Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/54/EU authorising the Republic of Slovenia to introduce a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax
Date: 2015-09-03
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Slovenia, VAT, derogation from EU law, small business, tax exemption

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   EUROPEAN COMMISSION  Brussels, 3.9.2015  COM(2015) 416 final 2015/0185 (NLE)   Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/54/EU authorising the Republic of Slovenia to introduce a special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax   
 
EXPLANATORY MEMORANDUM 

1. 

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CONTEXT OF THE PROPOSAL 

Reasons 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  27  May  2015  and  17  June  2015,  Slovenia 
requested an authorisation to continue to exempt taxable persons whose annual turnover is no 
higher  than  EUR  50  000.  In  accordance  with  Article  395(2)  of  the  VAT  Directive,  the 
Commission informed the other Member States by letters dated 24 June 2015 of the request 
made by Slovenia. By letter dated 25 June 2015, the Commission notified Slovenia 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(15)  of  the  VAT  Directive,  Slovenia  may  exempt  from  VAT  taxable 
persons whose annual turnover is no higher than the equivalent in national currency of EUR 
25 000. 

In  2012,  Slovenia  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 
Implementing  Decision  2013/54/EU  of  22  January  2013  the  Council  authorised  Slovenia  to 
exempt from VAT taxable persons whose annual turnover is no higher than EUR 50 000 until 
31 December 2015. This  measure is  optional for  taxable persons.  Based on this experience, 
Slovenia has now requested an extension of that measure which would continue to be optional 
for taxable persons. 

From the information provided by Slovenia, at the end of 2013, 51.45% of the VAT payers 
had  a  taxable  turnover  below  EUR  50  000  and  the  VAT  revenue  generated  by  them 
represented  only  1%  of  the  total  VAT  revenue.  In  addition,  the  number  of  taxable  persons 
registered  for  VAT  purposes  with  a  threshold  between  EUR  25  000  and  EUR  50  000  has 
decreased both in 2013 and 2014. This signifies that an increasing number of small business 
make use of the simplification measure. 

From information provided by Slovenia, it appears that the impact of the measure on tax VAT 
revenue collected at the final consumption stage is negligible. 

It  is  therefore  proposed  to  extend  the  derogation  for  another  period  until  the  earliest  of  31 
December 2018 or the entry into force of a Directive on the annual turnover thresholds below 
which taxable persons may be exempt from VAT. 

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Consistency with existing policy provisions in the policy area 

Similar derogations have been granted to other Member States. 

• 

Consistency with other Union policies 

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. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive. 

• 

Subsidiarity (for non-exclusive competence)  

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

• 

Proportionality 

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 the instrument 

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. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

Not applicable 

• 

Stakeholder consultations 

Not relevant. 

• 

Collection and use of expertise 

There was no need for external expertise.  

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Impact assessment 

The proposal for a Council Implementing Decision aims at continuing for another three years 
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  on  the  reduction  of  administrative  burden  for  businesses  and  tax 
administration without a major impact on the total VAT revenue. Because of the narrow scope 
of the derogation and its limited application in time, the scope will in any case be limited. 

4. 

BUDGETARY IMPLICATIONS 

The  proposal  has  no  implication  for  the  EU  budget  because  Slovenia  will  carry  out  a 
compensation  calculation  in  accordance  with  Article  6  of  Council  Regulation  (EEC 
EURATOM) 1553/89. 

5. 

OTHER ELEMENTS 

The proposal includes a sunset clause; an automatic time limit which is set at 31 December 
2018 for this derogation. 

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2015/0185 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2013/54/EU authorising the Republic of Slovenia to 
introduce 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 tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

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2 

Article  287(15)  of  Directive  2006/112/EC  authorises  Slovenia  to  exempt  from  value 
added  tax  (VAT)  taxable  persons  whose  annual  turnover  is  no  higher  than  EUR  25 
000. 
By  Council  Implementing  Decision  2013/54/EU2,  Slovenia  was  authorised,  until  31 
December  2015  and  as  a  derogation,  to  exempt  from  VAT  taxable  persons  whose 
annual turnover is no higher than EUR 50 000. 

By  letters  registered  with  the  Commission  on  27  May  2015  and  17  June  2015, 
Slovenia  requested  authorisation  for  an  extension  of  the  measure  derogating  from 
Article  287(15)  of  Directive  2006/112/EC  in  order  to  be  able  to  continue  to  exempt 
from  VAT  taxable  persons  whose  annual  turnover  is  no  higher  than  EUR  50  000. 
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 24 June 2015 of 
the request made by Slovenia. By letter dated 25 June 2015, the Commission notified 
Slovenia that it had all the information necessary to consider the request. 

From the information provided by Slovenia, at the end of 2013, 51.45% of the VAT 
payers had a taxable turnover below EUR 50 000 and represented only 1% of the total 
VAT revenue. 

Given that this higher threshold has resulted in reduced VAT obligations for the small 
businesses, whilst such businesses may still opt for the regular VAT arrangements in 
accordance with Article 290 of Directive 2006/112/EC, Slovenia should be authorised 
to apply the measure for a further limited period. 

OJ L 347, 11.12.2006, p. 1 
Council Implementing Decision 2013/54/EU of 22 January 2013 authorising the Republic of Slovenia 
to introduce a special measure derogating from Article 287 of Directive 2006/112/EC on the common 
system of value added tax (OJ L 22, 25.1.2013, p.15). 

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(7) 

(7) 
The  derogation  has  no  impact  on  the  Union's  own  resources  accruing  from 
VAT because Slovenia will carry out a compensation calculation in accordance with 
Article 6 of Council Regulation (EEC, EURATOM) 1553/893.  

(8) 

(8) 

Implementing Decision 2013/54/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

In  the  second  paragraph  of  Article  2  of  Implementing  Decision  2013/54/EU,  the  date  ‘31 
December 2015’ is replaced by the date ‘31 December 2018’. 

Article 1 

This Decision is addressed to the Republic of Slovenia. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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Council  Regulation  (EEC,  Euratom)  No  1553/89  of  29  May  1989  on  the  definitive  uniform 
arrangements for the collection of own resources accruing from value added tax (OJ L 155, 7.6.1989, p. 
9). 

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