# EUR-Lex - 52012PC0567 - EN

*|*

# 52012PC0567

**Proposal for a COUNCIL DECISION amending Decision 2009/790/EC authorising Poland to extend the application of a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax /* COM/2012/0567 final - 2012/0272 (NLE) */**

			*

			*

EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Grounds for and objectives of the proposal

Pursuant to Article 395(1) of Directive
2006/112/EC of 28 November 2006 on the common system of value added tax[1] (hereafter ‘the VAT
Directive’), the Council, acting unanimously on a proposal from the Commission,
may authorise any Member State to apply special measures for derogation from
the provisions of that Directive in order to simplify the procedure for
collecting VAT or to prevent certain forms of tax evasion or avoidance.

By letter registered with the Commission on 12
April 2012, Poland requested an authorisation to continue to exempt taxable
persons whose annual turnover is no higher than the equivalent in national
currency of EUR 30 000 at the conversion rate on the day of its accession. In
accordance with Article 395(2) of the VAT Directive, the Commission informed
the other Member States by letters dated 17 and 18 July 2012 of the request
made by Poland. By letter dated 19 July 2012, the Commission notified Poland
that it had all the information necessary to consider the request.

General context

Chapter 1 of Title XII of the VAT Directive
allows for the possibility for Member States to apply special schemes for small
enterprises, including the possibility of exempting taxable persons below a
certain annual turnover. This exemption implies that a taxable person does not
have to charge VAT on his supplies and, consequently, he cannot deduct the VAT
on his input.

Under Article 287(14) of the VAT Directive, Poland
may exempt from VAT taxable persons whose annual turnover is no higher than the
equivalent in national currency of EUR 10 000 at the conversion rate on the day
of its accession.

In 2009, Poland requested a derogation in order
to simplify VAT obligations for small traders and to ease the collection of the
tax for the national tax administration. By Council Decision 2009/790/EC of 20
October 2009[2]
the Council authorised Poland to exempt from VAT taxable persons whose annual
turnover is no higher than the equivalent in national currency of EUR 30 000 until
31 December 2012. This measure is optional for taxable persons.

Poland has now requested an extension of that
measure.

In its proposal for a Directive simplifying VAT
obligations of 29 October 2004 (COM(2004)728 final), the Commission included
provisions aimed at allowing the Member States to exempt taxable persons whose
annual turnover does not exceed a ceiling of EUR 100 000, with the possibility
of updating this amount each year. However, the Council has, as this stage, not
yet reached an agreement on that proposal.

From the information provided by Poland, it
appears that nearly 70 000 taxable persons benefited from VAT exemption as a
result of the application of the measure and it has led to an estimated
reduction of the overall amount of the state budget revenues from VAT of approximately
0,14%. It is therefore proposed to extend the derogation for another period
until the earliest of 31 December 2015 or the entry into force of a Directive
on the annual turnover thresholds below which taxable persons may be exempt
from VAT.

Existing provisions in the area of the
proposal

In 2004, the Commission made a proposal to
increase the annual turnover threshold available to Member States (COM(2004)
728 final) for the exemption from VAT of taxable persons to EUR 100 000.

Consistency with the other policies and
objectives of the Union

Not applicable.

2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

Consultation of interested parties

Not relevant.

Collection and use of expertise

There was no need for external expertise.

Impact assessment

The proposal for a Council Decision aims at
continuing a simplification measure which removes many of the VAT obligations
for businesses operating with an annual turnover no higher than the equivalent
in national currency of EUR 30 000 and therefore has a potential positive
impact.

Because of the narrow scope of the derogation,
and its limited application in time, the scope will in any case be limited.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

Summary of the proposed action

Authorisation for Poland to continue to apply a
derogating measure from the VAT Directive as regards a simplification measure
for businesses with an annual turnover no higher than the equivalent in
national currency of EUR 30 000 at the conversion rate on the day of its
accession.

Legal basis

Article 395 of the VAT Directive.

Subsidiarity principle

The proposal falls under the exclusive
competence of the European Union. The subsidiarity principle therefore does not
apply.

