Proposal for a COUNCIL REGULATION amending Regulation (EU) No 904/2010 as regards the certified taxable person
Date: 2017-10-04
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, VAT, administrative cooperation, domestic market, fraud, intra-EU trade, tax collection, tax evasion, tax law, taxpayer

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   EUROPEAN COMMISSION  Brussels, 4.10.2017  COM(2017) 567 final 2017/0248 (CNS)   Proposal for a COUNCIL REGULATION amending Regulation (EU) No 904/2010 as regards the certified taxable person  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

This proposal is part of the package of legislation to introduce a definitive VAT system for 
intra-Union  cross-border  trade  based  on  the  principle  of  taxation  in  the  Member  State  of 
destination of the goods in order to create a robust single European VAT area.  A legislative 
proposal for such a simpler and fraud-proof definitive VAT system for intra-Union trade was 
included in the Commission’s Work Programme for 20171. These proposals  for a definitive 
VAT  system  for  intra-Union  cross-border  trade  also  include  improvements  to  the  current 
VAT system as requested by the Member States2. 

Both  for  the  definitive  VAT  system  and  also  as  regards  certain  of  the  aforementioned 
improvements to the current system taxable persons should be able, under certain conditions, 
to  obtain  the  status  of  a  certified  taxable  person.  The  concept  of  certified  taxable  person 
should  allow  for  an  attestation  that  a  particular  business  can  globally  be  considered  to  be  a 
reliable  taxpayer.  Certain  simplification  rules  related  to  call-off  stock  arrangements,  chain 
transactions and the proof of transport of goods transported or dispatched to another Member 
State  which  could  be  fraud-sensitive,  should  apply  only  where  certified  taxable  persons  are 
involved in the relevant transaction. The certified taxable person concept  should in addition 
allow for a gradual implementation of the definitive VAT system because during the first step 
of  that  definitive  system  reverse  charge  would  apply  where  the  acquirer,  in  case  of  intra-
Union  supplies  of  goods,  is  a  certified  taxable  person.  The  justification  is  that,  the  certified 
taxable  person  being  by  definition  a  reliable  taxpayer,  no  fraud  should  occur  as  a  result  of 
VAT not being charged on intra-Union supplies of goods made for a certified taxable person.  

In this context, it is essential for businesses and tax administrations that the certified taxable 
person  status  of  a  business  can  be  checked  immediately  and  online.  To  that  end,  it  is 
necessary  that  all  Member  States  store  information  on  businesses  and their  certified taxable 
person status in an electronic system and that the competent authorities of each Member State 
ensure  that  confirmation  is  provided  of  the  certified  taxable  person  status  of  any  business. 
These  obligations  of  Member  States  are  to  be  established  within  the  legislation  on 
administrative co-operation, i.e. Council Regulation (EU) No 904/2010 of 7 October 2010 on 
administrative co-operation and combating fraud in the field of value added tax3 (the "VAT 
Administrative Cooperation Regulation"). 

• 

Consistency with existing policy provisions in the policy area 

The proposal is intended to give a practical effect to the certified taxable person status, which 
is  a  basic  component  of  the  definitive  VAT  regime  for  intra-Union  trade  based  on  the 
principle  of  taxation  in  the  Member  State  of  destination  of  the  goods,  as  announced  in  the 

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Commission Work Programme 2017: Delivering a Europe that protects, empowers and defends, 
COM(2016) 710 final.  
http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1487237841093&uri=CELEX:52016DC0710 
See Council conclusions of 8 November 2016 on Improvements to the current EU VAT rules for cross-
border 
(No.  14257/16  FISC  190  ECOFIN  1023  of  9  November  2016) 
http://data.consilium.europa.eu/doc/document/ST-14257-2016-INIT/en/pdf 
OJ L 268, 12.10.2010, p. 1–18 

transactions 

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VAT  Action  Plan4.  The  certified  taxable  person  status  is  also  relevant  in  relation  to  certain 
improvements to the current system requested by Member States; namely in relation to rules 
on  chain  transactions,  call-off  stock  situations  and  the  proof  of  transport  in  exempt  intra-
Community supplies of goods. 

