Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax
Date: 2016-12-01
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: VAT, broadcasting, electronic commerce, provision of services, tax harmonisation, telecommunications

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   EUROPEAN COMMISSION  Brussels, 1.12.2016  COM(2016) 756 final 2016/0372 (NLE)   Modernising VAT for cross-border B2C e-commerce Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax {SWD(2016) 379} {SWD(2016) 382}  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

This proposal is part of the package of legislation on modernising VAT for cross-border B2C 
e-commerce. The context for the package is set out in detail in the explanatory memorandum 
for  the  proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  and  Directive 
2009/132/EC  as  regards  certain  value  added  tax  obligations  for  supplies  of  services  and 
distance  sales  of  goods  -  COM(2016) 757.  In  preparing  this  package  of  proposals  the 
Commission, as part of the Better Regulation agenda, carried out a regulatory fitness check of 
the  existing  Mini  One  Stop  Shop  (MOSS)  which  applies 
to  B2C  supplies  of 
telecommunications, broadcasting and electronically supplied services as well as of the 2015 
changes to the place of supply rules for such services. The regulatory fitness check identified 
that  the  requirement  as  part  of  the  2015  rules  to  use  two  pieces  of  evidence  for  the 
identification  of  the  location  of  customers  is  particularly  onerous  for  SMEs  and  micro-
businesses. 

The  proposal  to  amend  Council  Implementing  Regulation  (EU)  No  282/2011  laying  down 
implementing  measures  for  Directive  2006/112/EC  on  the  common  system  of  value  added 
tax1  is  designed  to  address  this  shortcoming  with  effect  from  2018  by  providing  that  a 
business  with  cross-border  intra-Community  sales  of  telecommunications,  broadcasting  and 
electronically supplied services up to EUR 100 000 will only need one piece of evidence. 

2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  proposal  is  based  on  Article  397  of  Directive  2006/112/EC  on  the  common  system  of 
value  added  tax2  (the  'VAT  Directive').  This  article  provides  that  the  Council,  acting 
unanimously  on  a  proposal  from  the  Commission,  shall  adopt  the  measures  necessary  to 
implement the VAT Directive. 

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  is  consistent  with  the  principle  of  subsidiarity  as  the  problem  which  has  been 
identified (high administrative burden, in particular for SMEs) is triggered by a requirement 
laid down in the existing Regulation. The proposal simplifies this requirement and will thus 
clearly offer value over and above what can be achieved at Member State level. 

• 

Proportionality 

The proposal is consistent with the principle of proportionality i.e. it does not go beyond what 
is necessary to meet the objectives of the Treaty on the Functioning of the European Union, in 
particular the smooth functioning of the single market. As with the subsidiarity test, it is not 
possible for Member States to address the problems and problem drivers without a proposal to 
amend  the  VAT  Directive  and  associated  acts.  The  introduction  of  this  proposal  is 
proportional  in  that  it  offers  a  significant  simplification  for  SMEs  and  micro-businesses. 
However, this simplification does not place undue risk on VAT revenues for Member States 
given that total sales for the businesses who will benefit from this simplification are estimated 
to account for just 0.3% of total cross-border sales of the services concerned. 

1 
2 

OJ L 77, 23.3.2011, p. 1. 
OJ L 347, 11.12.2006, p. 1. 

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Choice of the instrument 

This proposal amends Council implementing Regulation (EU) No 282/2011. 

3. 

RESULTS OF EX-POST EVALUATION, STAKEHOLDER CONSULTATION 
AND IMPACT ASSESSMENT 

This proposal is part of the package of legislation on modernising VAT for cross-border B2C 
e-commerce.  The  results  of  the  ex-post  evaluation,  stakeholder  consultation  and  the  impact 
assessment are set out in detail in the explanatory memorandum for the proposal for a Council 
Directive  amending  Directive  2006/112/EC  and  Directive  2009/132/EC  as  regards  certain 
value  added  tax  obligations  for  supplies  of  services  and  distance  sales  of  goods  - 
COM(2016) 757. 

The stakeholder consultation identified that the requirement of the 2015 changes to the place 
of supply rules for electronic services to have two pieces of evidence to identify the location 
of  customers  is  particularly  onerous  for  SMEs  and  micro-businesses.  It  requires  systems 
development and  investment in  merchant retailing software  which is  disproportionate to  the 
level  of  cross-border  sales.  The  simplified  evidence  requirements  complement 
the 
introduction  of  the  cross-border  sales  threshold  of  EUR 10 000  in  the  proposal  within  this 
package to amend Council Directive 2006/112/EC. In quantitative terms, the introduction of 
an  intra-EU  cross-border  threshold  in  2018  will  take  6 500  businesses  out  of  the  current 
MOSS  system  leading  to  a  potential  regulatory  cost  saving  for  these  businesses  of 
EUR 13 million. The introduction in 2018 of simplified evidence requirements will benefit an 
additional  1 000  businesses.  The  study  supporting  the  impact  assessment  has  estimated  that 
the requirement for one piece of evidence does not present an undue risk to VAT revenues for 
Member States. 

