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

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dossier COM(2023)203 - Authorisation of Hungary to derogate from Article 287 of the VAT Directive.
document COM(2023)203 EN
date May 22, 2023
 
table>(1)Article 287, point (12), of Directive 2006/112/EC allows Hungary to 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 (EU) 2022/73 (2), Hungary was authorised, until 31 December 2024, to continue to apply a special measure derogating from Article 287, point (12), of Directive 2006/112/EC and thus 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 (the ‘special measure’).

(3)By letter registered with the Commission on 15 December 2022, Hungary requested an authorisation to increase the threshold of the existing special measure to EUR 71 500 for the remainder of the authorised period.

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

(5)The special measure requested by Hungary is in line with Council Directive (EU) 2020/285 (3), which seeks to reduce the compliance burden for small enterprises and avoid distortions of competition in the internal market.

(6)The special measure will remain optional for taxable persons as they can still opt for the regular VAT arrangements pursuant to Article 290 of Directive 2006/112/EC.

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

(8)Following the entry into force of Council Regulation (EU, Euratom) 2021/769 (4), 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 that the special measure has had a positive impact on the simplification of VAT-related obligations, as it has reduced the administrative burden and compliance costs for both small enterprises and tax authorities, and given that it lacks any major impact on the total VAT revenue generated, Hungary should be authorised to apply the special measure.

(10)The application of 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)Council Implementing Decision (EU) 2018/1490 (5) should therefore be repealed,