Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply a special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added tax
Date: 2020-03-31
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, VAT, derogation from EU law, small business, tax exemption

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   EUROPEAN COMMISSION  Brussels, 31.3.2020  COM(2020) 124 final 2020/0048 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply a special measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

Pursuant  to  Article  395(1)  of  Council  Directive  2006/112/EC  of  28  November  2006  on  the 
common system of value added tax1 (‘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 26 July 2019, Italy requested an authorisation to 
continue,  until  31  December  2022,  to  exempt  from  VAT  taxable  persons  whose  annual 
turnover is below a certain threshold, as provided for in Article 285 of the VAT Directive, to 
increase this threshold from EUR 65 000 to EUR 100 000 and, in parallel, apply a mandatory 
electronic invoicing scheme to  the taxable persons concerned, and to  raise the threshold for 
voluntary organisations and associations for social advancement up to EUR 130 000.  

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member  States  by  letter  dated  20  September  2019  of  the  request  made  by  Italy.  By  letter 
dated  23  September  2019,  the  Commission  notified  Italy  that  it  had  all  the  information  it 
considered necessary for the appraisal of the request. 

Subsequently,  following  informal  discussions  with  the  competent  Commission  services  and 
further political assessments at national level, Italy decided to modify its original request by 
letter sent on 26 November 2019 and registered with the Commission on 5 December 2019.  

By  means  of  that  letter,  Italy  asked  to  withdraw  its  request  to  increase  the  exemption 
threshold  from  EUR  65  000  to  EUR  100  000,  explaining  that  this  request  was  based  on  a 
national  rule which was  in  the course of being repealed.  Instead,  Italy expressed its wish to 
keep  the  current  threshold  of  EUR  65  000,  which  is  in  line  with  the  flat-rate  scheme  for 
taxpayers  in  the  field  of  direct  taxes.  Moreover,  Italy  asked  to  withdraw  the  request 
concerning the EUR 130 000 threshold for voluntary organisations and associations for social 
advancement, given that it is linked to direct taxation measures not yet in force; Italy reserved 
the  right  to  resubmit  such  request  once  the  overall  measures  at  issue  enter  into  force. 
Furthermore,  following  the  Member  States’  agreement  during  the  Economic  and  Financial 
Affairs  Council  (ECOFIN)  of  8  November  2019  on  the  Commission  proposal  on  new 
simplification  rules  in  respect  of  VAT  for  small  businesses2,  which  was  adopted  on  18 
February 20203 and will enter into force on 1 January 2025, Italy requested that the extension 
of the derogating measure expire on 31 December 2024.  

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States by letter dated 10 December 2019 of the corrigendum to the original request 
that Italy had sent.  By letter dated 11 December 2019, the Commission notified Italy that it 
had all the information it considered necessary for the appraisal of the revised request. 

1 
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OJ L 347, 11.12.2006, p. 1. 
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, COM(2018) 21 final. 
Council  Directive  (EU)  2020/285  of  18  February  2020  amending  Directive  2006/112/EC  on  the 
common system of value added tax as regards the special scheme for small enterprises and Regulation 
(EU)  No  904/2010  as  regards  the  administrative  cooperation  and  exchange  of  information  for  the 
purpose  of  monitoring  the  correct  application  of  the  special  scheme  for  small  enterprises  (OJ  L  62, 
2.3.2020, p. 13). 

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1. 

• 

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  a  special  scheme  for  small  enterprises,  which  includes  the  possibility  to  exempt  from 
VAT  taxable  persons  below  a  certain  annual  turnover.  Taxable  persons  falling  under  this 
exemption  do  not  have  to  charge  VAT  on  their  supplies  and,  consequently,  cannot  deduct 
VAT on their inputs.  

