# EUR-Lex - 52012PC0661 - EN

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# 52012PC0661

**Proposal for a COUNCIL DECISION amending Decision 2010/39/EU authorising Portugal to continue to apply a measure derogating from Articles 168, 193 and 250 of Directive 2006/112/EC on the common system of value added tax /* COM/2012/0661 final - 2012/0314 (NLE) */**

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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, the
Council, acting unanimously on a proposal from the Commission, may authorise
any Member State to apply special measures derogating from the Directive in
order to simplify the procedure for charging the tax or to prevent certain
types of tax evasion or avoidance.

By letter registered with the Commission on
18 April 2012 the Portuguese Republic requested an authorisation to continue
applying a measure derogating from Articles 168, 193 and 250 of Directive
2006/112/EC, in order to apply a special optional scheme for doorstep sales.

In accordance with Article 395(2) of
Directive 2006/112/EC, the Commission informed the other Member States by
letter dated 1 June 2012 of the request made by the Portuguese Republic. The
Commission notified the Portuguese Republic by letter dated 6 June 2012 that it
had all the information necessary to consider the request.

General context

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 193 of
Directive 2006/112/EC provides that the VAT shall be payable by any taxable
person carrying out a taxable supply of goods or services, except where it is
payable by another person in the cases referred to in Articles 194 to 199 and
Article 202. Article 250(1) of Directive 2006/112/EC provides that every
taxable person shall submit a VAT return setting out all the information needed
to calculate the tax that has become chargeable and the deductions to be made
including, in so far as is necessary for the establishment of the basis of
assessment, the total value of the transactions relating to such tax and
deductions and the value of any exempt transactions.

The measure pursued by the Portuguese
Republic however deviates from the abovementioned provisions. This special
optional scheme concerns firms active in the doorstep sales sector who meet
specific conditions and are authorised by the competent tax authorities to
apply that scheme. The firms in question make use of interposed resellers by
selling their products directly to those resellers who, in turn, sell the same
products directly to the final consumers.

By way of derogation from Article 193 of
Directive 2006/112/EC, those firms to which the scheme applies are made liable
for the VAT borne on their resellers' supplies of goods to final consumers. By
way of derogation from Article 168 of Directive 2006/112/EC, those firms are given
the right to deduct the VAT payable or paid by their resellers for the
corresponding goods that have been supplied to them. By way of derogation from
Article 250 of Directive 2006/112/EC, the resellers' obligation to submit a VAT
return relating to the goods which the authorised firms have supplied to them
and the supply of those goods to the final consumers, is transferred to the authorised
firm.

Only such firms may be authorised to use
that special scheme whose total turnover is derived from doorstep sales made by
resellers acting in their own name and on their own account, provided that all
products sold by the firm appear in a pre-established list of the prices
applicable at the final consumption stage and the firm sells its products
directly to resellers who, in turn, sell it directly to final consumers.

The derogating measure of the Portuguese
Republic had initially been granted by Council Decision 2004/738/EC[1] for a period until 31 December
2009 and was again granted by Council Decision 2010/39/EU[2] until 31 December 2012.

In its current request, the Portuguese
Republic informed the Commission that the reasons pursuant to which the Council
has taken its Decision 2010/39/EU are still valid and explained that the
special measure is being applied until now and has proved to be very useful in
terms of simplifying the VAT collection and maintaining a more effective VAT
control in this sector.

Derogations are in general granted for a
limited time as to allow an assessment whether the special measure is
appropriate and effective. In this respect, based on the information provided
by the Portuguese Republic, the Commission understands that the special measure
in question provides a facilitation to both tax administrations and businesses
as it mainly concerns very small taxpayers without the appropriate structure or
organisational capacity to comply with the requirements laid down in VAT law. The
amount of tax due at the level of final consumption is only affected to a
negligible extent. An extension of the derogating measure is therefore
appropriate.

However, any extension should be limited in
time in order to assess whether the conditions, on which the derogations are
based, would still be valid. Therefore, it is proposed to extend the derogation
until the end of 2015 and to request the Portuguese Republic to present,
together with the extension request, a report by 1 April 2015 at the latest including
a review of the application of the special measure in case a further extension
would be envisaged beyond 2015.

Existing provisions in the area of the
proposal

Not applicable.

Consistency with 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 is designed to simplify the
procedure for charging tax and has, therefore, a potential positive impact for
both businesses and administrations. The solution has been identified by the Portuguese
Republic as a suitable measure.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

Summary of the proposed action

The proposal aims to authorise the Portuguese
Republic to continue to apply a measure derogating from Articles 168, 193 and
250 of Directive 2006/112/EC so as to allow for imposing on certain authorised
firms the liability for the VAT borne on supplies of goods to final consumers
made by interposed resellers, granting those authorised firms the right to
deduct the VAT payable or paid by the resellers for the respective purchase of
those goods and transferring to the authorised firms the resellers' obligation
to submit a VAT return linked to the supplies of those goods from the authorised
firms to the resellers and from the resellers to the final consumers.

