Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/53/EU authorising the Kingdom of Belgium to introduce a special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added tax
Date: 2015-11-06
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Belgium, VAT, derogation from EU law, small business, tax exemption

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   EUROPEAN COMMISSION  Brussels, 6.11.2015  COM(2015) 552 final 2015/0256 (NLE)   Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/53/EU authorising the Kingdom of Belgium to introduce a special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

1. 

• 

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  15  July  2015  and  20  August  2015,  Belgium 
requested an authorisation to continue to exempt taxable persons whose annual turnover is no 
higher  than  the  equivalent  in  national  currency  of  EUR  25  000.  In  accordance  with  Article 
395(2)  of  the  VAT  Directive, the  Commission  informed  the  other  Member  States  by  letters 
dated 3 September 2015 of the request made by Belgium. By letter dated 4 September 2015, 
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 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 285 of the VAT Directive, Member States which did not make use of Article 14 
of Council Directive 67/288/EEC1, can exempt taxable persons whose threshold is no higher 
than EUR 5 000. As Belgium did not make use of this option, this resulted in the application 
of a particularly low threshold which in 2012 corresponded to EUR 5 580. 

In  2012,  Belgium  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 2013/53/EU of 22 December 20132, the Council authorised Belgium 
to exempt from VAT taxable persons whose annual turnover is no higher than  EUR 25 000 
until  31  December  2015.  This  measure  is  optional  for  taxable  persons.  Belgium  has  now 
requested an extension of that measure. 

Although authorised to apply the exemption up to a turnover of EUR 25 000, Belgium applied 
in practice, and as first step, a lower threshold of EUR 15 000 as from 1 April 2014. From the 
information  provided  by  Belgium,  this  first  change  of  the  threshold  resulted  in  2014  in  an 
increase of 18 942 taxable persons exempt from VAT under the SME scheme (from 79 190 to 
98 132  or  23,9%).  In  relation  to  the  total  number  of  taxable  persons,  this  represents  an 
increase from 7,4% to 11,4%. As from the introduction of this threshold, the budgetary impact 
of the measure was 0,0074% of the total VAT revenues in 2014. Extrapolated for the whole 
year 2014, the impact would correspond to 0,0188% of the total VAT revenues. 

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OJ 71, 14.4.1967, p. 1303/67. 
OJ L 22, 25.1.2013, p. 13. 

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On the basis of this experience, Belgium considers that the derogating measure has brought 
simplification,  both  for  taxable  persons  and  for  the  tax  administration,  and  would  therefore 
like  to  increase  the  threshold  up  to  the  initial  maximum  of  EUR 25 000  as  from  2016.  In 
Belgium's  view,  this  should  reduce  the  administrative  burden  for  an  additional  number  of 
small  businesses  who,  as  mentioned,  would  remain  entitled  to  opt  for  continuing  the 
application  of  the  normal  VAT  rules.  At  the  same  time,  the  impact  of  the  measure  on  the 
overall amount of the VAT revenue collected at the stage of final consumption would remain 
negligible.  

Since Belgium does not request a threshold which goes beyond what was previously already 
authorised,  the  derogation  can  be  extended  without  the  need  to  change  its  content.  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. 

Consistency with existing policy provisions in the policy area 

Similar  derogations  have  been  granted  to  other  Member  States.  Poland3  was  granted  a 
threshold  of  EUR  30 000,  Lithuania4  a  threshold  of  EUR  45 000,  Latvia5  and  Slovenia6  a 
threshold of EUR 50 000, Italy7 and Romania8a threshold of EUR 65 000. 

• 

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" '9. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive. 