The possibility of applying special VAT rules including exemptions or graduated tax relief to 
small  undertakings  was  first  introduced  by  Article  14  of  Council  Directive  67/228/EEC4. 
Member States which did not make use of the option provided for under that provision were 
allowed subsequently, according to Article 24(2)(b) of Directive 77/388/EEC5, now recast as 
the  first  paragraph  of  Article  285  of  the  VAT  Directive,  to  only  exempt  from  VAT  taxable 
persons  whose  annual  turnover  is  no  higher  than  EUR  5  000  or  the  equivalent  in  national 
currency.  

Italy  never  made  use  of  the  option  provided  for  by  Article  14  of  Council  Directive 
67/228/EEC. In 2007, it requested authorisation to derogate from the first paragraph of Article 
285,  by  exempting  from  VAT  taxable  persons  whose  annual  turnover  was  no  higher  than 
EUR 30 000. That request was prompted by the Italian economic structure, largely comprised 
of  micro  enterprises  with  a  very  small  number  of  employees,  and  Italy’s  desire  to  simplify 
VAT  obligations  for  small  businesses  and  to  ease  VAT  collection  for  the  national  tax 
administration. The derogating measure was authorised until 31 December 2010, by virtue of 
Council  Decision  2008/737/EC6.  The  measure  had  an  optional  character,  allowing  small 
businesses to opt for the normal VAT arrangements. 

Italy was subsequently authorised to extend the expiry date of the derogating measure until 31 
December 2013, by Council  Implementing Decision 2010/688/EU7, then until  31  December 
2016, by Council Implementing Decision 2013/678/EU8, which also increased the maximum 
exemption threshold from EUR 30 000 to EUR 65 000, and finally until 31 December 2019, 
by Council Implementing Decision (EU) 2016/19889.  

The present (revised) request from  Italy to prolong further the expiry date of the derogating 
measure until 31 December 2024, without increasing the current threshold of EUR 65 000 (or 

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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 tax (OJ 71, 14.4.1967, p. 1303). 
Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member 
States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 
L 145, 13.6.1977, p. 1). 
Council  Decision  2008/737/EC  of  15  September  2008  authorising  the  Italian  Republic  to  apply  a 
measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added 
tax (OJ L 249, 18.09.2008, p. 13). 
Council  Implementing  Decision  2010/688/EU  of  15  October  2010  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 294, 12.11.2010, p. 12). 
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  (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). 

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any  higher  value  which  is  equivalent  to  that  threshold  in  real  terms),  is  based  on  the  same 
grounds as those presented in the previous requests.  

Italy maintains that small and medium-sized enterprises, and in particular micro-enterprises, 
play  a  preponderant  role  in  the  non-financial  business  economic  sector  of  the  country,  in 
terms  of  both  added  value  and  employment.  Given  the  disproportionate  VAT  compliance 
costs such businesses bear in comparison with large enterprises, and the fact that they are still 
affected  by  the  economic  crisis,  Italy  states  that  the  derogating  measure  constitutes  a 
significant incentive for the start-up and consolidation of their economic activity.  

In this regard, it is stressed that the impact of the derogating measure on tax revenue collected 
at  the  final  consumption  stage  will  be  negligible,  whereas  its  impact  will  be  significant  in 
terms of simplifying both the tax obligations of the taxable persons concerned as well as the 
procedure for collecting VAT for the tax administration. It is noted that the measure affects 1 
332 000 taxable persons, that constitute 25% of the potentially eligible taxable persons. Italy 
estimates the total amount of revenue reduction at EUR 385.7 million.  

Based on the information provided by Italy, it is clear that the aim of the request to extend the 
derogating measure  is to  release small businesses from  many  of the VAT obligations under 
the  normal  VAT  arrangements  as  well  as  to  reduce  the  burden  of  the  tax  administration  in 
terms  of  tax  collection  and  the  auditing  of  small  businesses.  This  could  allow  the  tax 
administration  to  focus  its  control  activities  towards  larger  taxable  persons.  The  derogating 
measure is thus in line with the objectives of the first subparagraph of Article 395(1) of the 
VAT Directive, which allows Member States to introduce special measures derogating from 
its  provisions  in  order  to  simplify  the  procedure  for  collecting  VAT.  In  this  context,  it  is 
reiterated that the measure is and will remain optional for taxable persons, which are allowed 
to opt for the normal VAT arrangements.  