Proportionality principle

The proposal complies with the proportionality
principle for the following reasons.

The Decision concerns an authorisation granted
to a Member State upon its own request and does not constitute any obligation.

Given the limited scope of the derogation, the
special measure is proportionate to the aim pursued.

Choice of instruments

Proposed instruments: Council Decision.

Under Article 395 of the VAT Directive,
derogation from the common VAT rules is only possible with the authorisation of
the Council acting unanimously on a proposal from the Commission. Moreover, a
Council Decision is the most suitable instrument since it can be addressed to
individual Member States.

4.           BUDGETARY IMPLICATION

The proposal has no implication for the EU budget.

5.           OPTIONAL ELEMENTS

Review/revision/sunset clause

The proposal includes a sunset clause.

2012/0272 (NLE)

Proposal for a

COUNCIL DECISION

amending Decision 2009/790/EC authorising
Poland to extend the application of a special measure derogating from Article
287 of Directive 2006/112/EC on the common system of value added tax

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 291(2) thereof,

Having regard to Council Directive
2006/112/EC of 28 November 2006 on the common system of value added tax ([3]), and in particular Article
395(1) thereof,

Having regard to the proposal from the
European Commission,

Whereas:

(1)       In a letter registered with
the Commission on 12 April 2012, Poland requested authorisation for a measure
derogating from Article 285 of Directive 2006/112/EC in order to continue to
exempt from value added tax (VAT) taxable persons whose annual turnover is no
higher than the equivalent in national currency of EUR 30 000 at the conversion
rate on the day of accession. Through that measure, those taxable persons would
continue to be exempted from certain or all of the obligations in relation to
VAT referred to in Chapters 2 to 6 of Title XI of Directive 2006/112/EC.

(2)       The Commission informed
the other Member States by letters dated 17 and 18 July 2012 of the request
made by Poland. By letter dated 19 July 2012, the Commission notified Poland
that it had all the information necessary to consider the request.

(3)       Under point (14) of Article
287 of Directive 2006/112/EC, Poland may exempt from VAT taxable persons whose
annual turnover is no higher than the equivalent in national currency of EUR 10
000 at the conversion rate on the day of its accession.

(4)       By Council Decision 2009/790/EC
of 20 October 2009 authorising the Republic of Poland to apply a measure
derogating from Article 287 of Directive 2006/112/EC on the common system of
value added tax[4],
Poland was authorised, until 31 December 2012 and as a derogating measure, to
exempt from VAT taxable persons whose annual turnover is no higher than the
equivalent in national currency of EUR 30 000 at the conversion rate on the day
of its accession. Given that this higher threshold has resulted in reduced VAT
obligations for the smallest businesses, whilst the latter may still opt for
the regular VAT arrangements in accordance with Article 290 of Directive
2006/112/EC, Poland should be authorised to apply the measure for a further
limited period.

(5)       In its proposal of 29
October 2004 for a Council Directive amending Directive 77/388/EEC with a view
to simplifying value added tax obligations[5],
the Commission included provisions aimed at allowing Member States to set the
annual turnover ceiling for the VAT exemption scheme at up to EUR 100 000 or
the equivalent in national currency, with the possibility of updating that
amount each year. The extension request submitted by Poland is compatible with
that proposal.

(6)       From the information provided
by Poland, the measure has led to an estimated reduction of the overall amount
of budget revenues from VAT of approximately 0,14 %.

(7)       The derogation has no
impact on the Union’s own resources accruing from VAT.

(8)       Decision 2009/790/EC
should therefore be amended accordingly,

HAS ADOPTED THIS DECISION:

Article 1

In Article 2 of Decision 2009/790/EC the
date "31 December 2012" is replaced by the date "31 December
2015".

Article 2

This Decision is addressed to the Republic
of Poland.

Done at Brussels,

For
the Council

The
President

[1]               OJ L 347, 11.12.2006, p. 1.

[2]               OJ L 283, 30.10.2009, p. 53.

[3]               OJ L 347, 11.12.2006, p. 1.

[4]               OJ L 283, 30.10.2009, p. 53.

[5]               COM(2004) 728 final.