• 

Consistency with other Union policies 

The creation of a simple, modern and fraud-proof VAT system is one of the fiscal priorities 
set out by the Commission for 20175. 

Combating  missing  trader  VAT  fraud  is  also  one  of  the  European  Union's  priority  crime 
areas, under the 2014-2017 EU Policy Cycle of Europol6. Reference could also be made to the 
agreement7 on the creation of the European Public Prosecutor's Office (EPPO) which will be 
competent, under certain conditions, for VAT fraud. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposal is based on Article 113 of the Treaty on the Functioning of the European Union 
(TFEU).  This  article  provides  for  the  Council,  acting  unanimously  in  accordance  with  a 
special legislative procedure and after consulting the European Parliament and the Economic 
and Social Committee, to adopt provisions for the harmonisation of Member States' rules in 
the area of indirect taxation 

• 

Subsidiarity (for non-exclusive competence)  

According to the principle of subsidiarity, as set out in Article 5(3) of the Treaty on European 
Union  (TEU),  action  at  Union  level  may  only  be  taken  if  the  envisaged  aims  cannot  be 
achieved sufficiently by the Member States alone and can therefore, by reason of the scale or 
effects of the proposed actions, be better achieved by the Union. 

Issues  related  to  the  storage  of,  and  the  provision  of  access  to,  information  regarding  the 
certified taxable person status of businesses can, by their nature, not be decided by individual 
Member  States  since  businesses  and  tax  administrations  in  all  Member  States  should,  in  a 
standardised way, be able to check the certified taxable person status of businesses established 
in other Member States. This requires a common framework and an initiative in this respect 
requires  a  proposal  by  the  Commission  to  amend  the  VAT  Administrative  Cooperation 
Regulation. 

• 

Proportionality 

The proposal simply defines a framework regarding the certified taxable person status, while 
operational control and application measures remain the responsibility of the Member States. 
In  particular,  the  granting  or  repealing  of  the  certified  taxable  person  status  of  individual 

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Action  Plan  on  VAT  –  Towards  a  single  EU  VAT  area  –  Time  to  decide  (COM(2016)  148  final  of 
7 April 2016) 
Annual  Growth  Survey  2017,  see  https://ec.europa.eu/info/publications/2017-european-semester-
annual-growth-survey_en 
EMPACT priorities (European multidisciplinary platform against criminal threats) 
See http://www.consilium.europa.eu/en/press/press-releases/2017/06/08-eppo/ 

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taxable persons, based upon commonly agreed conditions, remains the sole competence of the 
Member States. 

• 

Choice of the instrument 

Since the existing legislation is a Regulation, it can be amended only by another Regulation. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

The Commission has set up two working groups for discussions at technical level regarding 
VAT,  namely  the  Group  on  the  Future  of  VAT  (GFV)  and  the  VAT  Expert  Group  (VEG). 
These groups have discussed the definitive VAT system for intra-Union trade, including the 
issue  of  the  certified  taxable  person.  In  addition,  a  public  consultation  was  organised  from 
20 December 2016 to 20 March 2017 resulting in 121 contributions8. 

• 

Impact assessment 

Reference  is  made  to  the  separate  impact  assessment  [SWD(2017)325  and  its  summary 
SWD(2017)326] which has been carried out in relation to, inter alia, this proposal. 

The impact assessment for the proposal was considered by the Regulatory Scrutiny Board on 
14 July 2017 [Ares(2017)3573962-SEC(2017)423]. The Board gave a positive opinion to the 
proposal with some recommendations that have been taken into account. The opinion of the 
Board and the  recommendations are mentioned  in  Annex 1 to  the Staff Working Document 
for the impact assessment accompanying this proposal. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will have no negative implications for the Union budget. 

