CELEX: 51989PC0346
Language: en
Date: 1989-07-10
Title: PROPOSAL FOR A COUNCIL DECISION AUTHORIZING FRANCE TO APPLY A MEASURE DEROGATING FROM THE SECOND SUBPARAGRAPH OF ARTICLE 17 ( 6 ) OF THE SIXTH DIRECTIVE 77/388/EEC ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES RELATING TO TURNOVER TAXES

COMMISSION OF THE EUROPEAN COMMUNITIES
                                              COM(89) 346 final
                                             Brussels, 10 July 1989
                           Proposal for a
                          COUNCIL DECISION
    authorizing France to apply a measure derogating from the
        second subparagraph of Article 17(6) of the Sixth
           Directive 77/388/EEC on the harmonization of
            the laws of the Member States relating to
                           turnover taxes
                   (presented by the Commission)
 ---pagebreak---                           EXPLANATORY MEMORANDUM
1. By letter received on 17 April 1989, the French Government submitted
   to the Commission a request for a derogation under Article 27 of the
   Sixth VAT Directive     in respect of a special measure to counter tax
   evasion and avoidance. This measure, which derogates from the second
   subpragraph of Article 17(6) of the Sixth Directive, is intended to
   exclude expenditure in respect of accomodation, food, hospitality and
   entertainment,   from the right to deduct value added tax previously
   charged regardless of the beneficiary. However, it does not concern
   expenditure incurred by a taxable person      in certain circumstances
   spelt out in the proposal for a decision.
2. In support of its request, the French Government stresses the risks of
   tax evasion and avoidance stemming from the deduction of tax charged
   on expenditure that intrinsically constitutes final consumption.
3. In line with the French Government's request, the proposal for a deci-
   sion authorizes it to apply the derogation on a temporary basis and
   until such time as Community rules determining expenditure not eligi-
   ble for a deduction of value added tax pursuant to the first subpara-
   graph of Article 17(6) of the Sixth Directive come into force.
4. The Commission informed the other Member States of the request by let-
   ter dated 17 May 1989.
1
 0J No L 145, 13.6.1977.
 ---pagebreak---                                  Proposal for a
                                COUNCIL DECISION
    authorizing France to apply a measure derogating from the second
     subparagraph of Article 17(6) of the Sixth Directive 77/388/EEC
          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 , as last amended by the Act of Accession of Spain and Portugal, and in
particular Article 27 thereof.
Having regard to the proposal from the Commission,
Whereas, under Article 27(t) of       Directive 77/388/EEC, 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;
1
 0J No L 145, 13.6.1977, p. 1.
 ---pagebreak---                                 - 2 -
Whereas, by letter recorded received by the Commission on 17 April 1989,
France     requested   authorization   to    introduce a special measure
derogating from the second subparagraph of Article 17(6) of the Sixth
Directive;
Whereas this measure, described as being designed to prevent tax evasion
and avoidance, is aimed at excluding expenditure in respect of accommoda-
tion, restaurants, hospitality and entertainment from the right to deduct
value added tax previously charged;
Whereas the exclusion would not concern expenditure incurred by a taxable
person in respect of the supply by him of accommodation, meals, food or
drink for consideration, expenditure on accommodation provided free of
charge for security or caretaking staff on works, sites or business pre-
mises, or expenditure incurred by a taxable person in carrying out his
contractual or legal responsibility towards customers;
Whereas   the    authorization   requested  by   France   can   be
granted only on a temporary basis and until such time as Community rules
determining expenditure not eligible for a deduction pursuant to the first
subparagraph of Article 17(6) of the Sixth Directive come into force;
Whereas this derogation does not have a negative effect on the European
Communities1 own resources accruing from value added tax;
Whereas the other Member States were informed of the French
request on 17 May 1989,
HAS ADOPTED THIS DECISION :
                                                                           4
 ---pagebreak---                                    - 3 -
                                Article   1
1. Notwithstanding   the   second     subparagraph    of    Article 17(6) of
   the Sixth Directive 77/388/EEC, France     is   hereby   authorized, on a
   temporary basis and until such time as Community rules determining the
   treatment of expenditure referred to in those provisions come into
   force, to exclude expenditure in respect of accommodation, food, hospi-
   tality and entertainment from the right to deduct value added tax pre-
   viously charged.
2. The exclusion referred to in paragraph 1 shall not apply to :
   - expenditure incurred by a taxable person in respect of the supply by
     him of accommodation, meals, food or drink for consideration;
   - expenditure on accommodation provided free of charge for security or
     caretaking staff on works, sites or business premises;
   - expenditure incurred by a taxable person in carrying out his con-
     tractual or legal responsibility towards customers.
                                 Article   2
This Decision is addressed to the French Republic
Done at Brussels,                                         For the Council
                                                          The President
 ---pagebreak--- Commission of the European Communities
COM(89) 346 final
Proposal for a
COUNCIL DECISION
authorizing France to apply a measure derogating from the second
subparagraph of Article 17(6) of the Sixth Directive 77/388/EEC on the
harmonization of the laws of the Member States relating to turnover
taxes
(submitted by the Commission)
 10.7.1989
Office for Official Publications of the European Communities
L - 2985 Luxembourg
Series : DOCUMENTS
 1989 — 5 pp. — Format: 21.0 x 29.7 cm
EN
ISSN 0254-1475
ISBN 92-77-51955-X
Catalogue number: CB-CO-89-305-EN-C
 ---pagebreak---                                              ISSN 0254-1475
COM(89) 346 final
DOCUMENTS
Proposal for a
COUNCIL DECISION
authorizing France to apply a measure
derogating from the second subparagraph of
Article 17(6) of the Sixth Directive 77/388/EEC
on the harmonization of the laws of the Member
States relating to turnover taxes
(submitted by the Commission)
09                                          10.7.1989
Catalogue number: CB-CO-89-305-EN-C
ISBN 92-77-51955-X
€
COMMISSION OF THE EUROPEAN COMMUNITIES