As demonstrated by Italy, the derogating measure is not expected to either affect significantly 
the  overall  amount  of  its  tax  revenue  collected  at  the  stage  of  the  final  consumption  or 
adversely  affect  the  Union’s  own  resources  accruing  from  VAT.  Therefore,  the  derogating 
measure  appears to  be in  accordance with  the second subparagraph of  Article 395(1) of the 
VAT Directive. 

In  the  light  of  the  above,  and  given  that  the  EU  legal  framework  and  the  factual  situation 
remain  unchanged,  the  requested  extension  of  the  expiry  date  of  the  derogating  measure 
appears to be justified. Hence, it is proposed that Italy’s request be granted.  

Derogations are normally granted for a limited period to allow an assessment of whether the 
derogating  measure  remains  appropriate  and  effective.  Moreover,  as  mentioned  earlier,  the 
provisions  of  Articles  281  to  294  of  the  VAT  Directive  on  the  special  scheme  for  small 
enterprises have recently been reviewed. The new directive on  simpler VAT rules for small 
enterprises10  requires  that  Member  States  adopt  and  publish  the  laws,  regulations  and 
administrative provisions, which are necessary to comply with the new rules, by 31 December 
2024 at the latest. Member States will have to apply those national provisions from 1 January 
2025.  

It  is  therefore  appropriate  to  authorise  Italy  to  apply  the  derogating  measure  until  31 
December 2024. Nevertheless, as the adoption by the Commission of the decision authorising 

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See footnote 3. 

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the  derogating  measure  will  take  place  after  the  expiry  of  Council  Implementing  Decision 
(EU) 2016/1988 (i.e. after 31 December 2019), this proposal cannot prolong the expiry date of 
the derogating measure authorised by that decision. 

• 

Consistency with existing policy provisions in the policy area 

The derogating measure is in line with the philosophy of the new directive amending Articles 
281  to  294  of  the  VAT  Directive  on  a  special  scheme  for  small  enterprises,  adopted  on  18 
February  2020,  which  resulted  from  the  VAT  action  plan11,  and  aims  to  create  a  modern, 
simplified scheme for those businesses. In particular, it seeks to reduce VAT compliance costs 
and distortions of competition both domestically and at EU level, reduce the negative impact 
of  the  threshold  effect,  and  facilitate  business  compliance  as  well  as  monitoring  by  tax 
administrations. 

Moreover,  the  threshold  of  EUR  65  000  is  consistent  with  the  new  directive,  insofar  as  it 
allows  Member  States  to  set  the  annual  turnover  threshold  required  for  an  exemption  from 
VAT at a level no higher than EUR 85 000 (or the equivalent in national currency). 

Similar derogations, exempting from VAT taxable persons whose annual turnover is below a 
certain threshold, as provided for in Article 285 of the VAT Directive, have been granted to 
other Member States. Malta12 has been granted a threshold of EUR 20 000; the Netherlands13 
a  threshold  of  EUR  25  000;  Luxembourg  a  threshold  of  EUR  35  00014;  Poland15,  Estonia16 
and  Latvia17  have  been  granted  a  threshold  of  EUR 40 000;  Croatia18  and  Lithuania19  a 
threshold  of  EUR  45  000;  Hungary  a  threshold  of  EUR  48  00020;  Slovenia21  a  threshold  of 
EUR 50 000; and Romania22 a threshold of EUR 88 500. 

