Proposal for a COUNCIL IMPLEMENTING DECISION extending the application of Council Implementing Decision 2012/181/EU authorising Romania to apply a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax
Date: 2014-10-24
Institutions: European Commission
Subjects: Romania, VAT, derogation from EU law, small business, tax exemption













EUR-Lex - 52014PC0653 - EN











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52014PC0653

Proposal for a COUNCIL IMPLEMENTING DECISION extending the application of Council Implementing Decision 2012/181/EU authorising Romania to apply a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax /* COM/2014/0653 final - 2014/0302 (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
(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 letters registered with the Commission
on 28 April 2014 and 22 August 2014, Romania requested an authorisation to
continue to exempt taxable persons whose annual turnover is no higher than the
equivalent in national currency of EUR 65 000 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 1 September 2014
of the request made by Romania. By letter dated 3 September 2014, the
Commission notified Romania 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 inputs.
Under Article 287(18) of the VAT Directive,
  Romania may exempt from VAT taxable persons whose annual turnover is no
higher than the equivalent in national currency of EUR 35 000 at the conversion
rate on the day of its accession.
In 2011, Romania 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 2012/181/EU
of 26 March 2012, the Council authorised Romania to exempt from VAT taxable
persons whose annual turnover is no higher than the equivalent in national
currency of EUR 65 000 until 31 December 2014. This measure is optional for
taxable persons.
Romania has now
requested an extension of that measure.
From the information provided by Romania, it appears that more than 10000 taxable persons benefited from VAT exemption as a
result of the application of the measure. In addition, the structure of the
Romanian economy shows that more than 84% of the total number of taxpayers has
a turnover below EUR 65 000. Approximately 21% of such taxpayers are registered
for VAT and contribute to only 1.81% in the total of the VAT revenues and to
only 0.54% in the total state budget revenues. Romania considers that this
measure brings simplification both for taxable persons and for the tax
administration. It is proposed to extend the derogation for another period
until 31 December 2017.
Existing provisions in the area of the
proposal
Similar derogations have been granted to
other Member States. 
Consistency with the other policies and
objectives of the Union
The measure is in line with the Union's
objectives for small businesses, as laid out in Commission Communication
"Think small first" – a "Small Business Act" for
Europe" (COM(2008) 394 of 25 June 2008).
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 Implementing 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 65 000 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 Romania 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 65 000 at the conversion rate on the day of its
accession.
Legal basis
Article 395 of the VAT Directive.
Subsidiarity principle
Considering the provision of the VAT
Directive on which the proposal is based, 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 Implementing 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 Implementing 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 Romania will carry out a compensation calculation in accordance
with Article 6 of Council Regulation (EEC EURATOM) 1553/89.
5.           OPTIONAL ELEMENTS 
Limitation clause
The proposal is limited in time.
2014/0302 (NLE)
Proposal for a
COUNCIL IMPLEMENTING DECISION
extending the application of Council
Implementing Decision 2012/181/EU authorising Romania 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 tax[1], and in particular
Article 395(1) thereof,
Having regard to the proposal from the European
Commission,
Whereas:
(1)       By letters registered with
the Commission on 28 April 2014 and 22 August 2014, Romania requested
authorisation for a measure derogating from Article 287 (18) 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 65 000 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)       In accordance with the
second paragraph of Article 395(2) of Directive 2006/112/EC, the Commission
informed the other Member States by letter dated 1 September 2014 of the
request made by Romania. By letter dated 3 September 2014, the Commission
notified Romania that it had all the information necessary to consider the
request.
(3)       A special scheme for small
enterprises is already available to Member States under Title XII of Directive
2006/112/EC. Under point (18) of Article 287 of Directive 2006/112/EC, Romania may exempt from VAT taxable persons whose annual turnover is no higher than the
equivalent in national currency of EUR 35 000 at the conversion rate on the day
of its accession.
(4)       By Council Implementing Decision
2012/181/EU of 26 March 2012 authorising Romania to introduce a special measure
derogating from Article 287 of Directive 2006/112/EC on the common system of
value added tax[2],
Romania was authorised, until 31 December 2014 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 65 000 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, Romania should be authorised to apply the measure for a further
limited period. 
(5)       From the information
provided by Romania, the measure will only have a negligible impact on the VAT collected
at the stage of final consumption.
(6)       The derogation has no
impact on the Union’s own resources accruing from VAT,
HAS ADOPTED THIS DECISION: 
Article 1
By way of derogation from point 18 of
Article 287 of Directive 2006/112/EC, Romania is authorised to exempt from VAT
taxable persons whose annual turnover is no higher than the equivalent in national
currency of EUR 65 000 at the conversion rate on the day of its accession to
the European Union. 
Article 2
This decision shall apply from 1 January
2015 until 31 December 2017.
Article 3
This Decision is addressed to Romania.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 347, 11.12.2006, p. 1.
[2]               OJ L 92, 30.03.2012, p. 26.