Proposal for a COUNCIL REGULATION amending Regulation (EU) 2017/2454 as regards the dates of application due to the outbreak of the COVID-19 crisis
Date: 2020-05-08
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: VAT, administrative cooperation, application of EU law, electronic commerce, epidemic, exchange of information, import (EU), infectious disease, tax offence, third country

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   EUROPEAN COMMISSION  Brussels, 8.5.2020  COM(2020) 201 final 2020/0084 (CNS)  Proposal for a COUNCIL REGULATION amending Regulation (EU) 2017/2454 as regards the dates of application due to the outbreak of the COVID-19 crisis     
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
On  5 December 2017,  the  Council  adopted  Council  Regulation  (EU)  2017/24541,  which  is 
part  of  the  package  of  legislation  on  modernising  VAT  for  cross-border  B2C  e-commerce 
(‘VAT  e-commerce  package’).  It  amends  Regulation  (EU)  No  904/2010  on  administrative 
cooperation and combating fraud in the field of value added tax2, which provides the basis for 
the underlying IT infrastructure and the necessary cooperation by Member States to ensure the 
success of the extension of the Mini One Stop Shop (MOSS).  

The  date  of  application  of  the  amendments  laid  down  in  Regulation  (EU)  2017/2454  was 
fixed to be 1 January 2021. 

The  Commission  presented  a  state  of  play  of  the  readiness  of  Member  States  on 
14 February 2020, whereby most Member States confirmed that they would be in a position to 
apply  the  rules  by  due  date.  Two  Member  States  raised  concerns  and  requested  a 
postponement  for  the  entry  into  application  by  one  year  or  more.  The  Commission  offered 
assistance to those Member States encountering  difficulties in  order to  help  them overcome 
these hurdles and remained confident that Member States would be ready by 1 January 2021.  

However,  due  to  the  unforeseen  outbreak  of  the  COVID-19  crisis  and  its  major  impact, 
Member States had to shift priorities and re-allocate resources from the implementation of the 
VAT e-commerce package to fighting this pandemic. Therefore, other Member States cannot 
guarantee  anymore  to  be  able  to  finalise  the  preparatory  work  to  apply  the  new  rules  by 
1 January 2021, including the rules on administrative cooperation. The IT system at national 
level  required  to  implement  the  new  VAT  e-commerce  rules,  including  those  laid  down  in 
Regulation  (EU)  2017/2454,  seriously  risks  to  be  delayed  and  thus  jeopardises  several 
Member States to be ready to apply the new rules as of 1 January 2021. Similar concerns were 
raised  by  key  economic  operators,  especially  postal  and  courier  operators,  who  urged  the 
Commission  to  postpone  the  date  of  application  of  the  VAT  e-commerce  package  by  6 
months due to the COVID-19 crisis.  

The  Commission  held  a  meeting  with  Member  States  on  24 April 2020  to  assess  their 
readiness  to  apply  the  new  rules  as  of  1 January 2021.  The  majority  of  Member  States  still 
confirmed  to  be  ready  to  apply  them  on  time,  but  stressed  that  the  provisions  on  the 
functioning  of  the  VAT  e-commerce  package  are  based  on  the  principle  that  all  Member 
States should be in a position to apply them correctly and would therefore be ready to support 
a postponement not exceeding 6 months.  

The objective of this proposal is to postpone the date of application of the amendments of the 
VAT  e-commerce  package  set  out  in  Regulation  (EU)  2017/2454  originally  foreseen  for 
1 January 2021  by  six  months.  The  new  date  of  application  shall  thus  be  1 July 2021.  A 
postponement  of  six  months  is  suggested,  because  the  delay  should  be  kept  as  short  as 
possible to minimise additional budgetary losses for Member States. 

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Council Regulation (EU) 2017/2454 of 5 December 2017 amending Regulation (EU) No 904/2010 on 
administrative cooperation and combating fraud in the field of value added tax, OJ L 348, 29.12.2017, 
p. 1–6. 
OJ L 268, 12.10.2010, p. 1. 

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• 

Consistency with existing policy provisions in the policy area 

The  general  objective  of  this  proposal  is  the  smooth  functioning  of  the  internal  market,  the 
competitiveness  of  EU  business  and  the  need  to  ensure  effective  taxation  of  the  digital 
economy.  The  VAT  e-commerce  package  is  consistent  with  the  future  application  of  the 
destination principle for VAT as set out in the recent VAT Action plan supported by Council3.  