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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. 
Council  Implementing  Decision  (EU)  2018/279  of  20  February  2018  authorising  Malta  to  apply  a 
special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 54, 24.2.2018, p. 14). 
Council  Implementing  Decision  (EU)  2018/1904  of  4  December  2018  authorising  the  Netherlands  to 
introduce  a  special  measure  derogating  from  Article  285  of  Directive  2006/112/EC  on  the  common 
system of value added tax (OJ L 310, 6.12.2018, p. 25). 
Council  Implementing  Decision  (EU)  2019/2210  of  19  December  2019  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  332,  23.12.2019,  p. 
155). 
Council Implementing Decision (EU) 2018/1919 of 4 December 2018 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 311, 7.12.2018, p. 32). 
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)  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)  2017/1768  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) 2017/1853 of 10 October 2017 amending 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 265, 14.10.2017, p. 15). 
Council Implementing Decision (EU) 2018/1490 of 2 October 2018 authorising Hungary to introduce a 
special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 252, 8.10.2018, p. 38). 

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As already mentioned, derogations from the VAT Directive should always be limited in time 
so  that  their  effects  can  be  assessed.  The  extension  of  the  expiry  date  of  the  derogating 
measure until  31 December 2024, as requested by  Italy, is  aligned with  the requirements  of 
the  new  directive  on  simpler  VAT  rules  for  small  and  medium-sized  enterprises.  That 
directive provides for 1 January 2025 as the date on which Member States will have to apply 
the national provisions, which they are required to adopt to comply with it.  

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

Consistency with other Union policies  

The  Commission  has  been  consistently  stressing  the  need  for  simpler  rules  for  small 
enterprises  in  its  annual  work  programmes.  In  this  regard,  the  2020  Commission  Work 
Programme23  refers  to  “a  dedicated  SME  Strategy  that  will  make  it  easier  for  small  and 
medium-sized businesses to operate, scale up and expand”. The derogating measure is in line 
with such objectives, as far as fiscal rules are concerned. It is notably consistent with the 2017 
Commission  Work  Programme24,  which  referred  specifically  to  VAT,  pointing  out  that  the 
administrative  burden  of  VAT  compliance  for  small  businesses  is  high  and  that  technical 
innovations pose new challenges for effective tax collection, and stressed the need to simplify 
VAT for smaller companies.  

Likewise,  the  measure  is  consistent  with  the  2015  single  market  strategy25,  where  the 
Commission set out to help small and medium-sized businesses grow, inter alia by reducing 
the administrative burdens that prevent them from taking full advantage of the single market. 
It  also  follows  the  philosophy  of  the  2013  Commission  Communication  ‘Entrepreneurship 
2020  Action  Plan:  Reigniting  the  entrepreneurial  spirit  in  Europe’26,  which  underlined  the 
need to simplify tax legislation for small businesses. 

Finally, the measure is in line with EU policies on small and medium-sized enterprises, as set 
out in the 2016 Start-Up Communication27, and the 2008 Communication ‘"Think small first" 

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Council  Implementing  Decision  (EU)  2018/1700  of  6  November  2018  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  285, 
13.11.2018, p. 78). 
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,  the  European 
Economic and Social  Committee and the  Committee of the  Regions  -  Commission Work Programme 
2020 - A Union that strives for more (COM(2020) 37 final). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social  Committee and the  Committee of the  Regions  -  Commission Work Programme 
2017 (COM(2016) 710 final).  
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions upgrading the Single Market: more 
opportunities for people and business (COM(2015) 550 final).   
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  Entrepreneurship  2020  Action 
Plan: Reigniting the entrepreneurial spirit in Europe (COM(2012) 795 final). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions - Europe’s Next Leaders: The Start-
Up and Scale-Up Initiative (COM(2016) 733 final). 

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– a "Small Business Act" for Europe’28 which called on the Member States to take account of 
the special features of SMEs when designing legislation and simplify the existing regulatory 
environment. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive is the only possible legal basis. 

• 

Subsidiarity (for non-exclusive competence)  

Considering the provision of the VAT Directive on which it is based, the proposal falls under 
the exclusive competence of the European Union. Hence, 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. to simplify tax collection for small taxable persons and for the tax administration. 

