Explanatory Memorandum to COM(2017)567 - Amendment of Regulation (EU) No 904/2010 as regards the certified taxable person - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2017)567 - Amendment of Regulation (EU) No 904/2010 as regards the certified taxable person. |
|---|---|
| source | COM(2017)567  |
| date | 04-10-2017 |
1. CONTEXTOFTHEPROPOSAL
• Reasons for and objectives of the proposal
This proposal is part of the package of legislation to introduce a definitive VAT system for intra-Union cross-border trade based on the principle of taxation in the Member State of destination of the goods in order to create a robust single European VAT area. A legislative proposal for such a simpler and fraud-proof definitive VAT system for intra-Union trade was included in the Commission’s Work Programme for 20171. These proposals for a definitive VAT system for intra-Union cross-border trade also include improvements to the current VAT system as requested by the Member States2.
Both for the definitive VAT system and also as regards certain of the aforementioned improvements to the current system taxable persons should be able, under certain conditions, to obtain the status of a certified taxable person. The concept of certified taxable person should allow for an attestation that a particular business can globally be considered to be a reliable taxpayer. Certain simplification rules related to call-off stock arrangements, chain transactions and the proof of transport of goods transported or dispatched to another Member State which could be fraud-sensitive, should apply only where certified taxable persons are involved in the relevant transaction. The certified taxable person concept should in addition allow for a gradual implementation of the definitive VAT system because during the first step of that definitive system reverse charge would apply where the acquirer, in case of intra-Union supplies of goods, is a certified taxable person. The justification is that, the certified taxable person being by definition a reliable taxpayer, no fraud should occur as a result of VAT not being charged on intra-Union supplies of goods made for a certified taxable person.
In this context, it is essential for businesses and tax administrations that the certified taxable person status of a business can be checked immediately and online. To that end, it is necessary that all Member States store information on businesses and their certified taxable person status in an electronic system and that the competent authorities of each Member State ensure that confirmation is provided of the certified taxable person status of any business. These obligations of Member States are to be established within the legislation on administrative co-operation, i.e. Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative co-operation and combating fraud in the field of value added tax3 (the 'VAT Administrative Cooperation Regulation').
• Consistency with existing policy provisions in the policy area
The proposal is intended to give a practical effect to the certified taxable person status, which is a basic component of the definitive VAT regime for intra-Union trade based on the principle of taxation in the Member State of destination of the goods, as announced in the
Commission Work Programme 2017: Delivering a Europe that protects, empowers and defends, COM(2016) 710 final.
eur-lex.europa.eu/legal-content/EN/TXT:52016DC0710 See Council conclusions of 8 November 2016 on Improvements to the current EU VAT rules for crossborder transactions (No. 14257/16 FISC 190 ECOFIN 1023 of 9 November 2016) data.consilium.europa.eu/doc/document OJ L 268, 12.10.2010, p. 1–18
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VAT Action Plan4. The
certified taxable person status is also relevant in relation to certain improvements to the current system requested by Member States; namely in relation to rules on chain transactions, call-off stock situations and the proof of transport in exempt intra-Community supplies of goods.
• Consistency with other Union policies
The creation of a simple, modern and fraud-proof VAT system is one of the fiscal priorities set out by the Commission for 20175.
Combating missing trader VAT fraud is also one of the European Union's priority crime areas, under the 2014-2017 EU Policy Cycle of Europol6. Reference could also be made to the agreement7 on the creation of the European Public Prosecutor's Office (EPPO) which will be competent, under certain conditions, for VAT fraud.
2. LEGALBASIS, SUBSIDIARITYAND 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)
According to the principle of subsidiarity, as set out in Article 5(3) of the Treaty on European Union (TEU), action at Union level may only be taken if the envisaged aims cannot be achieved sufficiently by the Member States alone and can therefore, by reason of the scale or effects of the proposed actions, be better achieved by the Union.
Issues related to the storage of, and the provision of access to, information regarding the certified taxable person status of businesses can, by their nature, not be decided by individual Member States since businesses and tax administrations in all Member States should, in a standardised way, be able to check the certified taxable person status of businesses established in other Member States. This requires a common framework and an initiative in this respect requires a proposal by the Commission to amend the VAT Administrative Cooperation Regulation.
• Proportionality
The proposal simply defines a framework regarding the certified taxable person status, while operational control and application measures remain the responsibility of the Member States. In particular, the granting or repealing of the certified taxable person status of individual
Action Plan on VAT – Towards a single EU VAT area – Time to decide (COM(2016) 148 final of 7 April 2016)
Annual Growth Survey 2017, see https://ec.europa.eu/info/publications/2017-european-semester-annual-growth-survey_en
EMPACT priorities (European multidisciplinary platform against criminal threats) See www.consilium.europa.eu/en/press/press-releases">www.consilium.europa.eu/en/press/press-releases
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taxable persons, based upon commonly agreed conditions, remains the sole competence of the Member States.
• Choice of the instrument
Since the existing legislation is a Regulation, it can be amended only by another Regulation.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER
ANDIMPACTASSESSMENTS
Stakeholder
consultations
The Commission has set up two working groups for discussions at technical level regarding VAT, namely the Group on the Future of VAT (GFV) and the VAT Expert Group (VEG). These groups have discussed the definitive VAT system for intra-Union trade, including the issue of the certified taxable person. In addition, a public consultation was organised from 20 December 2016 to 20 March 2017 resulting in 121 contributions8.
Impact
assessment
Reference is made to the separate impact assessment [SWD(2017)325 and its summary SWD(2017)326] which has been carried out in relation to, inter alia, this proposal.
The impact assessment for the proposal was considered by the Regulatory Scrutiny Board on 14 July 2017 [Ares(2017)3573962-SEC(2017)423]. The Board gave a positive opinion to the proposal with some recommendations that have been taken into account. The opinion of the Board and the recommendations are mentioned in Annex 1 to the Staff Working Document for the impact assessment accompanying this proposal.
4. BUDGETARYIMPLICATIONS
The proposal will have no negative implications for the Union budget.
5. OTHERELEMENTS
• Detailed explanation of the specific provisions of the proposal
The aim of Article 1 of the proposal is to provide the basis for the integration of the certified taxable person status into the VIES system (VAT Information Exchange System). Currently, the VIES system is, inter alia, used to check the validity of the VAT number of a client in another Member State in order to ascertain that a supply of goods, transported or dispatched to that customer outside the Member State of supply, can be exempt from VAT. From a practical point of view, the checking of the certified taxable person status of the customer in order not to charge VAT in case of an intra-Union supply of goods under the definitive system is quite similar as the checking of a VAT number. Since the certified taxable person
See, about stakeholder consultation, Annex 2 of the Staff Working Document - Impact assessment accompanying the document Proposal for a Council Directive amending Directive 2006/112/EC as regards harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States and the results of the related open public consultation: https://ec.europa.eu/taxation_customs/consultations-get-involved/tax-consultations_en
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status is relevant in cross-border situations and since the IT infrastructure is already in place and used by all tax administrations, it is suitable to use the existing infrastructure and to extend its functioning in order to include the certified taxable person status of taxable persons.
To integrate the certified taxable person status, it is first necessary that Member States, who are in charge of granting and withdrawing the certified taxable person status of businesses that are established in their territory, collect this information and store it electronically. To that end, Article 17 of the VAT Administrative Cooperation Regulation is amended to ensure that also information on the certified taxable person status of taxable persons is stored. Further by adapting Article 31 of the VAT Administrative Cooperation Regulation it is ensured that confirmation of the certified taxable person status of a particular person can be obtained by electronic means.