5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

The aim of Article 1 of the proposal is to provide the basis for the integration of the certified 
taxable person status into the VIES system (VAT Information Exchange System). Currently, 
the  VIES  system  is,  inter  alia,  used  to  check  the  validity  of  the  VAT  number  of  a  client  in 
another Member State in order to ascertain that a supply of goods, transported or dispatched 
to  that  customer  outside  the  Member  State  of  supply,  can  be  exempt  from  VAT.  From  a 
practical point of view, the checking of the certified taxable person status of the customer in 
order  not  to  charge  VAT  in  case  of  an  intra-Union  supply  of  goods  under  the  definitive 
system is quite similar as the checking of a VAT number. Since the  certified taxable person 

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See,  about  stakeholder  consultation,  Annex  2  of  the  Staff  Working  Document  -  Impact  assessment 
accompanying  the  document  Proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  as 
regards  harmonising  and  simplifying  certain  rules  in  the  value  added  tax  system  and  introducing  the 
definitive system for the taxation of trade between Member States and the results of the related open 
public consultation:  
https://ec.europa.eu/taxation_customs/consultations-get-involved/tax-consultations_en 

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status is relevant in cross-border situations and since the IT infrastructure is already in place 
and  used  by  all  tax  administrations,  it  is  suitable  to  use  the  existing  infrastructure  and  to 
extend its functioning in order to include the certified taxable person status of taxable persons.  

To integrate the certified taxable person status, it is first necessary that Member States, who 
are in charge of granting and withdrawing the certified taxable person status of businesses that 
are  established  in  their  territory,  collect  this  information  and  store  it  electronically.  To  that 
end, Article 17 of the VAT Administrative Cooperation Regulation is amended to ensure that 
also information on the certified taxable person status of taxable persons is stored. Further by 
adapting  Article 31  of  the  VAT  Administrative  Cooperation  Regulation  it  is  ensured  that 
confirmation  of the  certified  taxable person  status of a particular person can  be obtained by 
electronic means. 

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2017/0248 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EU) No 904/2010 as regards the certified taxable person 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament1,  
Having regard to the opinion of the European Economic and Social Committee2, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

In  its  VAT  Action  Plan3,  the  Commission  announced  its  intention  to  put  forward  a 
proposal  setting  out  the  principles  for  a  definitive  value  added  tax  (VAT)  system  in 
relation  to  cross-border  business-to-business  trade  between  Member  States.  The 
Council,  in  its  conclusions  of  8  November  20164,  invited  the  Commission  to  make 
certain  improvements  in  the  meantime  to  the  Union  VAT  rules  in  relation  to  cross-
border transactions. 

The certified taxable person is one of the essential components of that new definitive 
VAT  system  for  intra-Union  trade  and  will,  in  addition,  be  used  for  certain 
simplification measures within the current VAT system.  The concept  of the certified 
taxable  person  should  allow  for  proving  that  a  specific  taxable  person  can  be 
considered as a reliable taxpayer within the Union. 
Certain rules laid down by Directive 2006/112/EC5 for transactions that are considered 
fraud-sensitive  shall  apply  only  where  certified  taxable  persons  are  involved.  It  is 
therefore  essential  that  the  certified  taxable  person  status  of  a  taxable  person  can  be 
verified by electronic means in order to guarantee that those rules may apply. 

(4) 

In the first step towards a definitive VAT system as proposed by the VAT Action Plan, 
in the case of intra-Union supplies of goods the reverse charge procedure should apply 

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OJ C , , p. . 
OJ C , , p. . 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT - Towards a single EU VAT area - Time to 
decide (COM(2016)148 final of 7.4.2016). 
Council  conclusions  of  8  November  2016  on  Improvements  to  the  current  EU  VAT  rules  for  cross-
border transactions (No. 14257/16 FISC 190 ECOFIN 1023 of 9 November 2016).  
Council  Directive  2006/112/EC  of  28 November  2006  on  the  common  system  of  value  added  tax 
(OJ L 347, 11.12.2006, p. 1). 