• 

Choice of the instrument 

The instrument proposed is a Council Implementing Decision. 

Under Article 395 of the VAT Directive, a derogation from the common VAT rules is only 
possible upon authorisation by the Council, which is 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 

No stakeholder consultation has been conducted. The present proposal is based on a request 
made by Italy and concerns only this particular 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  extending  a  simplification 
measure which removes many of the VAT obligations for businesses operating with an annual 
turnover  no  higher  than  EUR  65  000.  This  could  have  a  potential  positive  impact  on  the 
reduction of administrative burden for roughly 1 332 000 small businesses (amounting to 25% 
of the potentially eligible taxable persons) in 2017 as well as for the tax administration.  The 

28 

Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  ‘Think  Small  First’  A  ‘Small 
Business Act’ for Europe (COM(2008) 394 final).  

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derogating measure is and will remain optional for taxable persons. Taxable persons will still 
be able to opt for the regular VAT arrangements in accordance with Article 290 of Directive 
2006/112/EC. The budgetary impact in terms of VAT revenue for 2019 is estimated by Italy 
at EUR 385.7 million, which is considered as negligible. 

• 

Fundamental rights 

The proposal does not have any consequences for the protection of fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will not have a negative impact on the EU budget because Italy will carry out a 
compensation  calculation  in  accordance  with  Article  6  of  Council  Regulation  (EEC 
EURATOM) 1553/89.  

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2020/0048 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Italy to apply 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 tax29, and in particular the first subparagraph of Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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31 

32 

33 

34 

Pursuant  to  the  first  paragraph  of  Article  285  of  Directive  2006/112/EC,  Member 
States  which  have  not  exercised  the  option  under  Article  14  of  Council  Directive 
67/228/EEC30  may  exempt  from  value  added  tax  (‘VAT’)  taxable  persons  whose 
annual turnover is no higher than EUR 5 000 or the equivalent in national currency. 
By Council Decision 2008/737/EC31, Italy was authorised to apply a special measure 
derogating from Article  285 of Directive 2006/112/EC (‘the derogating  measure’) to 
exempt  from  VAT  taxable  persons  whose  annual  turnover  was  no  higher  than  EUR 
30 000. The derogating measure was authorised until 31 December 2010. 
By  Council  Implementing  Decision  2010/688/EU32,  Italy  was  authorised  to  continue 
to apply the derogating measure until 31 December 2013.  
By  Council  Implementing  Decision  2013/678/EU33,  Italy  was  authorised  to  continue 
to  apply  the  derogating  measure  until  31  December  2016.  The  annual  turnover 
threshold was increased to EUR 65 000.  
By Council Implementing Decision (EU) 2016/198834, the validity of the authorisation 
to apply derogating measure was extended until 31 December 2019, or until the entry 

OJ L 347, 11.12.2006, p. 1. 
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 tax (OJ 71, 14.4.1967, p. 1303/67). 
Council  Decision  2008/737/EC  of  15  September  2008  authorising  the  Italian  Republic  to  apply  a 
measure derogating from Article 285 of Directive 2006/112/EC on the common system of value added 
tax (OJ L 249, 18.9.2008, p. 13). 
Council  Implementing  Decision  2010/688/EU  of  15  October  2010  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 294, 12.11.2010, p. 12). 
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  (EU)  2016/1988  of  8  November  2016  amending  Implementing 
Decision  2013/678/EU  authorising  the  Italian  Republic  to  continue  to  apply  a  special  measure 

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(6) 

(7) 

(8) 

(9) 

into force of a directive amending Articles 281 to 294 of Directive 2006/112/EC on a 
special scheme for small enterprises, whichever would be the earlier. On 18 February 
2020, the Council adopted Directive (EU) 2020/28535 amending Articles 281 to 294 of 
Directive 2006/112/EC as regards the special scheme for small enterprises. 

