Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/676/EU as regards an extension of the authorisation for 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: 2022-12-15
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Romania, VAT, derogation from EU law, supply, taxpayer, wood product

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.12.2022  COM(2022) 727 final 2022/0421 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2013/676/EU as regards an extension of the authorisation for 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  8  April  2022,  the  Republic  of  Romania 
(hereinafter 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.  By  letter  registered  on  the  28  June  2022  the  Commission  requested  additional 
information  concerning  the  request  from  Romania,  which  provided  its  reply  by  letter 
registered on 22 August 2022.  

In  accordance  with  Article  395(2)  of  the  VAT  Directive,  the  Commission  informed  all 
Member States, except Spain, on 1 September 2022 and Spain on 2 September 2022, of the 
request  made  by  Romania.  By  letter  dated  5  September 2022,  the  Commission  notified 
Romania that it had all the information necessary to consider the request. 

1. 

• 

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. 

The  derogating  measure  for  Romania  had  been  initially  granted  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 

1 
2 

3 

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). 

EN 

1 

  EN 

                                                 
2016, by Council  Implementing Decision (EU)  2016/12064  until  31 December 2019 and  by 
Council Implementing Decision (EU) 2019/15935 until 31 December 2022.  

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 
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.  

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.  

Romania  explained  that  to  that  end,  steps  have  been  taken  to  introduce  into  national  law 
conventional  measures  to  combat  VAT  fraud  and  prevent  its  further  spread  in  the  sector  of 
timber and wood such as digitalisation projects (RO e-Factura), the interconnection of fiscal 
cash  registers,  SAF-T,  the  monitoring  of  purchases  and  supplies  and  the  RO  e-Transport 
system (monitoring transports on national territory).  

However,  since  the  implementation  of  those  measures  is  still  at  an  early  stage,  Romania 
considers that in order to maintain the downward trend in tax evasion in the timber and wood 
sector,  it  is  necessary  to  continue  to  apply  the  reverse  charge  in  this  sector  after  1  January 
2023. 

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 2025. 

Therefore,  until  the  expiry  of  this  derogation  Romania  should  fully  implement  the  above 
mentioned 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, Portugal6, Lithuania7 and Latvia8. 

4 

5 

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). 
Council  Implementing  Decision  (EU)  2019/1593  of  24  September  2019  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 248, 27.9.2019, 
p. 69–70). 

EN 

2 

  EN 

                                                 
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 the VAT Directive, 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. 

3. 

• 

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. 

• 

Impact assessment 

One  of  the  most  common  types  of  fraud  involves  the  inclusion  in  the  timber  and  wood 
products marketing chain of companies that collect VAT, fail to pay it into the State budget, 
and then disappear. Their clients, in exercising their right to VAT deduction, then apply for 
reimbursement of amounts that have never been paid into the State budget. 

6 

7 

8 

Council  Implementing  Decision  (EU)  2019/1592  of  24  September  2019  authorising  Portugal  to 
introduce  a  special  measure  derogating  from  Article  193  of  Directive  2006/112/EC  on  the  common 
system of value added tax (OJ L 248, 27.9.2019, p. 67–68). 
Council  Implementing  Decision  (EU)  2018/1920  of  4  December  2018  amending  Implementing 
Decision  2010/99/EU  authorising  the  Republic  of  Lithuania  to  extend  the  application  of  a  measure 
derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax (OJ L 
311, 7.12.2018, p. 34–35). 
Council  Implementing  Decision  (EU)  2022/81  of  18  January  2022  amending  Implementing  Decision 
2009/1008/EU  authorising  the  Republic  of  Latvia  to  extend  the  application  of  a  measure  derogating 
from  Article  193  of  Directive  2006/112/EC  on  the  common  system  of  value  added  tax  (OJ  L  13, 
20.1.2022, p. 49–50). 

EN 

3 

  EN 

                                                                                                                                                         
Wood  products  account  for  the  largest  share  of  Romania's  forest  economy.  At  the  end  of 
2020,  Romania's  national  forest  estate  accounted  for  6  604  200  ha,  i.e.  27.66%  of  the 
country's total land area. 

The  reverse  charge,  the  requested  special  measure,  applies  only  to  transactions  between 
taxable persons registered for VAT purposes in Romania. Taxable persons in other Member 
States could be affected by the reverse charge mechanism only if they have an obligation to 
register for VAT purposes in Romania. In such cases, they would be subject to the same VAT 
rules as Romanian operators. 

The  reverse  charge  mechanism  has  decreased  the  risk  of  reimbursing,  amounts  that  have 
never been paid to the state budget, due to carousel fraud. 

Other positive effects of the reverse charge have included:  

enhanced  competitiveness  between  producers  to  counteract  distortions  created  by 

- 
entities operating on the black market; 

a  significant  decrease  of  the  shadow  economy  in  the  field,  leading  to  an  increase  in 

- 
state budget revenues. 