In addition to the VAT Action Plan, the VAT e-commerce package has been identified as a 
key  initiative  in  the  Digital  Single  Market  Strategy4  ('DSM  Strategy')  as  well  as  the  Single 
Market strategy5 and the E-Government Action Plan6.  

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)  

This  proposal  changes  the  date  of  application  of  the  VAT  e-commerce  package  concerning 
administrative cooperation and combating fraud in the field of value added tax that has been 
adopted by Council in December 2017. This goes hand in hand with the proposal to postpone 
the 1 January 2021 date of application of the VAT e-commerce package, including thus all the 
legal acts affected. This proposal is made as a consequence of and reaction to the outbreak of 
the  COVID-19  crisis,  which  confronts  Member  States  with  challenges  at  national  level  to 
tackle  the  current  emergency  situation  and  which  causes  some  of  them  difficulties  in 
guaranteeing  a timely implementation of the required changes in  their  domestic  IT systems. 
The provisions on the functioning of the VAT e-commerce package are based on the principle 
that all Member States should be in a position to apply them correctly. 

Given  that  VAT  is  a  tax  harmonised  at  EU  level,  Member  States  cannot  by  themselves  set 
different rules. Therefore, any initiative to amend the VAT rules for e-commerce, including a 
change  of  the  date  of  application,  requires  a  proposal  by  the  Commission  and  cannot  be 
achieved by unilateral actions at national level. 

The proposal is therefore consistent with the subsidiarity principle. 

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4 
5 
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http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-vat-action-plan  
COM(2015) 192 final. 
COM(2015) 550 final. 
COM(2016) 179 final. 

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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 TFEU in particular the smooth functioning of 
the single market. As to the subsidiarity test, it is not possible for Member States to address 
the issues without a proposal to amend the Council Regulation on administrative cooperation.  

• 

Choice of the instrument 

This proposal amends Council Regulation (EU) 2017/2454. The only amendment made is the 
postponement of the date of application.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

This proposal reflects the strong concerns some Member States, postal and courier operators 
have  expressed  and  addressed  to  the  Commission  not  to  be  able  to  finalise  the  preparatory 
works  of  the  VAT  e-commerce  package  at  national  level  and  apply  the  rules  by 
1 January 2021 due to the outbreak of the COVID-19 crisis. 

The  Commission  held  a  meeting  with  Member  States  on  24 April 2020  to  assess  their 
readiness  to  apply  the  new  rules  as  of  1 January 2021.  The  majority  of  Member  States  still 
confirmed  to  be  ready  to  apply  them  on  time,  but  stressed  that  the  provisions  on  the 
functioning  of  the  VAT  e-commerce  package  are  based  on  the  principle  that  all  Member 
States should be in a position to apply them correctly and would therefore be ready to support 
a postponement not exceeding 6 months.  

• 

Impact assessment 

An impact assessment was carried out for the proposal which led to the adoption of the VAT 
e-commerce  Directive7  which  is  the  basis  for  the  amendment  of  the  rules  laid  down  in  the 
Regulation  on  administrative  cooperation.  The  current  proposal  only  amends  the  date  of 
application of these amendments. 

• 

Regulatory fitness and simplification 

The main goal of this proposal is to postpone the date of application of the VAT e-commerce 
package  by  six  months.  The  proposal  does  not  change  the  substance  of  the  rules,  but  only 
postpones their date of application. 

4. 

BUDGETARY IMPLICATIONS 

This  proposal  is  part  of  the  project  to  postpone  the  date  of  application  of  the  VAT  e-
commerce package.  

The budgetary implications of the already adopted VAT e-commerce package as a whole are 
set  out  in  detail  in  the  explanatory  memorandum  of  the  proposal  for  Council  Directive 
2017/2455, document COM(2016)757 final8.  

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COMMISSION  STAFF  WORKING  DOCUMENT  IMPACT  ASSESSMENT  Accompanying  the 
document  Proposals  for  a  Council  Directive,  a  Council  Implementing  Regulation  and  a  Council 
Regulation  on  Modernising  VAT  for  cross-border  B2C  e-Commerce,  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=SWD:2016:0379:FIN 
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 

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The  budgetary  losses  for  Member  States  have  been  estimated  at  around  EUR  5-7  billion 
yearly if the VAT e-commerce package is not implemented successfully. A delay of 6 months 
would therefore cause losses of around EUR 2.5-3.5 billion. However, if Member States and 
businesses are not ready to apply the new VAT e-commerce rules, the risk of the system not 
working properly could entail almost the same losses. 

