Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/54/EU as regards authorisation to the Republic of Slovenia to continue to apply the special measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax
Date: 2022-02-11
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, 11.2.2022  COM(2022) 40 final 2022/0028 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/54/EU as regards authorisation to the Republic of Slovenia to continue to apply the 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  Council  Directive  2006/112/EC  of  28  November  2006  on  the 
common system of valued 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  27  October  2021,  Slovenia  requested  an 
authorisation  to  continue  to  apply,  until  31  December  2024,  a  measure  derogating  from 
Article  287  of  the  VAT  Directive,  allowing  Slovenia  to  exempt  from  VAT  taxable  persons 
whose annual turnover is no higher than EUR 50 000. 

In  accordance  with  Article  395(2),  second  subparagraph,  of  the  VAT  Directive,  the 
Commission  informed  the  other  Member  States  by  letter  dated  15  November  2021  of  the 
request  made  by  Slovenia.  The  Commission  notified  Slovenia  by  letter  dated  16  November 
2021 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 or she cannot deduct the VAT 
on his inputs. 

Under  Article  287  of  the  VAT  Directive,  particular  Member  States  which  acceded  after  1 
January  1978  may  exempt  taxable  persons  whose  annual  turnover  is  no  higher  than  the 
equivalent  in  national  currency  of  the  amounts  at  the  conversion  rate  on  the  day  of  their 
accession as specified in that provision. 

Under point 15 of Article 287 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/EU2 Slovenia was authorised, until 31 December 
2015, to apply a higher threshold and thus to exempt from VAT taxable persons whose annual 
turnover is no higher than EUR 50 000. That authorisation was extended initially by Council 
Implementing  Decision  (EU)  2015/20893  until  31  December  2018  and  subsequently  by 
Council Implementing Decision (EU) 2018/17004 until 31 December 2021.  

Slovenia requested another extension of that special measure for a limited period. 

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OJ L 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). 
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). 

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An  authorisation  to  continue  to  use  the  exemption  beyond  2021  for  taxable  persons  whose 
annual  turnover  is  no  higher  than  EUR  50 000  would  be  a  significant  simplification  for 
persons operating relatively small businesses. Taxable persons covered by this exemption do 
not  have  to  deduct  and  pay  VAT,  be  registered  for  VAT  or  keep  a  full  detailed  record  of 
transactions  subject  to  VAT.  Thanks  to  these  simplifications,  small  business  owners  can 
devote more time and resources to developing their business. The special measure is and will 
remain  fully  optional  for  taxable  persons.  Therefore,  small  businesses  whose  turnover  does 
not  exceed  the  threshold  will  still  have  the  possibility  to  exercise  their  right  to  apply  the 
normal VAT arrangements. 

Moreover,  the  cost  of  collecting  VAT  from  taxable  persons  operating  businesses  with 
relatively  low  turnover,  resulting  from  providing  taxpayer  services  to  these  taxable  persons 
and auditing their tax returns, is disproportionately high in comparison to the amount of tax 
collected. Accordingly, by applying a VAT exemption to small business owners, the revenue 
administration  may  direct  more  resources  towards  preventing  and  combating  tax  fraud, 
evasion  and  avoidance,  and  towards  improving  the  quality  of  taxpayer  services  and  the 
effectiveness of collecting VAT from large-scale business operators. 

According  to  Slovenia,  in  2019,  48 %  of  all  registered  taxable  persons  (i.e.  approximately 
60 000)  had  an  annual  turnover  of  EUR  50 000  or  less,  representing  1 %  share  of  the  total 
taxable  turnover  relevant  for  VAT  purposes.  It  estimates  that  approximately  2 000  of  these 
taxable  persons  (excluding  those  who  opted  for  taxation)  have  an  annual  turnover  between 
EUR  25 000  and  EUR  50 000.  Including  these  taxable  persons  in  the  VAT  system  would 
result in an increase of the state revenue from VAT by 0.3 %. 

Therefore, the special measure does not significantly affect the total amount of revenue from 
VAT or the overall amount of tax revenue collected at the stage of final consumption. 

The  special  measure,  simplifying  the  obligations  of  small  operators,  is  in  line  with  the 
objectives set out by the European Union for small businesses. 

Given the positive impact on the reduction of administrative burden for businesses and the tax 
administration without a major impact on the total VAT revenue, it is appropriate to authorise 
Slovenia to extend the application of the special measure until 31 December 2024. 

