CELEX: 51994PC0509
Language: en
Date: 1994-11-18
Title: Proposal for a COUNCIL DECISION AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY AND THE REPUBLIC OF POLAND TO CONCLUDE AN AGREEMENT CONTAINING MEASURES DEROGATING FROM ARTICLES 2 AND 3 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 COMMUNITIES
                                              C0M(94) 509 f i n a l
                                              B r u s s e l s , 18.11.1994
                               Proposal for a
                           COUNCIL DECISION
           AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY AND
  THE REPUBLIC OF POLAND TO CONCLUDE AN AGREEMENT CONTAINING MEASURES
                   DEROGATING FROM ARTICLES 2 AND 3 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
By letter received by the Secretariat General of the Commission, and registered on 23 August
 1994, the German Government requested authorisation, on the basis of article 30 of the Sixth
Council Directive, to conclude an agreement with the Republic of Poland, containing
derogations from articles 2 and 3 of the said Directive. (The Sixth Council Directive
 77/388/EEC, of 17 May 1977, on the harmonisation of the laws of the Member States relating
to tufn-over taxes - the Common system of Value Added Tax: uniform basis of assessment 1.)
In accordance with the provisions of article 30, the other member states were informed of the
German request by letter of 23 September 1994.
The agreement designates which of the contracting states is to be responsible for the
 maintenance of each frontier bridge currently operating. The agreement also regulates the
 maintenance and other related matters in the event of a new frontier bridge being constructed,
 or an existing bridge being put back into service; the agreement would have to be amended in
 such cases. Modification would also be required where a bridge, currently in use, is put out of
service.
As far as possible, the division of responsibility between the contracting States for the
maintenance of complete bridges is divided between the contracting States in proportion to the
surface areas of all the bridges on each respective sovereign territory.
Under the principle of territoriality, German Value Added Tax would be applied only to
maintenance work on the bridges carried out on German territory; maintenance work carried
out on Polish territory would be outwith the scope of application of the Sixth Directive. Work
carried out on both territories would have to be apportioned.
The application of these rules would involve considerable tax difficulties for the firms
contracted to carry out this maintenance work. In order to simplify the tax obligations of these
firms, the agreement contains tax provisions providing for the uniform taxation of maintenance
work, either in accordance with the German turnover tax law, or in accordance with the Polish
tax law on goods and services.
In particular, the agreement states that the right to tax in a. given case will lie with the
respective countries responsible for maintaining the frontier bridges.
Moreover, the agreement provides that, with the exception of customs duties, no import tax
shall be charged on goods imported from the territory of one contracting state into that of the
other contracting state, provided that the goods are used for maintaining frontier bridges.
However, imports for the public authorities (final consumption) are expressly excluded from
the measure.
1
  OJ no. L 145 of 13.6.1977, p.1. Directive last modified by Directive 94/5/EC (OJ no. L 60 of
3.3.1994, p. 16)
 ---pagebreak--- Under the provisions of Article 30 of the Sixth Directive any Member State may be authorised
to conclude with a non member country or an international organisation, an agreement which
may contain derogations from the said Directive.
The uniform taxation of maintenance work on the frontier bridges, either in the form of
German VAT, or a Polish tax, constitutes an important simplification for those carrying out the
maintenance work, when compared to the normal rules of the Sixth Directive. The decision to
waive the collection of German VAT on imports of goods into Germany is also aimed at
helping firms and the authorities avoid the practical difficulties connected with the VAT refund
procedures.
The Commission considers that the application of the proposed measures will have only a
negligible effect on the European Community's VAT receipts.
In effect, since the obligation to maintain the frontier bridges (which also determines the
applicable tax law) is divided between the two contracting states according to the territorial
location of each different part of all the frontier bridges, taxation of maintenance work
according to the provisions of the agreement will hardly affect the amount of the German VAT
due from these operations. On the other hand, considering the exclusion of the public
authorities from this measure, the decision to waive the collection of German VAT on
importation will not affect the amount of VAT due at the stage of final consumption, as even if
this VAT on importation was collected, it would be recoverable by the operator who carried
out the maintenance work.
