Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2018/485 as regards an extension of the authorisation for Denmark to apply a special measure derogating from Article 75 of Directive 2006/112/EC on the common system of value added tax
Date: 2023-07-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Denmark, VAT, derogation from EU law, light-duty vehicle, tax relief

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   EUROPEAN COMMISSION  Brussels, 28.7.2023  COM(2023) 463 final 2023/0291 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2018/485 as regards an extension of the authorisation for Denmark to apply a special measure derogating from Article 75 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

Pursuant  to  Article  395  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 derogating from the provisions of that Directive, in order to simplify the procedure 
for collecting value added tax (VAT) or to prevent certain forms of tax evasion or avoidance.  

By  letter  registered  with  the  Commission  on  21  March  2023,  Denmark  requested  the 
authorisation to continue to apply a flat-rate scheme for the private use of light goods vehicles 
with  a  maximum  authorised  total  weight  of  three  tonnes,  which  have  been  registered  solely 
for  business  use,  extending  the  application  of  the  special  measure  granted  by  Council 
Implementing  Decision  (EU)  2018/4852  which  derogates  from  Article  75  of  the  VAT 
Directive.  

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States, except Ireland and Poland, by letter dated 3 May 2023 of the request made 
by Denmark. Ireland and Poland were informed of Denmark’s request by letter dated 4 May 
2023.  The  Commission  notified  Denmark  by  letter  dated  5  May  2023  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 

In  order  to  simplify  VAT  collection  and  combat  tax  evasion,  Denmark  requested  in  2011  a 
special measure which would allow the introduction of a flat-rate scheme for the private use 
of light  goods vehicles  with a maximum authorised total weight of three tonnes which have 
been registered solely for business use. The request was approved by Council Implementing 
Decision  2012/447/EU  of  24  July  20123.  Denmark  requested  an  extension  of  the  special 
measure three times, which were approved by Council Implementing Decision (EU) 2015/992 
of 19 June 20154, by Council Implementing Decision (EU) 2018/485 of 19 March 2018 and 
by  Council  Implementing  Decision  2020/1088  of  22  July  2020  amending  Implementing 
Decision (EU) 2018/4855. The Implementing Decision (EU) 2018/445 is set to expire on 31 
December 2023.  

Without  such  special  measure  the  Danish  legislation  implies  that  any  private  use  of  such  a 
vehicle registered solely for business purposes would have as a consequence that the taxable 
person  loses  in  full  the  right  of  deduction  of  the  VAT  on  the  purchase  cost  of  the  vehicle. 
Denmark  makes  use  of  a  standstill  provision  under  Article  176  of  the  VAT  Directive 

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OJ L 347, 11.12.2006, p. 1. 
Council  Implementing  Decision  (EU)  2018/485  of  19  March  2018  authorising  Denmark  to  apply  a 
special measure derogating from Article 75 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 81, 23.3.2018, p. 13–14), amended by Council Implementing Decision (EU) 2020/1088 
of 22 July 2020 (OJ L 239, 24.7.2020, p. 14–15). 
Council  Implementing  Decision  of  24 July  2012  authorising  Denmark  to  introduce  a  special  measure 
derogating from Article 75 of Directive 2006/112/EC on the common system of value added tax (OJ L 
202, 28.7.2012, p. 24-25). 
Council  Implementing  Decision  (EU)  2015/992  of  19  June  2015  authorising  Denmark  to  introduce  a 
special measure derogating from Article 75 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 159, 25.6.2015, p. 66-67).  
Council  Implementing  Decision  (EU)  2020/1088  of  22  July  2020  amending  Implementing  Decision 
(EU) 2018/485 authorising Denmark to apply a special measure derogating from Article 75 of Directive 
2006/112/EC on the common system of value added tax (OJ L 239, 24.7.2020, p. 14–15). 

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regarding  the  deduction  of  VAT  on  the  purchase  and  running  costs  of  light  goods  vehicles 
with a maximum authorised weight of up to three tonnes. If a business registers such a light 
goods vehicle as being solely for business purposes, it will be authorised to deduct in full the 
VAT on the purchase of the vehicle as well as the running costs. However, a business which 
registers a light goods vehicle as being both for business and personal use is not authorised to 
deduct the VAT on the purchase cost but can deduct in full the VAT on the running costs of 
the vehicle.  

The Danish system as described above can be complicated and costly to administer, both for 
the  taxable  person  and  for  the  tax  administration.  Denmark  has  therefore  requested  to 
continue  to  apply  a  simplified  procedure  as  previously  granted  by  Council  Implementing 
Decision  (EU)  2018/485,  whose  validity  was  extended  by  Council  Implementing  Decision 
2020/1088. 

