77-82283-X
Office for Official Publications of the European Communities
L-2985 Luxembourg
                                              r