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(5) 

where  the  person  acquiring  the  goods  is  a  certified  taxable  person.  It  is  therefore 
essential,  for  a  taxable  person  making  an  intra-Union  supply  of  goods,  to  know 
whether or not his customer has been granted the certified taxable person status. Given 
the  practical  similarity  with  the  current  exemption  for  intra-Community  supplies  of 
goods and in order to avoid  unnecessary costs or  burden, use  should be  made  of the 
current  VAT  Information  Exchange  System  (VIES)  in  which  information  on  the 
certified taxable person status should be integrated. 

In  order  to  provide  information  on  the  certified  taxable  person  status  of  taxable 
persons  in  Member  States,  Member  States  should  record  and  store  in  an  electronic 
system the up to date certified taxable person status of taxable persons. Tax authorities 
of  a  Member  State  should  thereafter  grant  tax  authorities  of  other  Member  States 
automatic  access  to  this  information  and  should  be  able,  upon  demand  from  persons 
referred to in Article 31(1) of Council Regulation (EU) No 904/20106, to confirm by 
electronic means the  certified taxable person status of any taxable  person  where  that 
status is relevant for the purpose of the transactions referred to in that Article. 

(6) 

Taking  into  account  that  the  provisions  included  in  this  Regulation  result  from  the 
amendments introduced by Council Directive […]7/EU, this Regulation should apply 
from the date of the application of those amendments. 

(7) 

Regulation (EU) No 904/2010 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Regulation (EU) No 904/2010 is amended as follows: 

(1)      Article 17 is replaced by the following: 

Article 1 

'Article 17 

Each  Member  State  shall  store  in  an  electronic  system  the  following 

1.  
information: 

(a) 

(b) 

(c) 

(d) 

information  which  it  collects  pursuant  to  Chapter  6  of  Title  XI  of  Directive 
2006/112/EC; 

data on the identity, activity, legal form and address of persons to whom it has 
issued  a  VAT  identification  number,  collected  pursuant  to  Article  213  of 
Directive 2006/112/EC, as well as the date on which that number was issued; 

data on VAT identification numbers it has issued which have become invalid, 
and the dates on which those numbers became invalid; 

information  which  it  collects  pursuant  to  Articles  360,  361,  364  and  365  of 
Directive 2006/112/EC as well as, as from 1 January 2015, information which 
it collects pursuant to Articles 369c, 369f and 369g of that Directive; 

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Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating 
fraud in the field of value added tax (OJ L 268, 12.10.2010, p.1). 
Council  Directive  […]/EU  of  […]  amending  Directive  2006/112/EC  as  regards  harmonising  and 
simplifying  certain  rules  in  the  value  added  tax  system  and  introducing  the  definitive  system  for  the 
taxation of trade between Member States (OJ L […]) 

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(e) 

information  as  regards  the  status  of  a  certified  taxable  person  pursuant  to 
Article 13a of Directive 2006/112/EC, as well as the date on which that status 
was granted, refused and withdrawn. 

2. 
The  technical  details  concerning  the  automated  enquiry  of  the  information 
referred to in points (b), (c), (d) and (e) of paragraph 1 of this Article shall be adopted 
in accordance with the procedure provided for in Article 58(2).' 

(2) 

Paragraph 1 of Article 31 is replaced by the following:  

The  competent  authorities  of  each  Member  State  shall  ensure  that  persons 
'1. 
involved  in  the  intra-Community  supply  of  goods  or  of  services  and  non-established 
taxable  persons  supplying  telecommunication  services,  broadcasting  services  and 
electronically supplied services, in particular those referred to in Annex II to Directive 
2006/112/EC,  are  allowed  to  obtain,  for  the  purposes  of  such  transactions, 
confirmation by electronic means of the validity of the VAT identification number of 
any  specified  person  as  well  as  the  associated  name  and  address.  The  competent 
authorities of each Member State shall also ensure that it can be verified by electronic 
means  whether  any  specified  person  is  a  certified  taxable  person  pursuant  to  Article 
13a of Directive 2006/112/EC where such tax status is relevant for the purposes of that 
Article. This information shall correspond to the data referred to in Article 17 of this 
Regulation.' 

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 2019. 

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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