According to  Article 75  of the  VAT  Directive, where  goods forming part of the assets  of a 
business are used for private purposes, the taxable amount to determine the VAT due shall be 
the  full  cost  to  the  taxable  person  of  providing  the  services.  The  flat-rate  system  used  in 
Denmark could be used by a taxable person for up to twenty days per calendar year. Pursuant 
to this system, the taxable person pays a charge per day for the private use of the vehicle. The 
flat-rate amount to be paid per day for the use of the vehicle for private purposes is DKK 40, 
and covers only VAT. This amount has been determined by the Danish  Government  on the 
basis  of  an  analysis  of  national  statistics.  A  similar  payment,  under  separate  national 
legislation, would be required to  cover income tax on the disposal  of a company  car, and a 
surcharge to the circulation tax. Should the taxable person use the vehicle for private purposes 
for  more  than  twenty  days  during  a  calendar  year,  the  standstill  rules  would  apply,  and  the 
taxable person would lose in full the right of deduction of the purchase costs of the vehicle. 

The Danish authorities have developed an electronic system whereby taxable persons can pay 
the daily flat-rate either online or via a mobile app. At the time of payment, the taxable person 
receives a ‘day voucher’ by way of documentary evidence that the VAT has been paid. The 
authorities consider the system to simplify the accounting obligations for the taxable persons 
as well as the tax authorities' duty to charge and collect the tax. 

The  simplified  procedure  is  optional.  The  taxable  person  would  therefore  still  be  able  to 
register  their  light  goods  vehicle  for  both  business  and  private  use  if  that  suits  their 
circumstances.  

As  requested  by  Article  3  of  Council  Implementing  Decision  (EU)  2018/485,  Denmark 
submitted,  together  with  the  extension  request,  a  report  on  the  review  of  the  measure. 
According to  the  Danish authorities, the simplified procedure has worked very well  the last 
years and they find good reasons to continue with such a procedure. 

It is therefore appropriate to authorise Denmark to continue to apply the special measure until 
31 December 2026. 

• 

Consistency with existing policy provisions in the policy area 

Article 176 of the VAT Directive stipulates that the Council shall determine the expenditure 
in respect of which VAT is not deductible. Until then, it authorises Member States to maintain 
the exclusions provided for under their national laws at 1 January 1979. There are therefore a 
number of 'standstill' provisions restricting the right to deduct in relation to passenger cars.  

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Notwithstanding previous initiatives to establish rules on which categories of expenditure may 
be subject to a restriction on the right to deduct6, such special measure is appropriate in the 
awaiting of a harmonisation of these rules at EU level. 

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 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 special measure, it is proportionate to the aim pursued, i.e. to 
simplify VAT obligations and VAT collection, as well as combatting tax evasion. 

• 

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 Denmark and concerns only this particular Member State. 

• 

Collection and use of expertise 

There was no need for external expertise. 

• 

Impact assessment 

The proposal is designed to counter VAT evasion and to simplify the procedure for charging 
tax and has, therefore, a potential positive impact for both businesses and administrations. The 
solution has been identified by Denmark as a suitable measure. Denmark submitted the report 
on the review of the measure  according to  which the simplified procedure has  worked very 
well the last years and there are good reasons to continue with such a procedure. 

6  COM  (2004)  728  final  -  Proposal  for  a  Council  Directive  amending  Directive  77/388/EEC  with  a  view  to 
simplifying value added tax obligations (OJ C 24, 29.1.2005, p.10) withdrawn on 21 May 2014 (OJ C 153 21. 
05. 2014, p. 3)  

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According to the data submitted by Denmark, in 2020, 2021 and 2022 respectively, 33 100, 
40 000 and 43 500 day vouchers were sold at DKK 225, of which VAT made up DKK 40 per 
day voucher sold. This means that the measure has been taken up by an increasing number of 
taxable persons. 

• 

Fundamental rights 

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

4. 

BUDGETARY IMPLICATIONS 

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

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The proposal includes a sunset clause;  an automatic time limit which is set at  31 December 
2026. 

In  case  Denmark  would  consider  an  extension  of  the  special  measure  beyond  31  December 
2026,  a  report  including  a  review  of  the  measure  should  be  submitted  to  the  Commission 
together with the extension request and this no later than 31 March 2026. 