5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

cooperation 

This  proposal  only  concerns  the  date  of  application  of  the  already  adopted  provisions  on 
administrative 
in 
Regulation (EU) 2017/2454. The date of application of these new rules shall be postponed by 
six  months.  This  means  that  the  provisions  shall  be  applied  as  of  1 July 2021  instead  of 
1 January 2021  and  the  current  rules  of  the  Mini  One  Stop  Shop  (Chapter  XI,  Section  2, 
Articles 43-47) shall continue to apply until 30 June 2021.  

e-commerce 

the  VAT 

package 

out 

set 

of 

The  reason  for  this  proposal  is  the  outbreak  of  the  COVID-19  crisis,  which  puts  Member 
States  under  pressure  to  react  immediately  and  adopt  measures  urgently  at  national  level  to 
alleviate  its  consequences  for  businesses  and  the  population  in  general.  Due  to  these 
unprecedented, exceptional circumstances, several Member States will not be able to finalise 
the preparatory work to apply the new rules of the VAT e-commerce package at national level 
as of 1 January 2021. 

COM/2016/0757 
- 
content/EN/TXT/?qid=1586260266830&uri=CELEX:52016PC0757 

2016/0370 

(CNS), 

final 

https://eur-lex.europa.eu/legal-

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2020/0084 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EU) 2017/2454 as regards the dates of application due to the 
outbreak of the COVID-19 crisis 

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) 

Council Regulation (EU) No 904/20103 lays down rules on the exchange and storage 
of  information  by  Member  States  in  order  to  establish  the  special  schemes  provided 
for by Chapter 6 of Title XII of Council Directive 2006/112/EC4. 
Council  Regulation  (EU)  2017/24545  amends  those  provisions  in  line  with  the 
extension of the scope of those special schemes and the introduction of a new scheme. 
Those amendments are to be applied from 1 January 2021. 

On 30 January 2020, the World Health Organisation (WHO) declared the COVID-19 
outbreak  a  public  health  emergency  of  international  concern.  On  11 March 2020, 
WHO  declared  the  COVID-19  outbreak  a  pandemic.  COVID-19  has  provoked 
infections in all Member States. Due to the alarming increase in the number of cases 
and  the  lack  of  efficient  means  immediately  available  to  deal  with  the  COVID-19 
outbreak, numerous Member States have declared a national state of emergency.  

(4) 

The  outbreak  of  the  COVID-19  crisis  constitutes  an  unexpected  and  unprecedented 
emergency that deeply affects all Member States and obliges them to take immediate 

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OJ C , , p. . 
OJ C , , p. . 
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 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 
347, 11.12.2006, p. 1). 
Council Regulation (EU) 2017/2454 of 5 December 2017 amending Regulation (EU) No 904/2010 on 
administrative cooperation and combating fraud in the field of value added tax, OJ L 348, 29.12.2017, 
p. 1–6. 

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(5) 

action  at  national  level  to  deal  with  the  ongoing  crisis  as  a  priority  by  reallocating 
resources  to  other  issues.  Due  to  this  crisis,  several  Member  States  encounter 
difficulties in finalising the development of IT systems necessary for the application of 
the  rules  laid  down  in  Regulation  (EU)  2017/2454  and  apply  them  as  of 
1 January 2021.  Some  Member  States  have  therefore  asked  for  the  postponement  of 
the dates of application of Regulation (EU) 2017/2454.  

Taking  into consideration the challenges that Member States  are facing to tackle the 
COVID-19 crisis and the fact that the new provisions are based on the principle that 
all  Member  States  have  to  update  their  IT  systems  in  order  to  be  able  to  apply  the 
provisions laid down in Regulation (EU) 2017/2454, thus ensuring the collection and 
transmission of information and payments under the modified schemes, it is necessary 
to postpone the dates of application of this Regulation by six months. A postponement 
of six months is appropriate, because the delay should be kept as short as possible to 
minimise additional budgetary losses for Member States. 

(6) 

Regulation (EU) 2017/2454 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Regulation (EU) 2017/2454 is amended as follows: 

(1) 

in Article 1, point (7) is amended as follows: 

Article 1 

(a) 

in point (a), the heading of Section 2 is replaced by the following: 

‘Provisions applicable from 1 January 2015 until 30 June 2021’; 

(b)  point (b) is amended as follows: 

(i) 

the heading of Section 3 is replaced by the following: 

‘Provisions applicable from 1 July 2021’; 

(ii)  Article 47a is replaced by the following: 

‘Article 47a 

The provisions of this Section shall apply from 1 July 2021.’; 

(2) 

in Article 2, the second paragraph is replaced by the following: 

‘It shall apply from 1 July 2021.’ 

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

Article 2 

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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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