• 

Consistency with existing policy provisions in the policy area 

The derogating measure is in line with the objectives of Directive (EU) 2020/285 amending 
Articles 281 to 294 of the VAT Directive on a special scheme for small enterprises5, which 
resulted from the VAT action plan6, 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 50 000 is consistent with Directive (EU) 2020/285, 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). 

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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). 
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. 

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Similar derogations, exempting from VAT taxable persons whose annual turnover is below a 
certain threshold,  as  provided for in Articles  285 and 287  of the VAT  Directive, have been 
granted  to  other  Member  States.  The  Netherlands7  and  Belgium8  have  been  granted  a 
threshold  of  EUR  25 000;  Italy9  a  threshold  of  EUR  30 000,  Luxembourg10  a  threshold  of 
EUR 35 000; Poland11, Latvia12 and Estonia13 have been granted a threshold of EUR 40 000; 
Hungary14  a  threshold  of  EUR  48 000;  Lithuania15  a  threshold  of  EUR  55 000;  Croatia16  a 
threshold of EUR 45 000; Malta17 a threshold of EUR 30 000; and Romania18 a threshold of 
EUR 88 500. 

Derogations from the VAT Directive should always be limited in time so that their effects can 
be  assessed.  In  addition,  the  inclusion  of  an  expiry  date  of  the  special  measure  until  31 
December 2024, as requested by Slovenia, is aligned with the requirements of Directive (EU) 
2020/285.  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. 

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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)  2018/2077  of  20  December  2018  amending  Implementing 
Decision 2013/53/EU authorising the Kingdom of Belgium to introduce a special  measure derogating 
from  Article  285  of  Directive  2006/112/EC  on  the  common  system  of  value  added  tax,  OJ  L  331, 
28.12.2018, p. 222. 
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)  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)  2020/1261  of  4  September  2020  amending  Implementing 
Decision  (EU)  2017/2408  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  296, 
10.9.2020, p. 4). 
Council Implementing Decision (EU) 2021/358 of 22 February 2021 amending Implementing Decision 
(EU) 2017/563 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 69, 26.2.2021, p. 4). 
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). 
Council  Implementing  Decision  (EU)  2021/86  of  22  January  2021  authorising  the  Republic  of 
Lithuania  to  apply  a  special  measure  derogating  from  Article  287  of  Directive  2006/112/EC  on  the 
common system of value added tax (OJ L 30, 28.1.2021, p. 2). 
Council  Implementing  Decision  (EU)  2020/1661  of  3  November  2020  amending  Implementing 
Decision (EU) 2017/1768 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  374, 
10.11.2020, p. 4). 
Council  Implementing  Decision  (EU)  2021/753  of  6  May  2021  authorising  Malta  to  apply  a  special 
measure derogating from Article 287 of Directive 2006/112/EC on the common system of value added 
tax, and repealing Implementing Decision (EU) 2018/279 (OJ L 163, 10.5.2021, p. 1). 
Council  Implementing  Decision  (EU)  2020/1260  of  4  September  2020  amending  Implementing 
Decision (EU) 2017/1855 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 296, 10.9.2020, p. 1). 

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• 

Consistency with other Union policies 

The  Commission  has  been  consistently  stressing  the  need  for  simpler  rules  for  small 
enterprises.  In  this  respect,  the  Commission  adopted  in  March  2020  an  SME  Strategy  for  a 
sustainable and digital Europe19, where it committed to continue to work to reduce the burden 
on SMEs. The objective to reduce the regulatory burden for SMEs is one of the pillars of that 
strategy.  This  special  measure  is  in  line  with  such  objectives,  as  far  as  fiscal  rules  are 
concerned.  It  is  also  consistent  with  the  2020  Action  Plan  on  fair  and  simple  taxation 
supporting  the  recovery  strategy20,  which  acknowledges  that  tax  compliance  costs  remain 
high in the EU, and that compliance costs are typically substantially higher for small than for 
large companies. 

2. 

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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 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  the  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 Slovenia and concerns only this particular Member State. 

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Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  An  SME  Strategy  for  a 
sustainable and digital Europe (COM(2020) 103 final). 
Communication  from the  Commission to the  European Parliament and the  Council  –  An  Action Plan 
for fair and simple taxation supporting the Recovery Strategy (COM(2020) 312 final). 

