123rd VAT Committee Meeting: Guidelines on New Legislation for EU VAT Provisions and SME Scheme

These guidelines result from the 123rd meeting on 20 November 2023 and discuss new legislation related to the implementation of recently adopted EU VAT provisions. The guidelines specifically focus on the SME scheme and the special scheme for small enterprises and fixed establishments.

According to the guidelines, for a taxable person to be considered established within the territory of a Member State and eligible for possible exemption under the special scheme for small enterprises, their central administration functions must be carried out in that particular Member State. If a taxable person only has a fixed establishment in a Member State, they cannot be regarded as established in that Member State for the application of the special scheme. Additionally, if a taxable person’s central administration functions are carried out outside the EU but they have a fixed establishment in a Member State, they also cannot be considered established in that Member State.

The guidelines state that if a Member State has implemented an exemption under the special scheme for a taxable person with a fixed establishment in another Member State, that taxable person may benefit from the exemption in the Member State where the fixed establishment is located. However, if a taxable person is not established in any Member State because their central administration functions are carried out outside the EU, they cannot benefit from the exemption provided under the special scheme.

It is important to note that these guidelines issued by the VAT Committee are consultative and do not constitute an official interpretation of EU law. They do not bind the European Commission or Member States, who are free to choose whether or not to follow them.

Source Taxation-customs.ec.europa.eu (Page 295 & following)