Date: 2018-12-27Category: Not ApplicableState: Union GovernmentCountry: Europe
Council Implementing Decision (EU) 2018/2060 of 20 December 2018 amending Decision 2009/791/EC authorising Germany to continue to apply a measure derogating from Articles 168 and 168a of Directive 2006/112/EC on the common system of value added tax
Executive Summary:
This Council Implementing Decision (EU) 2018/2060 amends Decision 2009/791/EC, authorizing Germany to continue derogating from Articles 168 and 168a of Directive 2006/112/EC regarding VAT deduction. Germany can exclude VAT deduction on goods/services used >90% for private/non-business purposes until December 31, 2021. If Germany seeks an extension beyond 2021, a request with an application report must be submitted to the Commission by March 31, 2021.
Key Points / Main Content:
* **Authorization Extension:**
* Germany is authorized to continue applying a special measure derogating from Articles 168 and 168a of Directive 2006/112/EC.
* This measure excludes VAT deduction for goods and services used by a taxable person for more than 90% for private or non-business purposes.
* The authorization is extended until December 31, 2021.
* **Reporting Requirement for Extension:**
* If Germany considers an extension beyond 2021 necessary, it must submit a request to the Commission by March 31, 2021.
* The extension request must include a report on the application of the special measure, including a review of the apportionment rate applied on the right to deduct VAT.
* **Decision Details:**
* This Decision takes effect on the date of its notification and applies from January 1, 2019.
* The Decision is addressed to the Federal Republic of Germany.
* Decision 2009/791/EC is amended, replacing Article 2 with an expiration date of December 31, 2021, and a deadline of March 31, 2021, for any extension request.
Impact Analysis:
* Federal Republic of Germany:
* Impact: Authorized to continue excluding VAT deduction under specific conditions, reducing administrative burden and preventing tax evasion. Must submit a report by March 31, 2021, if an extension beyond 2021 is desired.
* Action Required: Comply with the extended authorization and submit a report by March 31, 2021, if an extension is sought.
* European Commission:
* Impact: Responsible for receiving and assessing Germany's request for extension and accompanying report.
* Action Required: Review the report and request from Germany by March 31, 2021, and make a determination on the extension.
* Taxable Persons in Germany:
* Impact: Continued exclusion of VAT deduction on goods and services used >90% for private/non-business purposes.
* Action Required: Comply with the VAT deduction rules as defined by the special measure.
Key Entities Referenced
European Union: The political and economic union of member states located primarily in Europe.
Germany: A Member State of the European Union, officially the Federal Republic of Germany, to which this decision is addressed.
Council Implementing Decision EU 2018/2060: The specific Council Implementing Decision being issued in this document.
Directive 2006/112/EC: Council Directive 2006/112/EC on the common system of value added tax.
Value Added Tax (VAT): A consumption tax assessed on the value added to goods and services.
Council Decision 2009/791/EC: Council Decision 2009/791/EC authorising Germany to continue to apply a measure derogating from Article 168 of Directive 2006/112/EC on the common system of value added tax, which is being amended by this decision.
European Commission: The executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the EU's budget.
Brussels: The location where the decision was made.
L 329/20 EN Official Journal of the European Union 27.12.2018
COUNCIL IMPLEMENTING DECISION (EU) 2018/2060
of 20 December 2018
amending Decision 2009/791/EC authorising Germany to continue to apply a measure derogating
from Articles 168 and 168a of Directive 2006/112/EC on the common system of value added tax
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (1),
and in particular Article 395(1) thereof,
Having regard to the proposal from the European Commission,
Whereas:
(1) Articles 168 and 168a of Directive 2006/112/EC govern the right of taxable persons to deduct value added tax
(VAT) charged on goods and services supplied to them for the purposes of their taxed transactions. Germany was
authorised to introduce a derogating measure intended to exclude VAT borne on goods and services from the
right of deduction where those goods and services are used by the taxable person for more than 90 % for his
private purposes or for purposes of his employees, or in general for non-business purposes or non-economic
activities.
