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: 2018-09-20
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, 20.9.2018 COM(2018) 653 final 2018/0335 (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 

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  letter  registered  with  the  Commission  on  22  May  2018,  Slovenia  requested  an 
authorisation to continue to exempt from VAT 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 25 June 2018 of the request 
made by Slovenia. By letter dated 26 June 2018, the Commission notified Slovenia that it had 
all the information necessary to consider the request. 

1. 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

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. 

By Council Implementing Decision 2013/54/EU1 the Council authorised Slovenia to exempt 
from  VAT  taxable  persons  whose  annual  turnover  is  no  higher  than  EUR  50 000.  This 
Decision  was  prolonged  by  Council  Implementing  Decision  (EU)  2015/20892  until  31 
December  2018.  This  measure  is  optional  for  taxable  persons  who  can  always  opt  for  the 
normal VAT arrangements.  

Slovenia  has  requested  an  extension  of  that  measure.  From  the  information  provided  by 
Slovenia, at the end of 2017, around 48% of VAT registered persons had a taxable turnover 
below EUR 50 000 and the VAT revenue generated by them represented only 1% of the total 
VAT revenue of which 0.3% was represented by taxable persons with taxable turnover under 
25 000.  Additionally  the  number  of  taxable  persons  registered  for  VAT  purposes  with  a 
threshold  between  EUR  25 000  and  EUR  50 000  has  decreased  over  the  years  starting  in 
2013.  This  signifies  that  an  increasing  number  of  small  businesses  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. 

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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  (EU)  2015/2089  of  10  November  2015  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  (OJ  L  302, 
19.11.2015 p. 107).  

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It is therefore proposed to extend the derogation for another limited period until 31 December 
2021.  The  Commission  has  recently  launched  a  proposal3  modifying  Articles  281  to  294  of 
Directive 2006/112/EC governing the special scheme for small enterprises. It is thus possible 
that a directive amending those Articles enters into force and sets a date from which Member 
States are to apply national provisions to implement it. If this date is set before the derogation 
expires on 31 December 2021, this Decision should cease to apply. 

Consistency with existing policy provisions in the policy area 

• 
Similar derogations have been granted to other Member States. Luxembourg4 was granted a 
threshold of EUR 30 000, Poland5 and Estonia6 a threshold of EUR 40 000, Italy7 a threshold 
of EUR 65 000, Croatia8 a threshold of EUR 45 000, Latvia9 a threshold of EUR 40 000 and 
Romania10 a threshold of EUR 88 500.  

Derogations from the VAT Directive should always be limited in time so that their effects can 
be  assessed.  Moreover,  the  provisions  of  Articles  281  to  294  of  the  VAT  Directive  on  a 
special  scheme  for  small  enterprises  are  currently  subject  to  review.  As  announced  in  the 
VAT  Action  Plan11,  and  the  2017  Commission  Work  Programme12,  the  Commission's 
proposal on the SMEs scheme13 has recently been presented. 

It is therefore proposed to grant the derogating measure until 31 December 2021 or until the 
date from which Member States are to apply any national provisions that they are required to 
adopt  in  the  event  that  a  directive  is  adopted  amending  Articles  281  to  294  of  Directive 
2006/112/EC.  

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Proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  on  the  common  system  of  value 
added tax as regards the special scheme for small enterprises, 18.1.2018, COM(2018) 21 final. 
Council Implementing Decision (EU) 2017/319 of 21 February 2017 amending Implementing Decision 
2013/677/EU authorising  Luxembourg  to  introduce  a  special  measure  derogating  from  Article  285  of 
Directive 2006/112.EC on the common system of value added tax (OJ L 47, 24.2.2017, p. 7).  
Council  Implementing  Decision  (EU)  2016/2090  of  21  November  2016  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 324, 30.11.2016, p.7). 
Council Implementing Decision (EU) 2017/563 of 21 March 2017 authorising the Republic of Estonia 
to  apply  a  special  measure  derogating  from  Article  287  of  Directive  2006/112/EC  on  the  common 
system of value added tax (OJ L 80, 25.3.2017, p. 33). 
Council  Implementing  Decision  (EU)  2016/1988  of  8  November  2016  amending  Implementing 
Decision  2013/678/EU  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 
306, 15.11.2016, p. 11). 
Council  Implementing  Decision  (EU)  2017/1768  of  25  September  2017  authorising  the  Republic  of 
Croatia  to  introduce  a  special  measure  derogating  from  Article  287  of  Directive  2006/112/EC  on  the 
common system of value added tax (OJ L 250, 28.9.2017, p. 71). 
Council  Implementing  Decision  (EU)  2017/2408  of  18  December  2017  authorising  the  Republic  of 
Latvia  to  apply  a  special  measure  derogating  from  Article  287  of  Directive  2006/112/EC  on  the 
common system of value added tax (OJ L 342, 21.12.2017, p. 8). 
Council Implementing Decision (EU) 2017/1855 of 10 October 2017 authorising Romania to apply a 
special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 265, 14.10.2017, p. 19). 
Communication from the Commission to the European Parliament, the Council and the European and 
Social  Committee  on  an  action  plan  on  VAT,  Towards  a  single  EU  VAT  area  –  Time  to  decide, 
Brussels, 7.4.2016, COM(2016)148 final. 
Commission  Work  Programme  2017  -  Delivering  a  Europe  that  protects,  empowers  and  defends, 
Strasbourg, 25.10.2016, COM(2016)710 final 
Proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  on  the  common  system  of  value 
added tax as regards the special scheme for small enterprises, 18.1.2018, COM(2018) 21 final. 