In  view  of  the  foregoing,  with  an  average  increase  of  RON  46  077  in  the  amount  of  VAT 
established  per  taxpayer,  Romania  believes  that  the  application  of  the  reverse  charge  in 
respect of supplies of timber and wood products has reached its objectives in combating VAT 
fraud and preventing its spread. 

Although  Romania  has  achieved  positive  results  in  the  fight  against  fraud  by  applying  the 
reverse charge in this sector, the phenomenon still exists, albeit on a smaller scale9. 

The  extension  of  this  measure  will  not  have  a  negative  impact  on  the  total  amount  of  vat 
revenue collected at the final stage of consumption and thus, does not  affect the union's vat 
own resources in a negative way. 

4. 

BUDGETARY IMPLICATIONS 

The proposal has no implication on the EU budget.  

5. 

OTHER ELEMENTS 

The proposal is limited in time. 

9 

According  to  the  year-by-year  overview  of  tax  inspections  conducted  at  taxpayers  with  the  NACE 
‘wood  products’  code  over  the  2018  -  2021  period,  the  cases  of  fraud  decreased,  as  reported  by 
Romania in its request. 

EN 

4 

  EN 

 
                                                 
2022/0421 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2013/676/EU as regards an extension of the 
authorisation for 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, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

1 
2 

3 

Pursuant to Article 193 of Directive 2006/112/EC, value added tax (‘VAT’) shall be, 
as a general rule,  payable by the taxable person supplying the goods or services. 
By Council Implementing Decisions 2010/583/EU2 and 2013/676/EU3, Romania was 
authorised  to  apply  a  special  measure  derogating  from  Article  193  of  Directive 
2006/112/EC  (‘the  special  measure’)  to  designate  the  taxable  person,  to  whom 
supplies  of  wood  products  by  taxable  persons  are  made,  as  the  person  liable  for  the 
payment  of  VAT  on  those  supplies.  The  authorisation  granted  by  Implementing 
Decision 2013/676/EU was extended until 31 December 2022.  

By  letter  registered  with  the  Commission  on  11  April  2022,  Romania  requested 
authorisation  to  continue  to  apply  the  special  measure,  authorised  by  Implementing 
Decision 2013/676/EU, beyond 31 December 2022. By letter dated 28 June 2022, the 
Commission  requested  additional  information  concerning  the  request  from  Romania. 
Romania  provided  its  reply  by  letter  registered  with  the  Commission  on  22  August 
2022.  

By letter dated 1 September 2022,  the Commission transmitted the request made by 
Romania to the other Member States, except Spain, pursuant to Article 395(2), second 
subparagraph,  of  Directive  2006/112/EC.  By  letter  dated  2  September  2022,  the 
Commission transmitted that request to Spain. By letter dated 5 September 2022, the 
Commission notified Romania that it had all the information necessary for appraisal of 
the request. 

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). 

EN 

5 

  EN 

 
 
                                                 
(5) 

(6) 

(7) 

According to the information provided by Romania in its request, the factual situation 
which justified application of the special measure has not changed. Moreover, analysis 
put forward by the Romanian authorities indicates that the special measure has proved 
to be effective in reducing tax evasion. In addition, the special measure has no adverse 
impact on the Union's own resources accruing from VAT. 

The special measure is proportionate to the objectives pursued since it is confined to 
very specific operations in a sector which poses considerable problems with regard to 
tax evasion and avoidance. Moreover,  the 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. 

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 at national level to 
monitor  the  movement  of  materials,  the  payment  of  VAT,  and  the  compliance  of 
taxable  persons  which  should  tackle  the  respective  problem  until  the  expiry  of  the 
derogating  measure,  thus  making  an  extension  of  the  authorisation  redundant.  A 
derogation  allowing  making  use  of  the  reverse  charge  procedure  is  only  granted 
exceptionally  for  specific  fraudulent  areas  and  constitutes  a  means  of  last  resort. 
Therefore,  before  the  expiry  of  the  extension  of  the  authorisation  under  this 
Implementing  Decision,  Romania  should  implement  other  conventional  measures  to 
fight and prevent VAT fraud in the timber market that another extension of the special 
measure would no longer be needed. 

(8) 

Therefore,  it  is  appropriate  to  extend  the  authorisation  set  out  in  Implementing 
Decision  2013/676/EU.  The  extension  of  the  authorisation  for  Romania  should  be 
limited in time to allow for an evaluation of the effectiveness and appropriateness of 
the special measure.  

(9) 

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

HAS ADOPTED THIS DECISION:  

In Article 1 of Implementing Decision 2013/676/EU, ‘31 December 2022’ is replaced by ‘31 
December 2025’.  

Article 1 

This Decision is addressed to Romania. 

Done at Brussels, 

Article 2 

For the Council 
The President 

EN 

6 

  EN