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• 

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  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. 

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

• 

Fundamental rights 

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

4. 

BUDGETARY IMPLICATIONS 

Following  entering  into  force  of  Council  Regulation  (EU,  Euratom)  2021/769  of  30  April 
2021  amending  Regulation  (EEC,  Euratom)  No  1553/89  on  the  definitive  uniform 
arrangements for the collection of own resources accruing from value added tax21, there will 
be no compensation calculation carried out by Slovenia as of VAT own resource statement for 
the financial year 2021 onwards. 

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Council  Regulation (EU, Euratom) 2021/769 of 30 April  2021 amending Regulation (EEC, Euratom) 
No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from 
value added tax (OJ L 165, 11.5.2021, p. 9). 

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2022/0028 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2013/54/EU as regards authorisation to the Republic 
of Slovenia to continue to apply the 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) 

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Article  287,  point  (15),  of  Directive  2006/112/EC  allows  Slovenia  to  exempt  from 
value  added  tax  (VAT)  taxable  persons  whose  annual  turnover  is  no  higher  than  the 
equivalent in national currency of EUR 25 000 at the conversion rate on the date of its 
accession. 
By  Council  Implementing  Decision  2013/54/EU2,  Slovenia  was  authorised,  until  31 
December  2015,  to  introduce  a  special  measure  derogating  from  Article  287,  point 
(15), of Directive 2006/112/EC and thus to exempt from VAT taxable persons whose 
annual  turnover  is  no  higher  than  EUR  50 000  (‘the  special  measure’).  That 
authorisation  was  extended  twice,  most  recently  by  Council  Implementing  Decision 
(EU) 2018/17003, until 31 December 2021. 

By letter registered with the Commission on 27 October 2021, Slovenia requested an 
authorisation  to  continue  to  apply  the  special  measure  until  31  December  2024,  the 
date  by  which  Member  States  are  to  transpose  Council  Directive  (EU)  2020/2854.  It 
follows from that Directive that, from 1 January 2025, Member States will be allowed 
to exempt from VAT the supply of goods and services made by taxable persons whose 
Member  State  annual  turnover  does  not  exceed  a  threshold  of  EUR  85 000  or  the 
equivalent in national currency. 

OJ L 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)  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  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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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

Pursuant  to  Article  395(2),  second  subparagraph,  of  Directive  2006/112/EC,  the 
Commission transmitted the request made by Slovenia to the other Member States by 
letter dated 15 November 2021. By letter dated 16 November 2021, the Commission 
notified  Slovenia  that  it  had  all  the  information  necessary  for  the  appraisal  of  the 
request. 

The  special  measure  is  in  line  with  Directive  (EU)  2020/285,  which  seeks  to  reduce 
the compliance burden of small enterprises and avoid distortions of competition in the 
internal market. 

The special measure will remain optional for taxable persons as they may still opt for 
the normal VAT arrangements pursuant to Article 290 of Directive 2006/112/EC. 

According to information provided by Slovenia, the special measure will only have a 
negligible effect on the overall amount of the tax revenue Slovenia collects at the stage 
of final consumption. 
Following entry into force of Council Regulation (EU, Euratom) 2021/7695, there will 
be no compensation calculation carried out by Slovenia with regard to the VAT own 
resource statement for the financial year 2021 onwards. 

Given the positive impact of the special measure in reducing the administrative burden 
and compliance costs for both small enterprises and the tax authorities, and the lack of 
any major impact on the total VAT revenue generated, Slovenia should be authorised 
to continue apply the special measure. 

(10)  The authorisation to continue to apply the special 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,  pursuant  to  Article  3(1)  of  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,  which  amends  Directive  2006/112/EC,  and  apply  those  provisions  from  1 
January  2025.  It  is  therefore  appropriate  to  authorise  Slovenia  to  apply  the  special 
measure until 31 December 2024. 

(11) 

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 2013 until 31 December 2024.’. 

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Council  Regulation (EU, Euratom) 2021/769 of 30 April  2021 amending Regulation (EEC, Euratom) 
No 1553/89 on the definitive  uniform arrangements for the collection of own resources accruing from 
value added tax (OJ L 165, 11.5.2021, p. 9). 

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This Decision is addressed to the Republic of Slovenia. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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