Decision 2004/758 - 2004/758/EC: Council Decision of 2 November 2004 authorising Austria to derogate from Article 21 of the Sixth Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes - Main contents

EN

Official Journal of the European Union

L 336/38

In a request submitted to the Commission and registered by the Commission's Secretariat-General on 3 March 2004, the Austrian Government sought authorisation to introduce three measures derogating from Article 21(1)(a) of Directive 77/388/EEC.

The purpose of the derogation requested by Austria is to make the recipient liable for the VAT due in three specific cases: Firstly on the supply of goods provided as security by one VAT taxable person to another person in execution of that security, secondly on the supply of goods following the cession of the reservation of ownership to an assignee and the exercising of this right by the assignee and thirdly on the supply of immovable property by a judgment debtor in a compulsory sale procedure to another person. The requested measures are to be considered as measures to prevent certain types of tax evasion or avoidance in the above sectors.

Where goods are supplied as collateral by one VAT taxable person to the recipient of security in execution of the security, this usually reflects a situation where the guarantor supplying the goods has a limited capacity to settle his debts, including his tax debts. When the collateral taker who received the goods exercises his rights and sells the collateral to a third party, this sale also generates a supply from the guarantor to the collateral taker. In such scenarios VAT losses occurred in many cases because the collateral taker could not be refused his right to deduct and the supplying guarantor could not be held responsible because he was insolvent or had disappeared. The dimension of the problems encountered by the Austrian administration requires legal measures. A similar derogation has already been granted to Germany by Decision 2002/439/EC (2).

In cases where a buyer of goods has a limited capacity to settle his debts for a purchase, the supplier of the goods will reserve the ownership and may cede the right to exercise this reservation as well as the purchase price claim to a third party, usually a bank, as a security for a loan granted by the bank to the buyer. If the buyer of the goods discontinues settling his debts for the loan, the bank will exercise its right of ownership; this involves a supply of the goods from the original buyer to the bank. In such a case the bank would usually not pay the original buyer the turnover tax due on the supply to it, but use it to settle the original buyer's debt for the loan, with the consequence of VAT losses for the fiscal authorities because the original buyers are usually insolvent or have disappeared before the tax administration can identify them and recover VAT. Therefore this scenario is similar to the execution of a security described above.

VAT losses also occurred in cases of taxable supplies of immovable property sold by the judgment debtor in a compulsory sale procedure to another person. This is particularly relevant for such cases where the supplier had opted for tax liability although at the time of supply he was not in a financial position to pay the tax authorities the tax which he has invoiced to the purchaser....