On Nov. 10, EU CNCL issued amendments re Croatia and Malta.
EU CNCL issued two decisions in respect of Croatia and Malta VAT derogations.
Croatia
Council implementing decision 2020/1661 of Nov. 3, 2020, amending implementing decision 2017/1768 authorizing Croatia to apply a special measure derogating from article 287 of directive 2006/112/EC on the common system of value added tax.
Croatia was authorized by dec 2017/1768 to introduce a derogation from article 287 of to exempt from VAT taxable persons whose annual turnover was no higher than equivalent in national currency of EUR 45 000 at conversion rate at accession.
In force until Dec. 31, 2020, or until the entry into force of a directive amending articles 281 to 294 of dir 2006/112, whichever date is the earlier.
According to information provided by Croatia, the reasons for the derogating measure remain largely unchanged and the increased threshold had no impact on the overall amount of tax revenue collected at the stage of final consumption.
Taxable persons are still able to opt for the normal VAT arrangements.
Given positive impact, Croatia should be authorized to continue applying the measure.
Implementing decision (EU) 2017/1768 should therefore be amended, accordingly,
Decision 2017/1768 shall now apply from Jan. 1, 2018, until Dec. 31, 2024.
Malta
Council implementing decision 2020/1662 of Nov. 3, 2020, amending implementing decision (EU) 2018/279, authorizing Malta to apply a special measure derogating from article 287 of directive 2006/112/EC on the common system of value added tax.
Malta was authorized by dec 2018/279 to derogate from article 287 to exempt from VAT taxable persons whose economic activity consists principally in supplies of services with a high value added (low inputs)/whose turnover is no higher than EUR 20 000.
Measure in force until Dec. 31, 2020, or until the entry into force of a directive amending articles 281 to 294 of directive 2006/112/EC, whichever date is earlier.
Given that the derogating measure has resulted in reduced VAT obligations and thus a reduction in the administrative burdens and costs for small enterprises, Malta should be authorized to continue applying the derogating measure.
Authorization to apply the derogating measure should be limited in time; limit should be sufficient to allow effectiveness and appropriateness of threshold to be evaluated.
Article 287 of dir 2006/112 is deleted by dir 2020/285 with effect from Jan. 1, 2025.
It is therefore appropriate to authorize Malta to apply derogating measure until Dec. 31, 2024; implementing decision 2018/279 should therefore be amended, accordingly.
Effectiveness
The derogations have been extended until Dec. 31, 2024.
May 2021 Malta Threshold Changed
On May 10, 2021, EU CNCL issued decision 2021/753 authorizing Malta to apply a special measure derogating from VAT directive art 287, repealing decision 2018/279.
Authorized to exempt from VAT if person's annual turnover is no higher than €30 000.
Where economic activity consists principally in the supply of services with a low value added (high inputs), or the supply of services with a high value added (low inputs).
The decision takes effect on the date of its notification, applies until Dec. 31, 2024.
Regulators
EU CNCL
Entity Types
Auditor; Corp
Reference
OJ L 163/1, 5/10/221; Dec 2021/753, 5/6/2021; OJ L 374/4, L 374/6, 11/10/2020, Dec 2020/1661, Dec 2020/1662, 11/3/2020; Dec 2017/1768; VAT Dir 2006/112; Rpl Dec 2018/279
