Proposal for a COUNCIL DECISION authorising Slovenia to apply a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax
Date: 2012-11-16
Institutions: European Commission
Subjects: Slovenia, VAT, derogation from EU law, small business, tax exemption

EUROPEAN 
COMMISSION 

Brussels, 16.11.2012  
COM(2012) 667 final 

2012/0316 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising Slovenia to apply 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/EC1 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  30  July  2012,  Slovenia  requested  an 
authorisation  to  apply  a  measure  derogating  from  Article  287  of  Directive  2006/112/EC, 
allowing Slovenia to exempt from VAT taxable persons whose annual turnover is no higher 
than EUR 50 000. 

In  accordance  with  Article  395(2)  of  Directive  2006/112/EC,  the  Commission  informed  the 
other Member States by letter dated 18 September 2012 of the request made by Slovenia. The 
Commission  notified  Slovenia  by  letter  dated  19  September  2012  that  it  had  all  the 
information necessary to consider the request. 

General context 

Chapter 1 of Title XII of Directive 2006/112/EC 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 287 of Directive 2006/112/EC, particular Member States which acceded after 1 
January  1978  may  exempt  taxable  persons  whose  annual  turnover  is  no  higher  than  the 
equivalent  in  national  currency  of  the  amounts  at  the  conversion  rate  on  the  day  of  their 
accession as specified in that provision. As regards Slovenia, this threshold is established at 
an amount of EUR 25 000 pursuant to point 15 of Article 287 of Directive 2006/112/EC. 

In  the  current  economic  and  political  climate,  Slovenia  would  like  to  raise  this  threshold  to 
EUR  50  000.  The  introduction  of  such  a  threshold  will  simplify  the  VAT  system  for  small 
enterprises by significantly reducing 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 Slovenian authorities, the 
special measure pursued would only have a negligible effect on the overall amount of VAT 
revenue of Slovenia collected at the stage of final consumption (not more than 0.3%). 

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OJ 347, 11.12.2006, p.1. 

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Existing provisions in the area of the proposal 

In  2004,  the  Commission  made  a  proposal  to  -  inter  alia  -  increase  the  annual  turnover 
threshold available to Member States (COM(2004) 728 final2) for the exemption from VAT 
of taxable persons to EUR 100 000. 

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  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 50 000 and therefore has a potential positive impact. 

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

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

The  proposal  aims  to  authorise  Slovenia  to  introduce  a  simplification  measure  derogating 
from  Article  287  of  Directive  2006/112/EC  so  as  to  allow  for  the  exemption  from  VAT  of 
taxable persons with an annual turnover no higher than EUR 50 000. 

Legal basis 

Article 395(1) of Council Directive 2006/112/EC. 

Subsidiarity principle 

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

2 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2004:0728:FIN:EN:PDF 

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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 instrument: 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  most  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 because Slovenia 
will carry out a compensation calculation in accordance with Article 6 of Council Regulation 
(EEC, EURATOM) 1553/89. 

5. 

OPTIONAL ELEMENTS 

The proposal includes a sunset clause. 

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2012/0316 (NLE) 

Proposal for a 

COUNCIL DECISION 

authorising Slovenia to apply 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, 

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) 

By  letter  registered  with  the  Commission  on  30  July  2012,  Slovenia  requested 
authorisation  to  apply  a  measure  derogating  from  Article  287  of  Directive 
2006/112/EC, allowing Slovenia to exempt from VAT taxable persons whose annual 
turnover is no higher than EUR 50 000. 

In  accordance  with  Article  395(2)  of  Directive  2006/112/EC,  the  Commission 
informed the other Member States of the request made by Slovenia by letter dated 18 
September  2012.  By  letter  dated  19  September  2012,  the  Commission  notified 
Slovenia that it had all the information necessary to consider the request. 

Under Article 287 of Directive 2006/112/EC, particular Member States which acceded 
after 1 January 1978 may exempt taxable persons whose annual turnover is no higher 
than the equivalent in national currency of the amounts at the conversion rate on the 
day  of  their  accession  as  specified  in  that  provision.  Slovenia  has  requested  that  its 
corresponding threshold, which is established at EUR 25 000 pursuant to point 15 of 
Article 287, be increased to EUR 50 000. 

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

In its proposal for a Directive simplifying valued added tax obligations of 29 October 
20044,  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 

3 
4 

OJ 347, 11.12.2006, p.1. 
COM(2004) 728 final. 

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the equivalent in national currency, with the possibility of updating this amount each 
year. The request submitted by Slovenia is in line with that proposal. 

(6) 

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, 

HAS ADOPTED THIS DECISION:  

Article 1 

By way of derogation from paragraph 15 of Article 287 of Directive 2006/112/EC, Slovenia is 
authorised  to  exempt  from  VAT  taxable  persons  whose  annual  turnover  is  no  higher  than 
EUR 50 000. 

Article 2 

This  Decision  shall  apply  until  the  date  of  entry  into  force  of  Union  rules  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 Republic of Slovenia. 

Done at Brussels,  

For the Council 
The President 

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