Proposal for a Council Implementing Decision authorising France to conclude an agreement with Switzerland that includes provisions derogating from Article 5 of Directive 2006/112/EC as regards the airport of Bâle-Mulhouse

Pursuant to Article 396 of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ('the VAT Directive'), the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to conclude with a third country or an international body an agreement which may contain derogations from the VAT Directive.

By letter registered with the Commission on 24 September 2015, France requested an authorisation to conclude an agreement with Switzerland as regards the territorial application of the VAT system at the airport of Bâle-Mulhouse. In accordance with Article 396(2) of the VAT Directive, the Commission informed the other Member States by letter dated 24 October 2016. By letter dated 25 October 2016, the Commission notified France that it had all the information necessary to consider the request.

The airport of Bâle-Mulhouse is entirely situated on the territory of France and therefore part of the so-called 'VAT territory' as defined in Article 5 of the VAT Directive. As regards the construction and exploitation of the airport, France and Switzerland concluded a Convention in 1949. Article 8 of this Convention foresees the creation of a so-called Swiss customs sector, a delimited area within the airport where the Swiss authorities are allowed to control goods and passengers coming from or going to Switzerland. Furthermore, it is stipulated in annex to the Convention that an agreement between the respective governments would be concluded on, inter alia, the tax rules which would be applicable to businesses installed in this sector. However, such an agreement was never concluded.

In 2015, France and Switzerland decided to conclude an international agreement which would exclude the Swiss customs sector from the territorial scope of the VAT Directive by considering this area as part of the Swiss VAT territory. As a result, Switzerland would be allowed to apply its own VAT rules. Since such an international agreement would contain a measure that derogates from the VAT Directive as regards the principle of territoriality, an authorisation by the Council, upon proposal of the Commission, is therefore required.

• Primary Source

EUR-Lex: COM(2017)2: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2017:002:FIN

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