CELEX: 51989PC0358
Language: en
Date: 1989-07-12
Title: PROPOSAL FOR A COUNCIL DECISION AUTHORIZING THE FRENCH REPUBLIC TO APPLY A MEASURE DEROGATING FROM ARTICLE 17 ( 2 ) 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(89)358 final
                                                    Brussels, 12 July 1989
                              Proposal for a
                             COUNCIL DECISION
                     authorizing the French Republic
                    to apply a measure derogating from
 Article 17(2) 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---                                                                                  6
                              EXPLANATORY MEMORANDUM
 1. By letter v." eivd on 17 April 1989, the French Government submitted
     to the Cocwiiltsioii a request for a derogation under Article 27 of the
     Sixth VAT Directive'1' aimed at Introducing a special simplification
     measure. The measure, which derogates from Article 17(2) of the Sixth
     Directive,   is designed    to exclude   from  the  right  to deduct    VAT
     previously charged expenditure in respect of the acquisition of goods
     and services in cases where private use of those goods and services
    accounts for more than .90% of their total use.
2. In support of       its request, the French Government      emphasizes   that
    taxation of     the private use of goods and services supplied by a
    taxable person to himself, which will be introduced in France along
    with the right to deduct the entire amount of input VAT charged on
    goods and services used for mixed purposes, would be complicated in
    cases where     the goods and services were used primarily        for non-
    business purposes since virtually all the amounts taxable would be
    represented not by actual turnover but by the value of the self-supply
    of services.
3. The French     Government also points     out   that, being   applicable   in
    exceptional and marginal situations, the derogation will not affect
    the amount of tax due at the final consumption stage.
l1
  *> O.J. N° L 145 of 13 June 1977
                                                                                   °L
 ---pagebreak--- 4. 7he Commission informed the other Member States of the French request
   by letter dated 17 May 1989.
 ---pagebreak---                                    Proposal for a
                                 COUNCIL. DECISION
                        authorizing th<» French Republic
                      to apply a measure derogating from
 Article 17(2) of the Sixth Council Directive (77/J88/Enc> 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
turnover   taxes - Common    system    of  value   added   tax : uniform    basis of
            1
assessment '*, and in particular Article 27 thereof,
Having regard to the proposal from the Commission,
Whereas,   under   Article 2/(1)      of   the   aforementioned      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 by letter received by the Commission on 17 April 1989, the French
Republic    requested   authorization       to   introduce     a   special    measure
derogating from Article 17(2) of the Sixth Directive;
Whereas   the   French   Republic      intends   to   introduce     an   arrangement
permitting deduction of the entire amount of tax charged on goods and
services used for both business and private purposes while, at the same
time, providing    for  taxation     of   the  private   use    of  such   goods and
" ' O.J. N° L 145 of 13 June 1977
                                                                                      4
 ---pagebreak---  services,   in  accordance    with   Articles 5'6) and 6(2)   of   the   Sixth
 Directive:
 Whereas, France would like to retain the right to exclude altogether the
 deduction  of  input  VAT while refraining     from taxing  self-supplies in
 cases where private use accounts for more than 90% of the use to which a
 particular good or service is put; whereas such a measure is necessary
 and appropriate to avoid certain tax evasion and fraud and whereas it
 contributes to the simplification of tax collection;
 Whereas the latter measure constitutes a derogation from Article 17(2) of
 the Sixth Directive, whereby a taxable person is entitled to deduct the
 tax charged on goods and services used by him in so far as those goods
and services are used for the purposes of his taxable transactions;
Whereas this.request can be accepted subject to certain conditions;
Whereas the measure in question should be temporary in order to allow an
evaluation after a certain period of application;
Whereas   the authorisation will     run until   31 December  1992, with    the
Commission presenting before that date, a report to the Council on the
application of this authorization;
Whereas the Council will determine, on the basis of a proposal           for a
Decision submitted if appropriate by the Commission and accompanying the
above mentioned report, whether to extend the authorization beyond that
date:
Whereas the derogation will not affect, except to a negligible degree,
the amount of tax due at the final consumption stage; whereas it will not
have   a negative   effect   on  the   European  Communities'  own   resources
accruing from value added tax;
Whereas the other Member States were Informed on the French Republic's
request on 17 May lvnvt
HAS ADOPTED THIS DEC If. TON :
                                                                                Ç
 ---pagebreak---                                                                            10
                                 Article J
By way of derogation from Article 17(2) of the Sixth Directive, the
French Republic   is h^rby authorized until 31 December 1V92 to exclude
from the right to deiJm.. t value added tax previously charged expenditure
in respect of goods and services in cases where private use of those
goods and services accounts for more than 90% of their total use.
                                 Article 2
On the basis of a report by the Commission on the application of the
authorization  cited   in Article   1, accompanied  if appropriate  by a
proposal for a decision, the Council shall determine on the basis of that
proposal before 31 December 1992 whether the said authorization shall be
extended.
                                 Article J
This Decision is addressed to the French Republic.
Done at Brussels,                                     For the Council
                                                      The President
                                                                            c
 ---pagebreak---  ---pagebreak--- Commission of the European Communities .
COM(89) 358 final
Proposal for a
COUNCIL DECISION
authorizing the French Republic to apply a measure derogating from
Article 17(2) 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
(submitted by the Commission)
 12.7.1989
Office for Official Publications of the European Communities
L - 2985 Luxembourg
Series: DOCUMENTS
 1989 - 6 pp. — Format: 21.0 * 29.7 cm
EN
ISSN 0254-1475
ISBN 92-77-51982-7
Catalogue number: CB-CO-89-308-EN-C
 ---pagebreak---                                                  ISSN 025*1475
COM(89) 358 final
 DOCUMENTS
Proposal for a
COUNCIL DECISION
authorizing the French Republic to apply a measure
derogating from Article 17(2) 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
(submitted by the Commission)
09                                             12.7.1989
Catalogue number: CB-CO-89-308-EN-C
ISBN 92-77-51982-7
€
COMMISSION OF THE EUROPEAN COMMUNITIES