Impact Analysis of Optional simplification

 ADMINISTRATIVE AND ENFORCEMENT COSTS FOR PUBLIC AUTHORITIES

Out of six MS that provided an answer to the relevant question, three (Ireland, Sweden, and the UK) stated they saw no benefits, one (Germany) described advantages and disadvantages of the suggested solution in detail, but provided no numerical value, and only two (Slovenia and Slovakia) specifically stated their expected administrative cost reduction in terms on man-days. Slovenia believes that, should the simplification scheme be introduced, it would save 20 man-days per year (that is, 2,864 EUR/year), while Slovakia – 108 days (13,219.2 EUR/year). Germany explained that the introduction of the simplification scheme could introduce certain flexibility that could, in turn, provide benefits for the MS itself. How beneficial it would be, would, however, “depend(s) on the concrete scope of the simplifications and the goods concerned”.

Table 56: Administrative cost reduction due to introduction of standard simplification schemes for “low-risk” cross-border movements according to MS

Indicator Administrative cost _reduction

Unit man-days Ireland 0 Slovenia 20 Slovakia 108 Sweden 0 United Kingdom 0

Source: own elaboration based on answers provided by MSAs.

Extrapolating these numbers, administrative cost reduction due to introduction of standard simplification schemes for “low-risk” cross-border movements would amount

to ca. 1,011 man-days EU-wide, which equals ca. EUR 0.786 million.

In order to achieve this number, we attached a weight to each MS, dividing the value of low-risk operations (intra-community supply of low-risk goods) in a given country by the value of all low-risk operations EU-wide (both numbers calculated using the method explained in detail in Chapter 3.6). Subsequently, knowing each MS’s share in all the low-risk movements, we were able to estimate its benefit from introduction of standard simplification schemes in terms of man-days. Knowing each country’s daily rate (in EUR) allowed us to then calculate the cost in monetary terms.

 COMPLIANCE AND ADMINISTRATIVE COSTS FOR ECONOMIC OPERATORS

Out of the plurality (42%) of EOs who provided an answer to the relevant question, one third (33.3%) expected savings amounting to less than 500 EUR a year, and another third (33.3%) – between 500 and 2,000 EUR a year. Roughly, an equal number believed they would save 2,000-5,000 EUR a year, 5,000-50,000 EUR88 _{a year, and}

88 _{One EO (5.6% of the sample) believed they would save between 5,000 and 10,000 EUR/year, and one –} between 10,000 and 50,000 EUR/year. Numbers displayed on the chart may vary slightly due to their rounding to the nearest number.

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more than 50,000 EUR a year (11.1% each). There was no statistically important difference in perception of potential benefits between companies depending on the sector they operated in. Bigger companies (employing over 250 people) were, however, the only ones to expect financial benefits exceeding 2,000 EUR per year (40% of all EOs employing 250 people and more). One fifth believed they would save between 10,000 EUR and 50,000 EUR a year. As for the SMEs, only 30% of those who took part in the survey answered that question. Out of those who did, two expected benefits to be below EUR 500 and one – between EUR 500 and 2,000 annually.

Extrapolating this number yields a figure of ca. EUR 4.45 million EU-wide. In order to achieve this number, we computed weight for each EO that provided its estimation of expected benefits by virtue of dividing number of its operations (as reported in the questionnaire) by the total number of all excise movements (calculated using data from EMCS, as described in detail in Chapter 3.7.3). We subsequently used the weights and estimations of savings provided to extrapolate the value of savings for the entire EU.

Figure 70: Benefits expected by EO from the introduction of standard simplification schemes for “low-risk” cross-border movements

Source: own elaboration based on answers provided by MSAs.

Financial benefits are also expected by EOs that participated in the OPC. Roughly two thirds suspected introduction of the simplification scheme would be beneficial or very beneficial for them. At the same time, however, 9.7% were concerned about a potential detrimental effect of the proposed changes.