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Council  implementing  Decision  2015/1173/EU  of  14  July  2015  amending  Decision  2009/790/EC 
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 tax (OJ L 189, 17.7.2015, p. 36). 
Council  implementing  Decision  2014/795/EU  of  7  November  2014  extending  the  application  of 
implementing  Decision  2011/335/EU  authorising  the  Republic  of  Lithuania  to  apply  a  measure 
derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax (OJ L 
330, 15.11.2014, p. 44). 
Council implementing Decision 2014/796/EU of 7 November 2014 authorising the Republic of Latvia 
to  apply a  measure  derogating  from  Article  287 of Directive  2006/112/EC on  the  common  system  of 
value added tax (OJ L 330, 15.11.2014, p. 46). 
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). 
Council implementing Decision 2013/678/EU of 15 November 2013 authorising the Italian Republic to 
continue  to  apply  a  special  measure  derogating  from  Article  285  of  Directive  2006/112/EC  on  the 
common system of value added tax (OJ L 316, 27.11.2013, p. 35). 
Council  implementing  Decision  2014/931/EU  of  16  December  2014  extending  the  application  of 
Implementing  Decision  2012/181/EU  authorising  Romania  to  introduce  a  special  measure  derogating 
from  Article  287  of  Directive  2006/112/EC  on  the  common  system  of  value  added  tax  (OJ  L  365, 
19.12.2014, p. 145). 
COM(2008) 394 of 25 June 2008 

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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. 

• 

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 25 000 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  Belgium  will  carry  out  a 
compensation  calculation  in  accordance  with  Article  6  of  Council  Regulation  (EEC 
EURATOM) 1553/89. 

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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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2015/0256 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2013/53/EU authorising the Kingdom of Belgium to 
introduce 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 tax10, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Under  Article  285  of  Directive  2006/112/EC,  Member  States,  which  have  not  made 
use of Article 14 of the Second Council Directive 67/228/EEC of 11 April 1967 on the 
harmonisation  of  legislation  of  Member  States  concerning  turnover  taxes,  structure 
and  procedures  for  application  of  the  common  system  of  value  added  tax11,  may 
exempt taxable persons whose annual turnover is no higher than EUR 5 000. Belgium 
has requested that this threshold be increased to EUR 25 000. 
By  Council  Implementing  Decision  2013/53/EU12,  Belgium  was  authorised,  until  31 
December  2015  and  as  a  derogation,  to  exempt  from  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.  In  practice, 
Belgium did not make use of the maximum authorised threshold but applied, as from 1 
April 2014, a threshold of EUR 15 000. 

By  letters  registered  with  the  Commission  on  15  July  2015  and  20  August  2015, 
Belgium  requested  again  authorisation  to  apply  an  exemption  threshold  of  EUR 
25 000. 

In  accordance  with  the  second  subparagraph  of  Article  395(2)  of  Directive 
2006/112/EC,  the  Commission  informed  the  other  Member  States  by  letter  dated  3 
September 2015 of the request made by Belgium. By letter dated 4 September 2015, 
the Commission notified Belgium that it had all the information necessary to consider 
the request. 

(5) 

From  information  provided  by  Belgium,  an  additional  18 942  taxable  persons 
benefited from the application of the increased threshold of EUR 15000 and it has led 

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OJ L 347, 11.12.2006, p. 1. 
OJ 71, 14.4.1967, p. 1303/67. 
Council Implementing Decision of 22 January 2013 authorising the Kingdom of Belgium to introduce a 
special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 22, 25.1.2013, p. 13–14). 

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(6) 

(7) 

(8) 

to  an  estimated  reduction  of  the  budget  revenues  from  VAT  of  approximately 
0,0188% in 2014. 

Given  that  the  applied  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, Belgium should be authorised 
to apply a threshold of EUR 25 000 as it may further reduce the VAT obligations for 
small  businesses; 
the  objectives  of  Commission 
Communication  entitled  ‘  “Think  Small  First”  —  A  “Small  Business  Act”  for  
Europe‘.13 

thereby  corresponding 

to 

According  to  Belgium,  the  derogating  measure  will  only  have  a  negligible  effect  on 
the overall amount of the tax revenue at the stage of final consumption. 

The  derogating  measure  will  have  no  adverse  impact  on  the  Union's  own  resources 
accruing  from  VAT  because  Belgium  will  carry  out  a  compensation  calculation  in 
accordance with Article 6 of Council Regulation (EEC EURATOM) 1553/89. 

(9) 

Implementing Decision 2013/53/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

In  the  second  paragraph  of  Article  2  of  Implementing  Decision  2013/53/EU,  the  date  ‘31 
December 2015’ is replaced by the date ‘31 December 2018’. 

Article 1 

This Decision is addressed to the Kingdom of Belgium. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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COM(2008) 394 of 25 June 2008 

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