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European Parliament 2014-2019 Committee on Economic and Monetary Affairs 2018/0006(CNS) 17.5.2018 * DRAFT REPORT on the proposal for a Council directive amending on the common system of value added tax as regards the special scheme for small enterprises (COM(2018)0021 C8-0022/2018 2018/0006(CNS)) Committee on Economic and Monetary Affairs Rapporteur: Tom Vandenkendelaere PR\1153039.docx PE621.115v02-00 United in diversity

PR_CNS_LegAct_am Symbols for procedures * Consultation procedure *** Consent procedure ***I Ordinary legislative procedure (first reading) ***II Ordinary legislative procedure (second reading) ***III Ordinary legislative procedure (third reading) (The type of procedure depends on the legal basis proposed by the draft act.) s to a draft act s by Parliament set out in two columns Deletions are indicated in bold italics in the left-hand column. Replacements are indicated in bold italics in both columns. New text is indicated in bold italics in the right-hand column. The first and second lines of the header of each amendment identify the relevant part of the draft act under consideration. If an amendment pertains to an existing act that the draft act is seeking to amend, the amendment heading includes a third line identifying the existing act and a fourth line identifying the provision in that act that Parliament wishes to amend. s by Parliament in the form of a consolidated text New text is highlighted in bold italics. Deletions are indicated using either the symbol or strikeout. Replacements are indicated by highlighting the new text in bold italics and by deleting or striking out the text that has been replaced. By way of exception, purely technical changes made by the drafting departments in preparing the final text are not highlighted. PE621.115v02-00 2/12 PR\1153039.docx

CONTTS Page DRAFT EUROPEAN PARLIAMT LEGISLATIVE RESOLUTION... 5 EXPLANATORY STATEMT... 12 PR\1153039.docx 3/12 PE621.115v02-00

PE621.115v02-00 4/12 PR\1153039.docx

DRAFT EUROPEAN PARLIAMT LEGISLATIVE RESOLUTION on the proposal for a Council directive amending on the common system of value added tax as regards the special scheme for small enterprises (COM(2018)0021 C8-0022/2018 2018/0006(CNS)) (Special legislative procedure consultation) The European Parliament, having regard to the Commission proposal to the Council (COM(2018)0021), having regard to Article 113 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C8-0022/2018), having regard to Rule 78c of its Rules of Procedure, having regard to the report of the Committee on Economic and Monetary Affairs (A8-0000/2018), 1. Approves the Commission proposal as amended; 2. Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union; 3. Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament; 4. Asks the Council to consult Parliament again if it intends to substantially amend the Commission proposal; 5. Instructs its President to forward its position to the Council, the Commission and the national parliaments. 1 Recital 8 (8) Member States should be left to set their national threshold for the exemption at the level that suits their economic and political conditions best, subject to the upper threshold provided for under this Directive. In this regard, it should be clarified that where Member States apply different thresholds, this would need to be (8) Member States should be left to set their national threshold for the exemption at the level that suits their economic and political conditions best, subject to the upper and lower threshold provided for under this Directive. In this regard, it should be clarified that where Member States apply different thresholds, this PR\1153039.docx 5/12 PE621.115v02-00

based on objective criteria. would need to be based on objective criteria. 2 Recital 13 (13) Furthermore, in order to ensure compliance with conditions for exemption granted by a Member State to enterprises not established there, it is necessary to require prior notification of their intention to use the exemption. Such notification should be made by the small enterprise to the Member State where it is established. That Member State should thereafter, based on the information declared on the turnover of that enterprise, provide that information to the other Member States concerned. (13) Furthermore, in order to ensure compliance with conditions for exemption granted by a Member State to enterprises not established there, it is necessary to require prior notification of their intention to use the exemption. Such notification should be made through an online portal, which should be set up by the Commission. The Member State of establishment should thereafter, based on the information declared on the turnover of that enterprise, provide that information to the other Member States concerned. 3 Recital 15 (15) To reduce the compliance burden of small enterprises that are not exempted, Member States should be required to simplify VAT registration and record keeping and to prolong tax periods so as to provide for less frequent filing of VAT returns. (15) To reduce the compliance burden of small enterprises that are not exempted, Member States should be required to simplify VAT registration and record keeping. Moreover, a one-stop shop for filing VAT returns in different Member States should be established by the Commission. PE621.115v02-00 6/12 PR\1153039.docx

4 Article 1 point 1a (new) Article 3 paragraph 2 point a Present text (a) during the current calendar year, the total value of intra-community acquisitions of goods does not exceed a threshold which the Member States shall determine but which may not be less than EUR 10 000 or the equivalent in national currency; (1a) in Article 3(2), point (a) is replaced by the following: (a) during the current calendar year, the total value of intra-community acquisitions of goods does not exceed a threshold which the Member States shall determine but which may not be less than EUR 25 000 or the equivalent in national currency; 5 Article 1 point 12 Article 284 paragraph 1 subparagraph 2 Member States may fix varying thresholds for different business sectors based on objective criteria. However, those thresholds shall be no higher than EUR 85 000 or the equivalent in national currency. Member States may fix varying thresholds for different business sectors based on objective criteria. However, those thresholds shall be no lower than EUR 15 000 and no higher than EUR 50 000 or the equivalent in national currency. 6 Article 1 point 12 PR\1153039.docx 7/12 PE621.115v02-00