By  letter  registered  with  the  Commission  on  26  July  2019,  Italy  requested 
authorisation to continue to apply the derogating measure after 31 December 2019 as 
well as to increase the threshold and the scope of the exemption. 

By  letter  dated  20  September  2019,  the  Commission  informed  the  other  Member 
States,  pursuant  to  the  second  subparagraph  of  Article  395(2)  of  Directive 
2006/112/EC,  of  the  request  made  by  Italy.  By  letter  dated  23  September  2019,  the 
Commission  notified  Italy  that  it  had  all  the  information  necessary  to  consider  the 
request.  

Italy  modified  its  request  by  letter  registered  with  the  Commission  on  5  December 
2019,  whereby  it  only  requested  authorisation  to  continue  to  apply  the  derogating 
measure until 31 December 2024. 

By  letter  dated  10  December  2019,  the  Commission  informed  the  other  Member 
States,  pursuant  to  the  second  subparagraph  of  Article  395(2)  of  Directive 
2006/112/EC,  of the revised request  of  Italy. By letter dated 11 December 2019, the 
Commission  notified  Italy  that  it  had  all  the  information  necessary  to  consider  the 
revised request.  

(10)  From the information provided by Italy, it appears that the reasons for the derogating 
the 
measure 
administrative  burden  and  compliance  costs  both  for  small  enterprises  and  for  tax 
authorities and it therefore helps to simplify the procedure for collecting VAT.  

largely  unchanged.  The  derogating  measure 

reduces 

remain 

(11)  The  derogating  measure  is  and  will  remain  optional  for  taxable  persons.  Taxable 
persons will still be able to opt for the regular VAT arrangements in accordance with 
Article 290 of Directive 2006/112/EC.  

(12)  According to information provided by Italy, the derogating measure will only have a 
negligible effect on the overall amount of the tax revenue of Italy collected at the stage 
of final consumption.   

(13)  The derogating measure will not adversely affect the Union’s own resources accruing 
from VAT because Italy will carry out a compensation calculation in accordance with 
Article 6 of Council Regulation (EEC, Euratom) No 1553/8936. 

(14)  Given  the  potential  positive  impact  of  the  derogating  measure  in  reducing  the 
administrative  burden  and  compliance  costs  for  small  businesses  and  for  the  tax 
authorities, and the lack of any major impact on the total VAT revenue generated, Italy 
should be authorised to apply the derogating measure for a further period.  

35 

36 

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  Directive  (EU)  2020/285  of  18  February  2020  amending  Directive  2006/112/EC  on  the 
common system of value added tax as regards the special scheme for small enterprises and Regulation 
(EU)  No  904/2010  as  regards  the  administrative  cooperation  and  exchange  of  information  for  the 
purpose  of  monitoring  the  correct  application  of  the  special  scheme  for  small  enterprises  (OJ  L  62, 
2.3.2020, p. 13). 
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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(15)  The authorisation to apply the derogating measure should be limited in time. The time 
limit  should  be  sufficient  to  allow  the  effectiveness  and  appropriateness  of  the 
threshold to be evaluated. Moreover, according to Directive (EU) 2020/285, Member 
States  are  to  adopt  and  publish,  by  31  December  2024,  the  laws,  regulations  and 
administrative  provisions  necessary  to  comply  with  Article  1  of  that  Directive,  and 
apply  those  provisions  from  1  January  2025.  It  is  therefore  appropriate  to  authorise 
Italy to apply the derogating measure until 31 December 2024,  

HAS ADOPTED THIS DECISION:  

By  way  of  derogation  from  Article  285  of  Directive  2006/112/EC,  Italy  is  authorised  to 
exempt from VAT taxable persons whose annual turnover is no higher than EUR 65 000. 

Article 1 

Italy may increase that threshold in order to maintain the value of the exemption in real terms. 

This Decision shall apply until 31 December 2024. 

Article 2 

This Decision is addressed to the Italian Republic. 

Article 3 

Done at Brussels, 

For the Council 
The President 

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