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• 

Consistency with other Union policies 

The measure is in line with the Union's objectives for small businesses, as laid down in the 
Commission  Communication  "Think  small  first"  –  a  "Small  Business  Act"  for  Europe"14 
which  calls  on  the  Member  States  to  take  account  of  the  special  features  of  SMEs  when 
designing legislation and, therefore, to simplify the existing regulatory environment. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive.  

• 

Subsidiarity (for non-exclusive competence)  

Considering  the  provision  of  the  VAT  Directive  on  which  the  proposal  is  based,  the 
subsidiarity principle does not apply. 

• 

Proportionality 

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, i.e. simplification for an additional number of small taxable persons and for the tax 
administration. 

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision. 

Under  Article  395  of  Council  Directive  2006/112/EC,  a  derogation  from  the  common  VAT 
rules  is  only  possible  upon  authorisation  of  the  Council  acting  unanimously  on  a  proposal 
from the Commission. A Council Implementing Decision is the most suitable instrument since 
it can be addressed to an individual Member State. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

This proposal is based on a request made by Slovenia and concerns only this Member State. 

• 

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 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  impact  of  the  measure  will  in  any 
case be limited. 

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COM(2008)394 of 25 June 2008. 

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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.  

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2018/0335 (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) 

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Point  (15)  of  Article  287  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 by way of derogation from point (15) of Article 287 of Directive 
2006/112/EC,  to  exempt  from  VAT  taxable  persons  whose  annual  turnover  is  no 
higher  than  EUR  50 000.  By  Council  Implementing  Decision  (EU)  2015/20893,  the 
application of Decision 2013/54/EU was extended until 31 December 2018. 

By  letter  registered  with  the  Commission  on  22  May  2018,  Slovenia  requested  an 
authorisation to continue to exempt from VAT taxable persons whose annual turnover 
is no higher than EUR 50 000. 

In  accordance  with  the  second  subparagraph  of  Article  395(2)  of  Directive 
2006/112/EC,  the  Commission  transmitted  the  request  of  Slovenia  to  other  Member 
States  by  letter  dated  25  June  2018.  By  letter  dated  26  June  2018,  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 2017 around 48% of VAT 
registered  persons  had  a  taxable  turnover  below  EUR  50 000  and  the  VAT  revenue 
generated by them represented only 1% of the total VAT revenue of which 0.3% was 
represented by taxable persons with taxable turnover under 25 000. 

OJ 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). 
Council  Implementing  Decision  (EU)  2015/2089  of  10  November  2015  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  (OJ  L  302, 
19.11.2015, p. 107).  

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(6) 

(7) 

(8) 

Given that the 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 until 31 December 2021. 

As  Articles  281  to  294  of  Directive  2006/112/EC  governing  the  special  scheme  for 
small  enterprises are subject to  review, it is  possible that a directive amending those 
Articles  will  enter  into  force  setting  a  date  from  which  Member  States  are  to  apply 
national  provisions  before  the  period  of  validity  of  the  derogation  expires  on  31 
December 2021. If that happens, this Decision should cease to apply. 

The  derogation  has  no  impact  on  the  Union's  own  resources  accruing  from  VAT 
because Slovenia is to carry out a compensation calculation in accordance with Article 
6 of Council Regulation (EEC, Euratom) No 1553/894.  

(9) 

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

HAS ADOPTED THIS DECISION:  

Article 1 

In Article 2 of Implementing Decision 2013/54/EU, the second paragraph is replaced by the 
following: 

'It shall apply from 1 January 2019 until the earlier of the following two dates: 

(a) 

31 December 2021;  

(b) 
the date from which Member States are to apply any national provisions that they are 
required  to  adopt  in  the  event  that  a  directive  is  adopted  amending  Articles  281  to  294  of 
Directive 2006/112/EC governing the special scheme for small enterprises.' 

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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