Introductory text

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^f1, and in particular Article 396(1) thereof,

Having regard to the proposal from the European Commission,

Whereas:

In accordance with Article 5 of Directive 2006/112/EC concerning the territorial scope of that Directive, the value added tax (‘VAT’) system is, as a rule, applicable in the territory of a Member State.

By a letter registered with the Commission on 7 October 2016, Poland requested authorisation to conclude an agreement with Ukraine in relation to the maintenance of three road bridges crossing the River Bug on the Poland-Ukraine border (‘the Agreement’). The Agreement includes provisions derogating from point (d) of Article 2(1) and Article 5 of Directive 2006/112/EC.

In accordance with the second subparagraph of Article 396(2) of Directive 2006/112/EC, the Commission informed the other Member States by letter dated 24 January 2017 of the request made by Poland. By letter dated 25 January 2017, the Commission notified Poland that it had all the information necessary to consider the request.

The maintenance work carried out on Polish territory is subject to VAT in Poland while that carried out on Ukrainian territory falls outside the scope of Directive 2006/112/EC. In addition, each importation from Ukraine into Poland of goods used for the maintenance of the border bridges is subject to VAT in Poland.

In order to ensure the achievement of the purposes of the Agreement, and in particular to improve the traffic between Poland and Ukraine, it is appropriate that the Agreement include provisions simplifying the VAT rules applicable to maintenance works and the related importation of goods.

The derogation will have no impact on the Union's own resources accruing from VAT,

HAS ADOPTED THIS DECISION: