Explanatory Memorandum to COM(2024)279 - - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2024)279 - . |
|---|---|
| source | COM(2024)279 |
| date | 08-07-2024 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The purpose of this proposal is to adapt Council Implementing Regulation (EU) No 282/20111 (the VAT Implementing Regulation) to pave the way for the introduction of an electronic exemption certificate confirming that a transaction qualifies for a specific exemption under the first subparagraph of Article 151(1) of Council Directive 2006/112/EC (the VAT Directive).
Annex II of the VAT Implementing Regulation provides for a paper-based exemption certificate for VAT and/or excise duty designed to be signed by hand. To allow Member States to keep pace with the increasing demands of the digital age and to reduce the administrative burden on businesses, the current paper version will be replaced by the new electronic exemption certificate, to prepare for the increasing use of advanced electronic signatures. In addition, such electronic conversion will allow Member States to comply with the obligations imposed by EU legislation2 requiring them to put in place the necessary technical means to enable the electronic processing of electronically signed documents when using an online service provided by or on behalf of a public sector body.
Under the new Article 151(1a) of the VAT Directive, the Commission, in consultation with Member States, will be able to adopt implementing measures laying down the technical details and specifications concerning the applicable electronic format of the new exemption certificate and the way in which it is to be processed electronically. This new electronic certificate will fully replace the paper version from 1 July 2030. For transactions carried out before that date, and to take better account of other IT projects under way, Member States may continue to use the paper version set out in Annex II to the VAT Implementing Regulation. Consequently, the wording of Article 51(1) of the VAT Implementing Regulation is amended to allow for the alternative use of both paper and electronic certificates.
Annex II of the VAT Implementing Regulation is no longer up to date as it refers to Directive 2008/118/EC which has been replaced by Council Directive (EU) 2020/262 (recast) 3 and will be amended accordingly.
Finally, both Article 51 and Annex II of the VAT Implementing Regulation will be deleted from 1 July 2030, the date on which this paper version will be replaced by the new electronic VAT exemption certificate pursuant to Article 151(1a) of the VAT Directive.
• Consistency with existing policy provisions in the policy area
The proposal allows for the electronic conversion of the exemption certificate as the next step following its adaptation in 20224, which reflects the extended scope of the exemptions under Article 151(1) of the VAT Directive, to encompass Union activities under the Common Security and Defence Policy (CSDP)5 and Union measures in response to the COVID-19 pandemic6.
• Consistency with other Union policies
The introduction of the electronic VAT exemption certificate is in line with the initiatives taken as part of the EU's digitalisation policy and will help Member States to equip their tax administrations to comply with the requirements for the use of advanced electronic signatures laid down in EU legislation7.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Article 397 of the VAT Directive. This article provides that the Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement the VAT Directive.
• Subsidiarity (for non-exclusive competence)
The introduction of the electronic VAT exemption certificate under Article 151(1a) of the VAT Directive requires the VAT Implementing Regulation to be adapted accordingly. This could not be done by Member States acting alone. The adaptation requires a Commission proposal to amend the VAT Implementing Regulation.
• Proportionality
The proposal complies with the proportionality principle as it does not go beyond what is necessary and is proportionate to the objective pursued. The initiative introduces an electronic exemption certificate confirming that a transaction qualifies for a specific exemption under the first subparagraph of Article 151(1) of the VAT Directive. Given the increased administrative burden and lack of flexibility associated with an exemption procedure based on paper documents, the proposed measures will lead to significant simplification and cost savings in the long term and are therefore proportionate in view of their budgetary impact.
• Choice of the instrument
An Implementing Regulation is proposed in view of amending the VAT Implementing Regulation.
3. RESULTS OF EX-POST EVALUATIONS AND STAKEHOLDER CONSULTATIONS
• Stakeholder consultations
No stakeholder consultation was carried out, due to the highly technical nature of this initiative and its alignment with efforts at EU level to promote digital government interactions.
• Collection and use of expertise
The Commission, in consultation with Member States, has carried out a technical study to identify possible IT solutions for the introduction of an electronic exemption certificate and corresponding procedure.
• Regulatory fitness and simplification
The proposal is not linked to REFIT and has no particular impact on micro‑enterprises or SMEs.
• Fundamental rights
The proposed electronic conversion of the VAT exemption procedure supports the adaptation to the digital age and strengthens the rights of citizens regarding the processing of their personal data, as protected by Article 8 of the EU Charter of Fundamental Rights and Article 16 of the Treaty on the Functioning of the European Union.
4. BUDGETARY IMPLICATIONS
This proposal introduces certain changes necessary for the electronic conversion of the VAT exemption certificate but does not affect the scope of the VAT exemptions to which it refers. It therefore has no impact on the Union budget.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation, and reporting arrangements
The Commission will monitor implementation of the proposed measures as part of its responsibilities for ensuring the correct application of EU VAT legislation.
• Detailed explanation of the specific provisions of the proposal
Article 1, paragraph 1, of the proposal amends the wording of the first sentence of Article 51(1) of the VAT Implementing Regulation to ensure that the new electronic VAT exemption certificate referred to in Article 151(1a) of the VAT Directive can be used as an alternative.
Article 1, paragraph 2, of the proposal replaces the VAT and/or excise duty exemption certificate provided for in Annex II of the VAT Implementing Regulation by a new version which reflects the fact that Directive 2008/118/EC has been replaced by Council Directive (EU) 2020/262 (recast).
Article 2 of the proposal deletes Article 51 and Annex II of the VAT Implementing Regulation to ensure that from 1 July 2030 only the electronic VAT exemption certificate referred to in Article 151(1a) of the VAT Directive will apply.