Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/676/EU authorising Romania to continue to apply a special measure derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax
Date: 2019-06-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Romania, VAT, derogation from EU law, supply, tax avoidance, tax evasion, taxpayer, wood product

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   EUROPEAN COMMISSION  Brussels, 28.6.2019  COM(2019) 304 final 2019/0144 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/676/EU authorising Romania to continue to apply a special measure derogating from Article 193 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  (‘the  VAT  Directive’1),  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  11 March 2019,  Romania  requested  the 
authorisation  to  continue  to  apply  a  measure  derogating  from  Article 193  of  the  VAT 
Directive, which determines the person liable for the payment of VAT.  

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States by letters dated 9 April 2019 of the request made by Romania. By letter dated 
10 April 2019, the Commission notified Romania 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 

As  a  general  rule,  Article  193  of  the  VAT  Directive  stipulates  that  the  taxable  person 
supplying goods or services is normally liable to pay VAT. 

Pursuant to Article 395 of the VAT Directive, Member States may apply measures derogating 
from the provisions of the VAT Directive to simplify the procedure for collecting VAT or to 
prevent certain forms of tax evasion or avoidance if they have been authorised by the Council. 

Romania requested in 2009 a derogation in order to be authorised to apply the reverse charge 
mechanism to, inter alia, supplies of wood products. Under this procedure, the taxable person, 
to  whom  the  supplies  are  made,  becomes  liable  for  the  payment  of  the  VAT.  These  woods 
products include, more specifically, standing timber, round or cleft working wood, fuel wood, 
timber products, as well as square-edged or chipped wood and wood in the rough, processed 
or semi-manufactured wood. 
This  request  was  approved  by  Council  Implementing  Decision  2010/583/EU2  until  31 
December 2013 and, as regards the wood products, it was subsequently extended by Council 
Implementing Decision 2013/676/EU3 until 31 December 2016 and by Council Implementing 
Decision (EU) 2016/12064 until 31 December 2019.  

Romania has now again asked for an extension of the derogation regarding the application of 
the reverse charge mechanism to supplies of these wood products. 

On  the  basis  of  the  report  provided  by  Romania,  which  was  presented  together  with  the 
request  for  extension  of  the  measure,  designating  the  recipient  as  the  person  liable  for  the 
payment  of  VAT  for  supplies  of  the  above-mentioned  wood  products  had  the  effect  of 

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OJ L 347, 11.12.2006, p. 1. 
Council Implementing Decision 2010/583/EU of 27 September 2010 authorising Romania to introduce 
a  special  measure  derogating  from  Article  193  of  Directive  2006/112/EC  on  the  common  system  of 
value added tax (OJ L 256, 30.9.2010, p. 27) 
Council Implementing Decision 2013/676/EU of 15 November 2013 authorising Romania to continue 
to  apply  a  special  measure  derogating  from  Article  193  of  Directive  2006/112/EC  on  the  common 
system of value added tax (OJ L 316, 27.11.2013, p. 31) 
Council  Implementing  Decision  (EU)  2016/1206  of  18  July  2016  amending  Implementing  Decision 
2013/676/EU authorising Romania to continue to apply a special measure derogating from Article 193 
of Directive 2006/112/EC on the common system of value added tax (OJ L 198, 23.7.2016, p. 47) 

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preventing tax evasion and avoidance in this sector which is characterised by a large number 
of small resellers and intermediaries which have proved difficult to control. An extension for 
another limited period seems therefore justifiable as it would appear that the measure has had 
no  negative  impact  on  fraud  at  the  retail  level,  in  other  sectors  or  in  other  Member  States. 
Taking into consideration the unchanged legal and factual situation, it is therefore proposed to 
extend  the  derogating  measure,  allowing  Romania  to  continue  to  apply  this  derogating 
measure until 31 December 2022. 

Derogations  are  in  general  granted  for  a  limited  period  of  time  as  to  allow  an  assessment 
whether the special measure is appropriate and effective and in order to grant Member States 
time  to  introduce  other  conventional  measures  to  tackle  the  respective  problem  until  the 
expiry  of  the  derogating  measure.  A  derogation  allowing  making  use  of  the  reverse  charge 
mechanism is only granted exceptionally for specific fraudulent areas and constitutes a means 
of last resort.  

Therefore, until the expiry of this derogation Romania should implement other conventional 
measures  to  fight  and  prevent  further  spreading  of  VAT  fraud  in  the  sector  of  timber.  As  a 
consequence  there  should  be  no  further  need  to  derogate  from  Article  193  of  Directive 
2006/112/EC with regard to these supplies. 

• 

Consistency with existing policy provisions in the policy area 

Similar derogations in relation to Article 193 of the VAT Directive have been granted to other 
Member States. 

The  proposed  measure  is,  therefore,  consistent  with  the  existing  provisions  of  the  VAT 
Directive.  

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. 

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision. 

