On the basis of Article 395 of Directive 2006/112/EC, Member States may be authorised to derogate from the common VAT rules to simplify the procedure for charging the tax or to prevent certain types of tax evasion or avoidance. Such derogations have been authorised under the following different procedures:
- Decisions authorised by the Council under the procedure provided for in Article 395;
- Council Decisions tacitly approved under the former Article 27(4) of Directive 77/388/EEC;
- Special measures that were applied by the Member States before 1st January 1977 and that were notified to the Commission before 1st January 1978 , under Article 394.
The Commission is aware, for reasons of transparency and legal certainty, of the importance of making business in particular and European citizens in general, aware of the VAT derogations currently applied throughout the EU. The latest list reflecting the derogations in force is available.
On 24 July 2006, the Council agreed a Directive (Council Directive 2006/69/EC ) giving all Member States the option of applying special rules to simplify the application of Value Added Tax (VAT) or to counter tax avoidance and evasion.
Until the adoption of Directive 2006/69/EC Member States were able to apply such special rules but only by individually requesting authorisations from the Council which have to be periodically renewed. As some of those special rules have proved successful, particularly in the fight against tax avoidance and evasion, the Commission wished to allow all Member States to apply them without having to seek individual authorisations.
A list of those Member States that have consulted the VAT Committee to be able to apply such special rules is available.
A wider use of effective measures against tax avoidance and evasion should protect compliant businesses from the competitive advantages gained by tax avoiders and evaders. A single agreed alternative rule should also mean greater transparency and consistency of Member States' rules.
The ability for Member States to request special authorisation under Article 395 of Directive 2006/112/EC to derogate from the common VAT rules remains unchanged.