Consequently, the Commission considers it advisable to authorise the Federal Republic of
Germany to conclude the proposed agreement.
 ---pagebreak---                                             Proposal for a
                                      COUNCIL DECISION
                  AUTHORIZING THE FEDERAL REPUBLIC OF GERMANY AND
     THE REPUBLIC OF POLAND TO CONCLUDE AN AGREEMENT CONTAINING MEASURES
                           DEROGATING FROM ARTICLES 2 AND 3 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.
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
harmonisation of the laws of the Member States relating to turnover taxes - Common system
of value added tax: uniform basis of assessment* , and in particular Article 30 thereof,
Having regard to the proposal from the Commission,
Whereas, under Article 30 of the Sixth VAT Directive, the Council, acting unanimously on a
proposal of the Commission, may authorize any Member State to conclude with a non member
country or an international organization, an agreement which may contain derogations from the
said Directive;
Whereas, by letter officially received by the Secretary General of the Commission on 23
August 1994, the German Government requested authorisation to conclude an agreement with
Poland, concerning the maintenance of frontier bridges linking German motorways to the main
roads in Poland, which contains derogations from Articles 2 and 3 of the Sixth Directive;
Whereas, the other Member States were informed on 23 September 1994 of the request for
authorisation received from Germany;
1
  OJ no. L 145 of 13.6.1977, p.1. Directive last modified by Directive 94/5/EC (OJ no. L 60 of
3.3.1994, p. 16)
                                                        S
 ---pagebreak---  Whereas in the absence of a special measure, only the maintenance work carried out on
 German territory would be subject to German VAT, those carried out on Polish territory
 would be outwith the scope of the Sixth Directive. In addition, each import of goods from
Poland into Germany, used for the maintenance of frontier bridges, would be subject to
 German VAT;
 Whereas the purpose of these derogations is to simplify the taxation rules for those responsible
for carrying out the maintenance work on the frontier bridges;
Whereas the derogations will only have a negligible effect on the European Community's own
resources arising from value added tax;
HAS ADOPTED THIS DECISION:
                                            Article 1
The Federal Republic of Germany is authorised to conclude an agreement with the Republic of
Poland containing measures derogating from the Sixth Council Directive 77/388/EEC. These
derogations are defined in articles 2 and 3 hereinafter.
                                            Article 2
By way of derogation from Article 3 of the Sixth Directive, the frontier bridges of the
contracting States for which, on the basis of the agreement, the Federal Republic of Germany
has maintenance responsibility, are considered to be a part of German territory. This is in so far
as the deliveries of goods and the supply of services are consistent with the maintenance of
these bridges.
By way of derogation from Article 3 of the Sixth Directive, the frontier bridges of the
contracting states for which, on the basis of the agreement, the Republic of Poland has
maintenance responsibility, are considered to be a part of Polish territory. This is in so far as
the deliveries of goods and the supply of services are consistent with the maintenance of these
bridges.
                                            Article 3
By way of derogation from Article 2, paragraph 2 of the Sixth Directive, the importation of
goods into Germany from Poland is not subject to value added tax, in so far as these goods are
used for the maintenance of the frontier bridges for which, on the basis of the agreement, the
Republic of Poland is responsible. However, the derogation does not apply to importations of
goods effected by a public authority.
                                                  4-
 ---pagebreak---                                            Article 4
This Decision is addressed to the Federal Republic of Grermany.
Done at Brussels,       1994
                                                      For the Council
                                                      The President
 ---pagebreak---                                                                      ^ S N 0254-1475
                                                      DOCUMENTS
EN                                                                     11 09 06
                                 Catalogue number : CB-CO-94-535-EN-C
                                                             ISBN 92-77-82301-1
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