ECJ VAT Case – C-504/26 (Commission v Spain) – Action – Small enterprises VAT scheme: failure to transpose Directive (EU) 2020/285

Summary

The European Commission brought an infringement action against the Kingdom of Spain on 19 May 2026 concerning the implementation of the revised VAT special scheme for small enterprises. The Commission claims that Spain failed to adopt all the laws, regulations and administrative provisions necessary to comply with Directive (EU) 2020/285 or, in any event, failed to communicate those measures to the Commission. Under Article 3(1) of Directive (EU) 2020/285, Member States were required to transpose the Directive by 31 December 2024 and apply the relevant provisions from 1 January 2025. The Directive requires Member States to establish the necessary framework for small enterprises established in their territory to benefit from VAT exemptions granted by other Member States, subject to the applicable conditions and thresholds. The Commission seeks a declaration of failure to fulfil obligations, a lump-sum payment and, if the infringement continues until judgment, a daily penalty payment under Article 260(3) TFEU. [eur-lex.europa.eu], [eur-lex.europa.eu]

Articles of the EU VAT Directive 2006/112/EC discussed

No individual article of Directive 2006/112/EC is identified in the published notice. The action concerns Directive (EU) 2020/285, which amends Directive 2006/112/EC regarding the special scheme for small enterprises. The notice explains that the amended framework allows qualifying small enterprises established in one Member State to benefit from a VAT exemption granted in another Member State. It does not, however, attribute the alleged infringement to a specifically numbered article of Directive 2006/112/EC. [eur-lex.europa.eu], [eur-lex.europa.eu]
Article 3(1) of Directive (EU) 2020/285. This provision required Member States to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 31 December 2024, communicate those provisions to the Commission without delay and apply them from 1 January 2025. It is the central provision relied upon by the Commission in alleging that Spain failed to transpose or communicate the required measures. [eur-lex.europa.eu], [eur-lex.europa.eu]
Article 260(3) TFEU. This provision permits the Court, in proceedings concerning a Member State’s failure to notify measures transposing a directive adopted under a legislative procedure, to impose a lump sum or penalty payment. The Commission relies on it in requesting financial sanctions against Spain. [eur-lex.europa.eu], [eur-lex.europa.eu]

Form of Order Sought

The European Commission claims that the Court should:

Declare that, by failing to adopt all the laws, regulations and administrative provisions necessary to comply with Council Directive (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises, or, in any event, by failing to communicate them, the Kingdom of Spain has failed to fulfil its obligations under Article 3(1) of that Directive.
Order the Kingdom of Spain to pay the Commission a lump sum equal to the higher of the following amounts:
i. A daily sum of EUR 32,430 multiplied by the number of days during which the infringement has persisted from the day following the expiry of the transposition period laid down in Article 3(1) of Directive (EU) 2020/285 until the date on which the Kingdom of Spain puts an end to the infringement or, failing that, the date of delivery of the judgment pursuant to Article 260(3) TFEU.

ii. A minimum lump sum of EUR 7,540,000.
Should the failure to fulfil obligations persist until the date on which judgment is delivered, order the Kingdom of Spain to pay the Commission a daily penalty payment of EUR 135,811.20 from the date of judgment until Spain complies with its obligation under Article 3(1) of Directive (EU) 2020/285 to communicate the measures transposing that Directive.
Order the Kingdom of Spain to pay the costs. [eur-lex.europa.eu], [eur-lex.europa.eu]

Key Takeaways

The action concerns Spain’s alleged failure to transpose or communicate the measures required to implement the revised EU VAT special scheme for small enterprises by the 31 December 2024 deadline. [eur-lex.europa.eu], [eur-lex.europa.eu]
The revised scheme has a cross-border dimension: Member States must put in place the provisions necessary for eligible small enterprises established in their territory to access exemptions adopted by other Member States. [eur-lex.europa.eu], [eur-lex.europa.eu]
The Commission is requesting substantial financial sanctions under Article 260(3) TFEU, including a lump sum and, if the infringement continues until judgment, a daily penalty payment. [eur-lex.europa.eu], [eur-lex.europa.eu]

Source

CURIA: Action brought on 19 May 2026, European Commission v Kingdom of Spain, Case C-504/26