Proposal for a Council Implementing Decision authorising Denmark to apply a special measure derogating from Article 75 of Council Directive 2006/112/EC on the common system of value added tax

Background and further information:

Pursuant to Article 395 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ("the VAT Directive"), the Council 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.

In order to simplify VAT collection and combat tax evasion, Denmark requested in 2011 a derogation which would allow the introduction of a flat-rate scheme for the private use of light goods vehicles with a maximum authorised weight of up to three tonnes which have been registered solely for business use. The derogation request was approved by Council Implementing Decision 2012/447/EU of 24 July 2012, which was prolonged by Council Implementing Decision (EU) 2015/992 of 19 June 2015. The latter Decision expired on 31 December 2017.

As requested by Article 3 of Council Implementing Decision (EU) 2015/992, Denmark submitted, together with the prolongation request, a report on the review of the measure. According to the Danish authorities, the procedure has worked very well and they find good reasons to continue with such a procedure. Denmark therefore requested on 21 November 2017 authorisation to prolong Council Decision (EU) 2015/992 and to apply a measure derogating from Article 75 of the VAT Directive.

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 proposal includes an automatic time limit which is set at 31 December 2020. In case Denmark would consider an extension of the derogating measure beyond 2020, a report including a review of the measure should be submitted to the Commission together with the extension request no later than 31 March 2020.