Decision 2012/705/EU authorising Germany and Austria to continue to apply a measure derogating from Articles 168 and 168a of Directive 2006/112/EC

Summary:

On 31 August 2012 the European Commission presented a proposal for a Council Decision authorising Germany and Austria 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 VAT Directive). The Council of the European Union adopted the Decision on 13 November.

Further information:

Article 168 of Directive 2006/112/EC provides that a taxable person is entitled to deduct the VAT charged on purchases made for the purpose of his taxed transactions. Article 168a provides that the VAT on expenditure related to immovable property forming part of the business assets of a taxable person and used both for business and non-business purposes shall be deductible only up to the proportion of the property's use for purposes of the taxable person's business.

The measure requested by Germany and Austria however deviates from those principles as it entirely excludes 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.

Germany’s derogating measure was initially granted by Decision 2000/186/EC for a period until 31 December 2002 and was extended by Decision 2003/354/EC until 30 June 2004, by Decision 2004/817/EC until 31 December 2009 and by Decision 2009/791/EC until 31 December 2012.

Austria’s derogating measure was initially granted by Decision 2004/866/EC for a period until 31 December 2009 and was extended by Decision 2009/1013/EU until 31 December 2012.

Based on the information provided by Germany and Austria, the Commission understands that the special measure provides a facilitation to both tax administrations and businesses 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. Therefore, it is proposed to extend the derogations until the end of 2015.

Official

EUR-Lex: COM(2012)475: Proposal to amend Decisions 2009/791/EC and 2009/1013/EU authorising Germany and Austria to continue to apply a measure derogating from Articles 168 and 168a of Directive 2006/112/EC https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:475:FIN

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