Considerations on COM(2023)203 - Authorisation of Hungary to derogate from Article 287 of the VAT Directive

Please note

This page contains a limited version of this dossier in the EU Monitor.

 
dossier COM(2023)203 - Authorisation of Hungary to derogate from Article 287 of the VAT Directive.
document COM(2023)203
date May 22, 2023
 
(1) Pursuant to Article 287, point (12), of Directive 2006/112/EC, Hungary may exempt from value added tax (VAT) taxable persons whose annual turnover is no higher than the equivalent in national currency of EUR 35 000 at the conversion rate on the day of its accession.

(2) By Council Implementing Decision 2022/733, Hungary was authorised to continue to apply a special measure derogating from Article 287 of Directive 2006/112/EC to exempt from VAT taxable persons whose annual turnover is no higher than the equivalent in national currency of EUR 48 000 at the conversion rate on the day of its accession to the Union until 31 December 2024.

(3) By letter registered with the Commission on 15 December 2022, Hungary requested an authorisation to increase the threshold of the above mentioned existing special measure to EUR 71 500 until 31 December 2024 (‘the special measure’).

(4) By letter dated 11 January 2023, the Commission transmitted the request made by Hungary to the other Member States in accordance with Article 395(2), second subparagraph, of Directive 2006/112/EC. By letter dated 12 January 2023, the Commission notified Hungary that it had all the information it considered necessary for the appraisal of the request.

(5) The special measure requested by Hungary is in line with the amendments to Directive 2006/112/EC made by Council Directive (EU) 2020/2854, which seeks to reduce the VAT compliance costs for small enterprises and mitigate distortions of competition in the internal market.

(6) 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.

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

(8) Following the entry into force of Council Regulation (EU, Euratom) 2021/7695, there is to be no compensation calculation carried out by Hungary with regard to the VAT-based own resource statement for the financial year 2021 onwards.

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

(10) 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 Hungary to apply the special measure until 31 December 2024.

(11) Implementing Decision (EU) 2018/1490 should therefore be repealed.