Proposal for a COUNCIL DECISION authorising Belgium to apply a special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added tax
Date: 2012-11-14
Institutions: European Commission
Subjects: Belgium, VAT, derogation from EU law, small business, tax exemption

EUROPEAN 
COMMISSION 

Brussels, 14.11.2012  
COM(2012) 654 final 

2012/0312 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising Belgium to apply a special measure derogating from Article 285 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 21 June 2012 Belgium requested an authorisation 
to  introduce  a  measure  to  exempt  taxable  persons  whose  annual  turnover  is  no  higher  than 
EUR  25  000.  In  accordance  with  Article  395(2)  of  the  VAT  Directive,  the  Commission 
informed the other Member States by letter dated 13 September 2012 of the request made by 
Belgium. By letter dated 17 September 2012 the Commission notified Belgium 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  of  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 
inputs. 

Under Article 285 of the VAT Directive, Member States which did not make use of Article 14 
of Council Directive 67/228/EEC2, can exempt taxable persons whose threshold is no higher 
than EUR 5 000. 

In the current economic and political climate, the Belgian Government would like to raise this 
threshold to EUR 25 000, with the possibility to increase it in order to maintain its value in 
real  terms.  The  introduction  of  such  a  threshold  will  simplify  the  VAT  system  for  small 
enterprises and significantly reduce the burdens on those businesses eligible for the scheme by 
releasing them from many of the VAT obligations under the normal VAT arrangements. The 
system would be optional for taxable persons. According to the Belgian authorities, some 1% 
of taxable persons will make use of the scheme, with a corresponding minimal effect on the 
budget (around 0.2%).  

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 other policies and objectives of the Union 

1 
2 

OJ L 347, 11.12.2006, p.1 
OJ 71, 14.4.1967, p. 1303–1312 

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Not applicable. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

Consultation of interested parties 

Not relevant 

Collection and use of external expertise 

There was no need of external expertise 

Impact assessment 

The  proposal  for  a  Council  Decision  aims  at  introducing  a  simplification  measure  which 
removes  many  of  the  VAT  obligations  for  businesses  operating  with  an  annual  turnover  no 
higher than EUR 25 000 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  Belgium  to  introduce  a  measure  derogating  from  the  VAT  Directive  as 
regards a simplification measure for businesses with an annual turnover no higher than EUR 
25 000. 

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 instrument: Council Decision. 

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Under Article 395 of the VAT Directive, a derogation from the common 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  because  Belgium  will  carry  out  a 
compensation  calculation  in  accordance  with  Article  6  of  Council  Regulation  (ECC, 
EURATOM) 1553/89. 

5. 

OPTIONAL ELEMENTS 

Review/revision/sunset clause 

The proposal includes a sunset clause. 

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2012/0312 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising Belgium to apply a special measure derogating from Article 285 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 tax3, and in particular Article 395(1) thereof,  

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

In  a  letter  registered  with  the  Commission  on  21  June  2012,  Belgium  requested 
authorisation for a measure derogating from Article 285 of Directive 2006/112/EC in 
order to introduce a special measure exempting from value added tax (VAT) taxable 
persons whose annual turnover is no higher than EUR 25 000. Through that measure, 
those  taxable  persons  would  be  exempted  from  all  or  some  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 letter dated 13 September 2012 
of the request made by Belgium. By letter dated 17 September 2012 the Commission 
notified Belgium that it had all the information necessary to consider the request. 

Under Article 285 of Directive 2006/112/EC, Member States, who have not made use 
of  Article  14  of  Council  Directive  67/228/EEC4,  can  exempt  taxable  persons  whose 
turnover  is  no  higher  than  EUR  5  000.  Belgium  has  requested  that  this  threshold  be 
increased to EUR 25 000. 

A  higher  threshold  for  the  special  scheme  for  small  enterprises  is  a  simplification 
measure  in  that  it  may  significantly  reduce  the  VAT  obligations  of  the  smallest 
businesses. The special scheme is optional for taxable persons. 

In its proposal for a Directive simplifying valued added tax obligations of 29 October 
20045,  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 this amount each 
year. The request submitted by Belgium is in line with that proposal. 

3 
4 
5 

OJ L 347, 11.12.2006, p.1 
OJ 71, 14.4.1967, p. 1303–1312 
COM(2004) 728 final. 

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(6) 

The derogation has no impact on the Union's own resources accruing from VAT and 
only a negligible effect on the overall amount of the tax revenue of the Member State 
collected at the stage of final consumption, 

HAS ADOPTED THIS DECISION:  

Article 1 

By way of derogation from Article 285 of Directive 2006/112/EC, Belgium is authorised to 
exempt from VAT taxable persons whose annual turnover is no higher than EUR 25 000. 

Belgium may raise that ceiling in order to maintain the value of the exemption in real terms. 

Article 2 

This  Decision  shall  apply  until  the  date  of  entry  into  force  of  a  Directive  amending  the 
amounts  of  the  annual  turnover  ceilings  below  which  taxable  persons  may  qualify  for  VAT 
exemption or until 31 December 2015, whichever date is earlier. 

This Decision shall enter into force on the day following that of its publication in the Official 
Journal of the European Union. 

Article 3 

This Decision is addressed to the Kingdom of Belgium. 

Done at Brussels,  

For the Council 
The President 

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