Article 284 paragraph 4 subparagraph 1 Prior to availing itself of the exemption in other Member States, the small enterprise shall notify the Member State in which it is established. The Commission shall set up an online portal through which small enterprises willing to avail themselves of the exemption in another Member State shall register. 7 Article 1 point 18 Article 294e paragraph 1 Member States may release exempt small enterprises from the obligation to submit a VAT return laid down in Article 250. Member States shall release exempt small enterprises from the obligation to submit a VAT return laid down in Article 250. 8 Article 1 point 18 Article 294e paragraph 2 Where this option is not exercised, Member States shall allow such exempt small enterprises to submit a simplified VAT return to cover the period of a calendar year. However, small enterprises may opt for the application of the tax period set in accordance with Article 252. deleted PE621.115v02-00 8/12 PR\1153039.docx

9 Article 1 point 18 Article 294i For small enterprises the tax period to be covered in a VAT return shall be the period of a calendar year. However, small enterprises may opt for application of the tax period set in accordance with Article 252. deleted 10 Article 1 point 18 Article 294i a (new) Article 294i a The Commission shall put in place a onestop shop through which small enterprises can file VAT returns of the different Member States in which they are operating. The Member State of establishment shall be responsible for VAT collection. PR\1153039.docx 9/12 PE621.115v02-00

11 Article 1 point 18 Article 294j Article 294j Notwithstanding Article 206, Member States shall not require interim payments to be made by small enterprises. deleted 12 Article 1a (new) Regulation (EU) No 904/2010 Article 31 paragraph 1 Present text 1. The competent authorities of each Member State shall ensure that persons involved in the intra-community supply of goods or of services and non-established taxable persons supplying telecommunication services, broadcasting services and electronically supplied services, in particular those referred to in Annex II to, are allowed to obtain, for the purposes of such transactions, confirmation by electronic means of the validity of the VAT identification number of any specified person as well as the associated name and address. This information shall correspond Article 1a Regulation (EU) No 904/2010 is amended as follows: In Article 31, paragraph 1 is replaced by the following: 1. The competent authorities of each Member State shall ensure that persons involved in the intra-community supply of goods or of services and non-established taxable persons supplying telecommunication services, broadcasting services and electronically supplied services, in particular those referred to in Annex II to, are allowed to obtain, for the purposes of such transactions, confirmation by electronic means of the validity of the VAT identification number of any specified person as well as the associated name and address. This information shall correspond to the data referred to in Article 17. The PE621.115v02-00 10/12 PR\1153039.docx

to the data referred to in Article 17. VAT information exchange system (VIES) shall include a reference whether eligible small enterprises do use the VAT exemption or not. 13 Article 2 paragraph 1 subparagraph 1 Member States shall adopt and publish, by 30 June 2022 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall communicate to the Commission the text of those provisions without delay. Member States shall adopt and publish, by 31 December 2019 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall communicate to the Commission the text of those provisions without delay. 14 Article 2 paragraph 1 subparagraph 2 They shall apply those provisions from 1 July 2022. They shall apply those provisions from 1 January 2020. PR\1153039.docx 11/12 PE621.115v02-00

EXPLANATORY STATEMT Your rapporteur welcomes the Commission s proposal to ease the VAT compliance burden on SMEs. Small businesses bear proportionally higher VAT compliance costs than larger businesses, which not only violates the principle of fair taxation, but also hampers entrepreneurship. This proposal aims to foster entrepreneurship across the Union by introducing some administrative simplification measures for small enterprises. In order to achieve this goal, your Rapporteur considers some improvements on the following three fronts: First, this proposal aims to expand the VAT exemption for small enterprises from a solely national regime to a more EU-wide regime. Therefore, your Rapporteur believes this regime should be harmonised accordingly in order to not distort the operation of the internal market. Several amendments have been introduced to this extent. Your Rapporteur seeks to harmonise the threshold for VAT exemptions by setting both an upper and lower limit for the threshold. He also aims to make it mandatory for Member States not to require a VAT return for VAT exempted enterprises. Additionally, he proposes to set up an online portal through which enterprises willing to avail themselves from the VAT exemption in another Member state should register. Second, your Rapporteur aims to impose real administrative simplifications for SMEs. In addition to the proposed simplification measures, he also asks to set up a one-stop shop for VAT returns. The biggest hurdle for SMEs when acting cross-border is language. Therefore, filing VAT returns from different Member States through a one-stop shop could mean a significant simplification for small enterprises. On the other hand, the proposed annual VAT return for small companies would not imply a real simplification for SMEs. Even though this measure sounds attractive, in reality it would have too much negative side effects. Annual VAT returns for small enterprises would significantly increase bankruptcies. Small entrepreneurs themselves also ask for frequent updates on their bookkeeping and financial situation. Therefore, your Rapporteur asks to delete this measure. Third, your Rapporteur believes that this file should be treated separately from the other VAT files. VAT simplification measures for SMEs could be implemented more quickly than the definitive VAT regime. There should be no delay in fostering entrepreneurship. Therefore, the date of implementation of this proposal could be advanced. PE621.115v02-00 12/12 PR\1153039.docx