Directive 2020/285 - Amendment of the VAT Directive as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises - Main contents
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official title
Council Directive (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises| Legal instrument | Directive |
|---|---|
| Number legal act | Directive 2020/285 |
| Original proposal | COM(2018)21  |
| CELEX number i | 32020L0285 |
| Document | 18-02-2020; Date of adoption |
|---|---|
| Publication in Official Journal | 02-03-2020; OJ L 62 p. 13-23 |
| Effect | 22-03-2020; Entry into force See Art 4 01-01-2025; Application Partial application See Art 4 |
| End of validity | 31-12-9999 |
| Transposition | 31-12-2024; Adoption See Art 3.1 01-01-2025; Application See Art 3.1 |
2.3.2020 |
EN |
Official Journal of the European Union |
L 62/13 |
COUNCIL DIRECTIVE (EU) 2020/285
of 18 February 2020
amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 113 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinions of the European Parliament (1),
Having regard to the opinion of the European Economic and Social Committee (2),
Acting in accordance with a special legislative procedure,
Whereas:
(1) |
Council Directive 2006/112/EC (3) allows Member States to continue to apply their special schemes to small enterprises in accordance with common provisions and with a view to closer harmonisation. However, those provisions are outdated and do not reduce the compliance burden of small enterprises, as they were designed for a common system of value added tax (VAT) based on taxation in the Member State of origin. |
(2) |
In its action plan on VAT, the Commission announced a comprehensive simplification package for small enterprises which aims to reduce their administrative burden and helps create a fiscal environment to facilitate their growth and the development of cross‐border trade. The simplification package entails a review of the special scheme for small enterprises as outlined in the Communication on the follow‐up to the action plan on VAT. The review of the special scheme for small enterprises therefore constitutes an important element of the reform package set out in the action plan on VAT. |
(3) |
In order to address the issue of the disproportionate compliance burden faced by exempt small enterprises, certain simplification measures should also be available to them. |
(4) |
The special scheme for small enterprises currently only allows for an exemption to be granted to enterprises established in the Member State in which the VAT is due. This has a negative impact on competition in the internal market for enterprises not established in that Member State. To address this and to avoid further distortions, small enterprises established in Member States other than that in which the VAT is due should also be allowed to benefit from the exemption. |
(5) |
Where a taxable person is subject to the regular VAT regime in its Member State of establishment, but avails itself of the VAT exemption for small enterprises in another Member State, the input tax deduction should reflect a connection to taxed supplies of the taxable person. Therefore, where such taxable persons procure inputs in their Member State of establishment which are connected to exempt supplies in other Member States, no input VAT deduction should be possible. |
(6) |
Small enterprises may only benefit from the exemption where their annual turnover is below the threshold applied by the Member State in which the VAT is due. In setting their threshold, Member States should abide by the rules on thresholds laid down by Directive 2006/112/EC. Those rules, most of which were put in place in 1977, are no longer suitable. |
(7) |
For the purposes of simplification, a number of Member States have been authorised to apply a threshold higher than that authorised under Directive 2006/112/EC on a temporary basis. As it is not appropriate to continue modifying general rules using measures granted by way of derogation, the rules on thresholds should be... |
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