4. 

BUDGETARY IMPLICATIONS 

This proposal is part of the package of legislation for the proposal on modernising VAT for 
cross-border B2C e-commerce. The budgetary implications for the package as a whole are set 
out in detail in the explanatory memorandum for the proposal to amend the VAT Directive - 
COM(2016) 757. This amendment should not generate costs for tax administrations to adjust 
to  the  new  threshold  and  could  simplify  the  complexity  of  auditing  such  businesses.  As 
outlined above, there should not be an undue risk to overall VAT revenues as a result of this 
change given that they represent 0.3% of total cross-border sales. 

5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

The requirement laid down in Article 24b(d) of Implementing Regulation (EU) No 282/2011 
that  the  supplier  of  telecommunications,  broadcasting  and  electronically  supplied  services 
supplied to non-taxable persons has to collect two items of non-contradictory evidence of the 
place of establishment of his customers is extremely burdensome for businesses, in particular 
SMEs. This  is  because their business  flow and  volume is  not  important enough to  invest  in 
costly  technological  solutions  allowing  them  to  obtain  two  forms  of  proof  of  the  customer 
location. This proposal, therefore, provides that a single item of evidence is sufficient where 
the total annual value of the supplies, exclusive of VAT, covered by Article 24b(d) does not 
exceed EUR 100 000.  This  simplification should  already take effect as  from 1 January 2018 
as  it  does  not  require  any  changes  to  the  IT  system  for  registration  and  declaration  and 
payment of the VAT (the MOSS). 

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2016/0372 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING REGULATION 

amending Implementing Regulation (EU) No 282/2011 laying down implementing 
measures for 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 397 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Council  Implementing  Regulation  (EU)  No  282/20112  lays  down  detailed  provisions 
for the presumption of the location of the customer for determining the place of supply 
of  telecommunications,  broadcasting  or  electronically  supplied  services  provided  to 
non-taxable person. 

The  evaluation  of  the  requirements  for  the  application  of  those  presumptions  has 
shown that for the taxable person established in a Member State and supplying such 
services  to  non-taxable  person  in  other  Member  States,  to  obtain,  under  certain 
circumstances,  two  items  of  non-contradictory  evidence  of  the  place  where  his 
customer is established or has his permanent address or usually resides, is extremely 
burdensome. 

The  burden  is  particularly  onerous  for  small  and  medium-sized  companies.  The 
requirement  for  one  piece  of  evidence  should  simplify  the  obligations  for  such 
companies whose intra-Community supplies to consumers in other Member States are 
below a certain threshold. 

The  simplification  of 
is 
complementary  to  the  amendments  introduced  by  Article  1  of  Council  Directive 
[…]/EU3  in  the  special  schemes  laid  down  in  Chapter  6  of  Title  XII  of  Directive 
2006/112/EC and should therefore apply from the same date. 

the  requirement 

the  customer's 

to  prove 

location 

(5) 

Implementing  Regulation  (EU)  No  282/2011  should 
accordingly, 

therefore  be  amended 

1 
2 

3 

OJ L 347, 11.12.2006, p. 1. 
Council  Implementing  Regulation  (EU)  No  282/2011  of  15  March  2011  laying  down  implementing 
measures for Directive 2006/112/EC on the common system of value added tax (OJ L 77, 23.3.2011, p. 
1). 
Council  Directive  […]/EU  of  […]  amending  Directive  2006/112/EC  and  Directive  2009/132/EC  as 
regards certain value added tax obligations for supplies of services and distance sales of goods. 

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HAS ADOPTED THIS REGULATION: 

Article 1 

In Article 24b of Implementing Regulation (EU) No 282/2011, the following second and third 
paragraphs are added: 

'For supplies of services falling under point (d) of the first paragraph where the total value of 
such  services,  exclusive  of  VAT,  provided  by  a  taxable  person  from  his  business 
establishment  or  a  fixed  establishment  located  in  a  Member  State  to  persons  established, 
having their permanent address or usually residing in other Member States, does not exceed 
EUR 100 000, or the equivalent in national currency, in the current and the preceding calendar 
year, the presumption shall be that the customer is established, has his permanent address or 
usually  resides  at  the  place  identified  as  such  by  the  supplier  on  the  basis  of  one  item  of 
evidence as listed in Article 24f. 

Where,  during  a  calendar  year,  the  threshold  provided  in  the  second  paragraph  has  been 
reached, that paragraph shall not apply as of that time and until such time as the conditions 
provided in that paragraph are fulfilled again.' 

Article 2 

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

It shall apply from 1 January 2018. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

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