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
Date: 2012-10-03
Institutions: European Commission
Subjects: Poland, VAT, derogation from EU law, small and medium-sized enterprises, tax-free allowance, turnover

EUROPEAN 
COMMISSION 

Brussels, 3.10.2012  
COM(2012) 567 final 

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 

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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  tax1  (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  20092  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. 

1 
2 

OJ L 347, 11.12.2006, p. 1. 
OJ L 283, 30.10.2009, p. 53. 

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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. 

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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. 

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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) 

(2) 

(3) 

(4) 

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. 

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. 

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. 

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  tax4,  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 

3 
4 

OJ L 347, 11.12.2006, p. 1. 
OJ L 283, 30.10.2009, p. 53. 

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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 obligations5, 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:  

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

Article 1 

Article 2 

This Decision is addressed to the Republic of Poland. 

Done at Brussels,  

For the Council 
The President 

5 

COM(2004) 728 final. 

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