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2023/0291 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2018/485 as regards an extension of the 
authorisation for Denmark to apply a special measure derogating from Article 75 of 
Directive 2006/112/EC on the common system of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of value added tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

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By Council Implementing Decision (EU) 2018/4852, Denmark was authorised to apply 
a special measure derogating from Article  75 of Directive 2006/112/EC  (‘the special 
measure’) to apply a flat-rate scheme for the private use of light goods vehicles with a 
maximum  authorised  total  weight  of  three  tonnes  which  have  been  registered  solely 
for  business.  The  special  measure  authorised  by  Implementing  Decision  (EU) 
2018/485 is set to expire on 31 December 2023. 

By  letter  registered  with  the  Commission  on  21  March  2023,  Denmark  requested  an 
authorisation  in  accordance  with  Article  395(2),  first  subparagraph,  of  Directive 
2006/112/EC to continue to apply the special measure beyond 31 December 2023. 

By letters dated 3 May 2023 and 4 May 2023, the Commission transmitted the request 
submitted by Denmark to the other Member States in accordance with Article 395(2), 
second  subparagraph,  of  Directive  2006/112/EC.  By  letter  dated  5  May  2023,  the 
Commission notified Denmark that it had all the information necessary for appraisal of 
the request. 

The  continued  application  of  the  special  measure  would  allow  taxable  persons  who 
have  registered  a  vehicle  only  for  business  purposes  to  use  the  vehicle  for  private 
purposes,  and  to  calculate  the  taxable  amount  of  the  deemed  supply  of  services 
pursuant to Article 75 of Directive 2006/112/EC on a daily flat-rate basis, rather than 
lose their right to deduct the VAT incurred on the purchase cost of the vehicle. 

That simplified calculation method should, however, be limited to  20 days of use for 
private purposes for each calendar year. 

According to the information provided by Denmark in its request, the factual situation 
which  justified  the  application  of  the  special  measure  has  not  changed.  Denmark 
submitted  to  the  Commission,  together  with  the  request,  a  report  reviewing  the  flat-

OJ L 347, 11.12.2006, p. 1. 
Council  Implementing  Decision  (EU)  2018/485  of  19  March  2018  authorising  Denmark  to  apply  a 
special measure derogating from Article 75 of Directive 2006/112/EC on the common system of value 
added tax (OJ L 81, 23.3.2018, p. 13). 

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(7) 

(8) 

(9) 

(10) 

(11) 

rate  amount  to  be  paid  per  day  for  the  use  of  the  vehicle  for  private  purposes. 
According to that report, Denmark maintains that the amount of VAT collectable per 
day remains unchanged at DKK 40. 

Denmark indicates that the special measure has worked very well in the last years and 
has  been  taken  up  by  an  increasing  number  of  taxable  persons.  Denmark  also 
maintains  that  the  special  measure  aims  to  simplify  the  VAT  obligations  of  taxable 
persons who make occasional use for private purposes of a vehicle that was registered 
only  for  business  purposes,  thereby  simplifying  the  procedure  for  collecting  VAT. 
However,  it  would  remain  possible  for  a  taxable  person  to  choose  to  register  a  light 
goods vehicle as  being used for both  business  and private purposes.  In doing so,  the 
taxable person would lose the right to deduct the VAT incurred on the purchase cost of 
the  vehicle  but  would  not  be  required  to  pay  a  daily  charge  for  any  use  for  private 
purposes. 

Authorising a measure which ensures that a taxable person who makes occasional use 
for private purposes of a vehicle registered only for business purposes is not deprived 
of the full right to deduct the input VAT on that vehicle is consistent with the general 
rules on deduction as set out in Directive 2006/112/EC. 

It is therefore appropriate to extend the authorisation set out in Implementing Decision 
(EU) 2018/485. The extension of the authorisation should be limited in time to allow 
for an evaluation of the effectiveness and appropriateness of the special measure. The 
authorisation should therefore expire on 31 December 2026. 

In the event that Denmark requests a further extension of the special measure beyond 
31  December  2026,  it  should  submit  a  report  to  the  Commission  together  with  the 
extension request by 31 March 2026. 

It is considered that the extension of the special measure would only have a negligible 
effect  on  the  overall  amount  of  VAT  revenue  collected  at  the  stage  of  final 
consumption  and  would  have  no  adverse  impact  on  the  Union's  own  resources 
accruing from VAT. 

(12) 

Implementing Decision (EU) 2018/485 should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

Article 1 

In  Article  3  of  Implementing  Decision  (EU)  2018/485,  the  second  and  third  paragraphs  are 
replaced by the following: 

‘It shall apply from 1 January 2018 to 31 December 2026. 

Any request for extension of the measure provided for in this Decision shall be submitted to 
the Commission  by  31  March 2026 and shall be accompanied by  a report which includes a 
review of the measure.’. 

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This Decision is addressed to the Kingdom of Denmark. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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