- Support of small undertakings/retaining a reasonable relationship between administrative cost v. tax at stake

 

"[27] It should be stated, in that regard, that, as regards the condition to obtain a tax advantage the grant of which would be contrary to the objectives pursued by the VAT exemption scheme laid down in point 19 of Article 287 of the VAT Directive, that scheme makes it possible, by the administrative simplifications which it entails, to support the creation, activities and competitiveness of small undertakings and to retain a reasonable relationship between the administrative charges connected with fiscal supervision and the small amounts of tax to be reckoned with. Thus, that scheme is aimed at sparing small undertakings and the tax authorities from such an administrative burden (judgment of 9 July 2020, AJPF Caraş-Severin and DGRFP Timişoara, C‑716/18, EU:C:2020:540, paragraph 40)." (UP Caffe C-171/23)

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"[63] As the tax exemption is not objectively linked to the nature of the activity, but only to a turnover limit not being reached by the individual taxable persons, Article 287 of the VAT Directive provides for a subjective exemption. As the Court has already ruled ( 24 ) and I have stated elsewhere, ( 25 ) the purpose behind this subjective exemption resides primarily in administrative simplification.

[64] Without such a limit, the tax authorities would have to treat any person who carries on even a limited economic activity for the purposes of Article 9 of the VAT Directive as a taxable person from the first euro. This would give rise to administrative expenditure not only for the taxable person but also for the tax authorities, for which there would be no corresponding tax revenue. ( 26 ) The de minimis limit in Article 287 of the VAT Directive is designed to avoid this. ( 27 )" (XT C-312/19 AG Kokott)

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But see

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"[52] However, use of the Croatian small enterprise scheme may have been inappropriate. It is therefore necessary to determine its purpose. With regard to Article 287 of the VAT Directive, which authorises the Member States to grant such a tax exemption, the Court has held that this is intended to support the creation, activities and competitiveness of small enterprises. ( 20 ) That is questionable in view of the fact they are, at the same time, denied the right to deduct input tax and the exemption encompasses only the annual turnover that an enterprise generates in one year in the Member State in which it is established. ( 21 ) The fact that the turnover threshold takes the form of an exemption limit rather than a tax-free allowance also militates against a conclusion that the tax exemption is intended to promote small enterprises, because it is precisely the particularly successful start-ups that are disadvantaged. ( 22 )

[53] On the contrary, the tax exemption is intended primarily to enable administrative simplification (de minimis rule). Unless a turnover threshold is set, the tax authorities would have to treat every person with even the slightest economic activity as a taxable person. That would involve considerable administrative expenditure for the taxable persons and the tax authorities, without that expenditure being offset by corresponding tax revenues. ( 23 )" (UP Caffe C-171/23, AG Kokott)

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