The application and the necessity for the
derogating measure are to be reviewed and reported on by the Portuguese
Republic upon any request for an extension. The Decision will expire on the
date specified therein.

Legal basis

Article 395(1) of Council Directive
2006/112/EC of 28 November 2006 on the common system of value added tax.

Subsidiarity principle

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

Proportionality principle

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

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

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

Choice of instruments

Proposed instruments: Council Decision.

Other means would not be adequate for the
following reasons:

Under Article 395 of Council Directive
2006/112/EC, a derogation from the common VAT rules is only possible upon
authorization of the Council acting unanimously on a proposal from the
Commission. A Council Decision is the only suitable instrument since it can be
addressed to an individual Member State.

4.           BUDGETARY IMPLICATION

The proposal will not adversely affect the
Union's own resources from VAT.

5.           OPTIONAL ELEMENTS

The proposal includes a review clause and a
sunset clause.

2012/0314 (NLE)

Proposal for a

COUNCIL DECISION

amending Decision 2010/39/EU authorising
Portugal to continue to apply a measure derogating from Articles 168, 193 and
250 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,

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)       By letter registered with
the Commission on 18 April 2012, Portugal requested authorisation to continue
to apply a special measure that was previously granted by Council Decision 2010/39/EU[4], derogating from the provisions
of Directive 2006/112/EC governing the right of deduction, the person liable to
pay the tax and the obligation to submit a VAT return.

(2)       In accordance with the
second subparagraph of Article 395(2) of Directive 2006/112/EC, the Commission
informed the other Member States of the request made by Portugal by letter dated
1 June 2012. By letter dated 6 June 2012, the Commission notified Portugal that
it had all the information necessary to consider the request.

(3)       The derogating measure
pursued by Portugal deviates from the provisions of Directive 2006/112/EC as it
allows for the application of a special optional scheme concerning particular firms
acting in the doorstep sales business that fulfil specific conditions, where
authorised by the competent tax authorities. Those firms apply a particular
business model by selling their products directly to interposed resellers who,
in turn, sell the same products directly to the final consumers.

(4)       The special measure
derogates from Article 168 of Directive 2006/112/EC which governs a taxable
person's right to deduct VAT charged on goods and services supplied to him for
the purposes of his taxed transactions by granting those firms the right to deduct
the VAT payable or paid by their resellers for the corresponding goods that
have been supplied to them.

(5)       The special measure
derogates from Article 193 of Directive 2006/112/EC which governs the liability
to pay the VAT by establishing those firms to which the scheme applies as the
person liable for the VAT borne on their resellers' supplies of goods to final
consumers.

(6)       The special measure
derogates from Article 250 of Directive 2006/112/EC which governs the
obligation to submit a VAT return by transferring the resellers' obligation to
submit a VAT return relating to the goods which those firms have supplied to
them and the supply of those goods to the final consumers.

(7)       The special measure may
only be applied to firms whose total turnover is derived from doorstep sales
made by resellers acting in their own name and on their own account, provided
that all products sold by the firm appear in a pre-established list of the
prices applicable at the final consumption stage and the firms sell their products
directly to resellers who, in turn, sell it directly to final consumers.

(8)       This special scheme has
the effect of ensuring that the VAT collected at the retail sale stage on sales
of products coming from these firms is actually paid to the Treasury, thereby
helping to prevent tax fraud. It also provides facilitation to the tax
administration by simplifying the arrangements for collecting VAT and reducing
the resellers' obligations in relation to VAT.

(9)       According to the
information provided by Portugal, the legal and factual situation which
justified the current application of the special measure in question has not
changed and continues to exist. Portugal should therefore be authorised to continue
applying this special measure during a further period, but limited in time
until 31 December 2015 in order to allow for a review of the necessity and
effectiveness of the derogating measure.

(10)     Where Portugal considers a
further extension beyond 2015 to be necessary, a report on the application of
the measure should be submitted to the Commission together with the extension
request no later than 31 March 2015 in order to reserve sufficient time for the
Commission to examine the request and, in case the Commission would come
forward with a proposal, for the Council to adopt it.

(11)     The derogation will only
have a negligible effect on the overall amount of tax collected at the stage of
final consumption and will not adversely affect the Union's own resources accruing
from value added tax.

(12)     Decision 2010/39/EU should therefore
be amended accordingly,

HAS ADOPTED THIS DECISION:

Article 1

Article 4 of Decision 2010/39/EU is replaced
by the following:

'Article 4

1.           This Decision shall expire
on 31 December 2015.

2.           Any request for the
extension of the special measure provided for in this Decision shall be
submitted to the Commission by 31 March 2015 at the latest.
Such request shall be accompanied by a report on the application of the special
measure.'

Article 2

This Decision shall apply as from 1 January
2013.

Article 3

This
Decision is addressed to the Portuguese Republic.

Done at Brussels,

For
the Council

The
President

[1]               OJ L 325, 28.10.2004, p. 62

[2]               OJ L 19, 23.1.2010, p. 5

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

[4]               OJ L 19, 23.1.2010, p. 5