Commissie spant rechtzaak bij Hof van Justitie aan tegen Oostenrijk en Finland inzake weigering BTW-regelgeving te harmoniseren (en)

The Commission has decided to take Austria to the Court of Justice over a simplified tax scheme which it applies on passenger transport operators established in other Member States or certain third countries and which does not comply with the Sixth VAT Directive. The Commission is taking similar action against Finland because it has maintained the obligation, in certain circumstances, for foreign businesses engaging in economic activity in Finnish territory to designate a tax representative, despite the entry into force of Directive 2000/65/EC (see IP/00/1168) which was intended to eliminate such obligations.

Austria: application of a simplified tax scheme for taxable persons engaged in passenger transport

A simplified tax scheme exists in Austria for the international carriage of passengers by operators established in other Member States and third countries other than certain former Soviet republics. These operators are exempt from lodging declarations and do not have to pay the net VAT if their annual turnover in Austria is less than EUR 22 000. As a result, operators using the simplified scheme are not allowed to mention Austrian VAT on their invoices.

However, Community VAT legislation requires operators to invoice and declare VAT. The Commission accordingly considers that Austria's introduction of the scheme infringes Community law.

In defence of the scheme Austria refers to Article 24 of the Sixth VAT Directive, 77388/EEC of 17 May 1977, which allows Member States experiencing difficulties in applying the normal tax scheme to small businesses to apply simplified arrangements such as flat-rate schemes. One condition specified in the Article is that this must not result in a reduction of the tax.

The Commission considers it, firstly, very unlikely that the scheme is reserved in practice for small businesses, as the businesses concerned are involved in international transport, and secondly that Austria has failed to prove that the system does not lead to a reduction in tax, as no VAT is charged or paid.

In view of Austria's failure to comply with the reasoned opinion sent to it in July, the Commission has decided to take the case to the Court of Justice.

Finland: obligation for non-established traders to designate a tax representative

According to Finnish VAT Law, traders who are not established in Finland may, upon request, be registered as the persons liable to pay VAT with regard to the taxable transactions carried out by them in that Member State. Through this scheme, they are entitled to deduct VAT paid in Finland, thus avoiding the refund mechanism provided for under the Eighth VAT Directive (79/1072/CEE). As a precondition for submitting such a request, non-established traders have to appoint a tax representative domiciled in Finland.

The Commission takes the view that this obligation of appointing a tax representative breaches Community law.

First, the Commission recalls that Article 21 of the Sixth VAT Directive, as amended by Directive 2000/65/EC, does not allow Member States to impose such an obligation on traders established within another Member State. Indeed, according to that provision, the appointment of a tax representative in such cases is always optional for the trader.

In addition, this obligation contravenes the free movement of goods and the freedom to provide services enshrined in the Treaty. This is because the Finnish arrangements entail a specific obligation and specific costs for traders established in Member States other than Finland.

Lastly, the Commission considers that the Finnish arrangements cannot be justified by the need for fiscal supervision. In this respect, the Court has frequently stressed the adequacy of the existing rules on administrative cooperation in the field of taxation for meeting that need, and has rejected alternative measures introduced by Member States which contravene the EC Treaty. This is particularly the case given the Regulation reinforcing administrative cooperation in the field of VAT that entered into force as of 1 January 2004 (see IP/03/1350).

The latest information on infringement procedures concerning all Member States can be found at the following site:

http://europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm ;