Considerations on COM(2023)89 - Authorisation of Italy to derogate from Article 285 of the VAT Directive

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dossier COM(2023)89 - Authorisation of Italy to derogate from Article 285 of the VAT Directive.
document COM(2023)89 EN
date March 21, 2023
 
(1) By Council Implementing Decision (EU) 2020/647 28 , Italy was authorised to apply a special measure derogating from Article 285 of Directive 2006/112/EC to exempt from VAT taxable persons whose annual turnover was no higher than EUR 65 000 until 31 December 2024.

(2) By letter registered with the Commission on 29 November 2022, Italy requested authorisation to apply a measure until 31 December 2024,  derogating from Article 285 of Directive 2006/112/EC in order to exempt taxable persons whose annual turnover was no higher than EUR 85 000 from VAT (‘the special measure’). 

(3) By letter dated 8 December 2022, the Commission transmitted Italy’s request to the other Member States in accordance with Article 395(2), second subparagraph, of Directive 2006/112/EC. By letter dated 9 December 2022, the Commission notified Italy that it had all the information it considered necessary for the appraisal of the request.

(4) The special measure is in line with the amendments to Directive 2006/112/EC made by Council Directive (EU) 2020/285 29 , which seek to reduce the VAT compliance costs for small enterprises and mitigate distortions of competition in the internal market.

(5) The special measure will remain optional for taxable persons as they may still opt for the regular VAT arrangements in accordance with Article 290 of Directive 2006/112/EC.

(6) According to the information provided by Italy, the special measure will have a negligible effect on the overall amount of tax revenue of Italy collected at the stage of final consumption.

(7) Following the entry into force of Council Regulation (EU, Euratom) 2021/769 30 , there is to be no compensation calculation carried out by Italy with regard to the VAT-based own resource statement for the financial year 2021 onwards.

(8) Given the expected positive impact of the special measure in reducing the administrative burden and compliance costs for both small enterprises and the tax authorities, and given the negligible impact on the total VAT revenue generated, Italy should be authorised to apply the special measure.

(9) The authorisation to apply the special measure should be limited in time. The time limit should be sufficient to allow the Commission to evaluate the effectiveness and appropriateness of the threshold. 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(12) of that Directive, and are to apply those provisions from 1 January 2025. It is therefore appropriate to authorise Italy to apply the special measure until 31 December 2024.

(10) Implementing Decision (EU) 2020/647 should therefore be repealed.