Under  Article  395  of  Council  Directive  2006/112/EC,  a  derogation  from  the  common  VAT 
provisions  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. 

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3. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

This proposal is based on a request made by Romania 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  preventing  certain  forms  of  tax 
evasion or avoidance in the wood sector and has therefore a potential positive impact as it will 
continue to prevent previously applied fraud schemes in this wood sector. The non-extension 
of the measure would, according to Romania, inevitably lead to the revival of these schemes. 

However, because of the narrow scope of the derogation and the limited application in time, 
the impact will in any case be limited. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will have no negative implication for the EU budget. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The proposal is limited in time. 

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2019/0144 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2013/676/EU authorising Romania to continue to 
apply a special measure derogating from Article 193 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) 

Implementing  Decision  2010/583/EU2  and, 

Council 
subsequently,  Council 
Implementing Decision 2013/676/EU3 authorised Romania to apply a special measure 
designating the taxable person to whom supplies of wood products by taxable persons 
are  made  as  the  person  liable  for  the  payment  of  value  added  tax  (VAT)  on  those 
supplies.  The  authorisation  granted  by  Implementing  Decision  2013/676/EU  was 
extended to 31 December 2019 by Council Implementing Decision (EU) 2016/12064. 

By  letter  registered  with  the  Commission  on  11 March 2019,  Romania  requested 
authorisation  to  continue  to  apply  the  special  measure  authorised  by  Implementing 
Decision 2013/676/EU. The request was accompanied by a report on the application of 
that measure, as required by Article 3 of that Implementing Decision. 

By letters dated 9 April 2019, the Commission informed the other Member States of 
the request made by Romania. By letter dated 10 April 2019, the Commission notified 
Romania that it had all the information necessary to consider the request. 

According  to  information  provided  by  Romania  in  its  request,  the  factual  situation 
which justified application of the special measure has not changed. Moreover, analysis 
by the Romanian authorities indicates that the measure has  proved to  be  effective in 
reducing tax evasion. 

(5) 

The Commission considers that the special measure is proportionate to the objectives 
pursued  since  it  is  confined  to  very  specific  operations  in  a  sector  which  poses 

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2 

3 

4 

OJ L 347, 11.12.2006, p.1. 
Council Implementing Decision 2010/583/EU of 27 September 2010 authorising Romania to introduce 
a  special  measure  derogating  from  Article  193  of  Directive  2006/112/EC  on  the  common  system  of 
value added tax (OJ L 256, 30.9.2010, p. 27). 
Council Implementing Decision 2013/676/EU of 15 November 2013 authorising Romania to continue 
to  apply  a  special  measure  derogating  from  Article  193  of  Directive  2006/112/EC  on  the  common 
system of value added tax (OJ L 316, 27.11.2013, p. 31) 
Council  Implementing  Decision  (EU)  2016/1206  of  18  July  2016  amending  Implementing  Decision 
2013/676/EU authorising Romania to continue to apply a special measure derogating from Article 193 
of Directive 2006/112/EC on the common system of value added tax (OJ L 198, 23.7.2016, p. 47) 

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(6) 

(7) 

considerable problems  with  regard to  tax evasion  and avoidance.  It  further considers 
that continued application of the measure would not have any adverse impact on the 
prevention of fraud at the retail level, in other sectors or in other Member States. 

Romania should therefore be authorised to continue to apply the special measure for a 
further limited period of time until 31 December 2022. 

Derogations  are  in  general  authorised  for  a  limited  period  of  time  to  allow  an 
assessment of whether the special measures are appropriate and effective. Derogations 
grant  Member  States  time  to  introduce  other  conventional  measures  to  tackle  the 
problem in question until the expiry of the special measures. A derogation allowing for 
use  to  be  made  of  the  reverse  charge  mechanism  is  only  granted  exceptionally  for 
specific  areas  where  fraud  occurs  and  constitutes  a  means  of  last  resort.  Romania 
should therefore implement  other  conventional  measures  to  fight  and prevent  further 
spreading  of  VAT  fraud  in  the  sector  of  timber  and  wood  and,  as  a  consequence, 
should  no  longer  need  to  derogate  from  Article  193  of  Directive 2006/112/EC  with 
regard  to  such  supplies.  It  is  therefore  not  necessary  at  this  stage  to  include  specific 
provision in  Implementing Decision 2013/676/EU for the making of  further requests 
to  extend  the  derogation  authorised  by  that  Implementing  Decision  beyond  31 
December 2022. 

(8) 

The derogating measure has no adverse impact on the Union's own resources accruing 
from VAT. 

(9) 

Implementing Decision 2013/676/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

Council Implementing Decision 2013/676/EU should be amended as follows: 

(1) in Article 1, the date ‘31 December 2019’ is replaced by the date ‘31 December 2022’; 

Article 1 

(2) Article 3 is deleted. 

This Decision is addressed to Romania. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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