Proposal for a Council Implementing Decision authorising Latvia to introduce a special measure derogating from Article 193 of Council Directive 2006/112/EC on the common system of value added tax

Background and further information:

Pursuant to Article 395(1) of 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 for derogation from the provisions of that Directive in order to simplify the procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance.

As a general rule, Article 193 of the VAT Directive stipulates that the taxable person supplying goods or services is normally liable to pay value added tax (VAT). Pursuant to Article 199a(1) of the VAT Directive, Member States may provide that the person liable for payment of VAT on supplies listed in this Article is the taxable person to whom the supply is made (the reverse charge mechanism). Under the reverse charge procedure, the taxable person, to whom the supplies are made, becomes liable for the payment of VAT.

On the basis of the options set out in Article 199a(1), since 1 April 2016, Latvia applies the VAT reverse charge mechanism to supplies of mobile phones, tablet PCs, laptops, and integrated circuit devices. At that time Latvia did not make use of the option to apply the reverse charge mechanism to supplies of game consoles. However, due to the recent increased fraud in the sector of game consoles in Latvia, on 15 November 2017 Latvia requested a derogation from Article 193 of the VAT Directive in order to apply the reverse charge mechanism to supplies of game consoles.

It is proposed to grant the derogation for the period of validity of Article 199a of the VAT Directive. The derogation is thus proposed until 31 December 2018, i.e. the date of expiry of Article 199a of the VAT Directive.