(2) Initially, Council Decision 2000/186/EC (2) authorised Germany to introduce and apply special measures
derogating from Articles 6 and 17 of Council Directive 77/388/EEC (3) until 31 December 2002. Council
Decision 2003/354/EC (4) authorised Germany to apply a measure derogating from Article 17 of
Directive 77/388/EEC until 30 June 2004. Council Decision 2004/817/EC (5) extended the authorisation until
31 December 2009.
(3) By means of Council Decision 2009/791/EC (6) Germany was authorised to continue to apply a special measure
derogating from Article 168 of Directive 2006/112/EC until 31 December 2012. Council Implementing
Decision 2012/705/EU (7) authorised Germany to apply a special measure derogating from Articles 168
and 168a until 31 December 2015, and Council Implementing Decision (EU) 2015/2428 (8) until
31 December 2018.
(4) By letter registered with the Commission on 10 September 2018, Germany requested the authorisation to
continue to apply the special measure derogating from Articles 168 and 168a of Directive 2006/112/EC in order
to entirely exclude from the right of deduction the VAT borne on goods and services that are used by a taxable
person for more than 90 % for private or non-business purposes, including non-economic activities. The request
was accompanied by a report on the application of the special measure, including a review of the apportionment
rate applied on the right to deduct VAT as required by Article 2 of Decision 2009/791/EC.
(1) OJ L 347, 11.12.2006, p. 1.
(2) Council Decision 2000/186/EC of 28 February 2000 authorising the Federal Republic of Germany to apply measures derogating from
Articles 6 and 17 of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes —
common system of value added tax: uniform basis of assessment (OJ L 59, 4.3.2000, p. 12).
(3) 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 (OJ L 145, 13.6.1977, p. 1).
(4) Council Decision 2003/354/EC of 13 May 2003 authorising Germany to apply a measure derogating from Article 17 of the Sixth
Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (OJ L 123, 17.5.2003, p. 47).
(5) Council Decision 2004/817/EC of 19 November 2004 authorising Germany to apply a measure derogating from Article 17 of the Sixth
Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (OJ L 357, 2.12.2004, p. 33).
(6) Council Decision 2009/791/EC of 20 October 2009 authorising the Federal Republic of Germany to continue to apply a measure
derogating from Article 168 of Directive 2006/112/EC on the common system of value added tax (OJ L 283, 30.10.2009, p. 55).
(7) Council Implementing Decision 2012/705/EU of 13 November 2012 amending Decision 2009/791/EC and Implementing Decision
2009/1013/EU authorising Germany and Austria respectively to continue to apply a measure derogating from Articles 168 and 168a of
Directive 2006/112/EC on the common system of value added tax (OJ L 319, 16.11.2012, p. 8).
(8) Council Implementing Decision (EU) 2015/2428 of 10 December 2015 amending Decision 2009/791/EC and Implementing Decision
2009/1013/EU authorising Germany and Austria respectively to continue to apply a measure derogating from Articles 168 and 168a of
Directive 2006/112/EC on the common system of value added tax (OJ L 334, 22.12.2015, p. 12).27.12.2018 EN Official Journal of the European Union L 329/21
(5) In accordance with the second subparagraph of Article 395(2) of Directive 2006/112/EC, the Commission
transmitted the request made by Germany to the other Member States, by letters dated 14 September 2018. By
letter dated 17 September 2018, the Commission notified Germany that it had all the necessary information for
the appraisal of the request.
(6) According to Germany, the special measure has proven very effective in simplifying the collection of VAT and
preventing tax evasion and avoidance. The measure reduces the administrative burden for businesses and tax
administrations, as there is no need for any monitoring of the subsequent use of the goods and services to which
the exclusion from deduction applied at the time of their acquisition. Germany should therefore be authorised to
continue to apply the special measure for a further limited period until 31 December 2021.
(7) In the event that Germany considers that an extension beyond 2021 is necessary, it should, by 31 March 2021,
submit to the Commission a request for an extension accompanied by a report on the application of the special
measure that includes a review of the apportionment rate applied.
(8) The special measure will have no adverse impact on the Union's own resources accruing from VAT.
(9) Decision 2009/791/EC should therefore be amended accordingly,
HAS ADOPTED THIS DECISION:
Article 1
Article 2 of Decision 2009/791/EC is replaced by the following:
‘Article 2
This Decision shall expire on 31 December 2021.
Any request for the extension of the derogating measure provided for in this Decision shall be submitted to the
Commission by 31 March 2021.
Such request shall be accompanied by a report on the application of this measure which includes a review of the
apportionment rate applied on the right to deduct VAT on the basis of this Decision.’.
Article 2
This Decision shall take effect on the date of its notification.
It shall apply from 1 January 2019.
Article 3
This Decision is addressed to the Federal Republic of Germany.
Done at Brussels, 20 December 2018.
For the Council
The President
E. KÖSTINGER