 MARKET EFFECTS AND IMPACT ON SMES

Taking the level of EOs’ discontent with current arrangements into consideration, introduction of a simplification scheme would be beneficial for EOs. However, it is worth noting at the same time that although EOs expressed a hope in questionnaires and the OPC that a simplification scheme would be introduced, some of them were worried that implemented changes would not, in fact, reduce their administrative burden (implicitly: further complicate their work). Moreover, differences in terms of the type of simplification scheme preferred could be noticed between different groups of EOs; micro companies were not in favour of a scheme based on a type of product (100% against it), preferring simplification based on fiscal risk attached to a movement or a combination of both solutions. It was only large companies, employing over 250 employees, who supported simplification scheme based on type of product transported.

33% 33% 11% 6% 6% 11%

<500 (EUR, per year) 500-2,000 (EUR, per year) 2,000-5,000 (EUR, per year) 5,000-10,000 (EUR, per year) 10,000-50,000 (EUR, per year) > 50,000 (EUR, per year)

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In monetary terms, the scale of savings from the introduction of proposed policy option is rather limited and with only one in ten EOs (11%) expecting to save more than 50,000 EUR a year thanks to the simplification scheme. Large EOs would benefit more than small ones; all micro companies that replied to the question estimated their savings to fall below EUR 500 per year and the only medium-sized (50-250) enterprise that responded–at between EUR 500 and EUR 2,000. 27% of large companies, on the other hand, expected to save more than EUR 5,000 and 13.3% more than EUR 50,000– although 60% still believed their savings to be below EUR 2,000 a year.

 IMPACT ON FRAUD

Apart from Latvia, who believed fraud related to low risk movements to amount to zero (although only because it believed the number of low risk movements to be zero), and Finland who did not provide estimations on fraud but did expect its scale and value to increase in the upcoming 5 years, no MS provided any information regarding current or future scale of fraud.

However, in their comments MSAs indicated that their unwillingness to introduce simplification scheme (especially one based on fiscal risk associated), or indeed to recognize the term “low risk” goods/movements, resulted from the fact that all movements carry a risk of fraud (even movements with low excise concerned due to the effect of scale).

 DISTRIBUTION OF COSTS/BENEFITS BETWEEN MS, AND MODULARITY OF THE POLICY

OPTION

The benefits from the introduction of low risk movements’ simplification would vary significantly between MS. This is however not an impediment for the introduction of this policy option as it may–and indeed from the beginning was planned to be– implemented in the voluntary basis. MS that do not believe they would benefit from it will be able to abstain from its introduction.

5.5.2 Comparison of Policy Options

Table 57: Comparison of policy options (low-risk movements)89

Impact area and

target groups A) Dynamic baseline scenario

B) Simplification of low-risk movements Administrative costs for National Authorities 10% increase in absolute terms (0% increase per movement) The administrative cost per movement borne by MS will remain the same. The number of low- risk movements in absolute terms will increase by 10 percent. 4 million EUR over 5 years (benefit) Gains of ca. 1,011 man-days, equivalent to ca. EUR 0.79 million per

year, to increase by 10% over 5 years.

89 _{Note: +2 major positive effect expected, +1 moderate positive effect expected, 0 no effect or neutral} impact expected, -1 moderate negative effect expected, -2 major negative effect expected. Monetary values are presented in real terms. Figures in the table were estimated for the next five years as of next year using the estimated change in the number of movements and the estimates of current unitary gains/losses. We also assume that the fixed cost (CAPEX) of implementing IT systems is five times larger than the yearly variable cost (OPEX).Some numbers may not sum up due to rounding.

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target groups A) Dynamic baseline scenario

B) Simplification of low-risk movements

Enforcement costs for

National Authorities 0

No enforcement costs will be borne by

National Authorities. 0

No enforcement costs will be borne

by National Authorities (use of simplified schemes will be voluntary). Administrative, compliance and hassle costs for economic operators 10% increase in absolute terms (0% increase per movement) The administrative cost per movement borne by MS will remain the same. The number of low- risk movements in absolute terms will increase by 10 percent. 22.7 million EUR over 5 years (benefit)

Gains of ca. EUR 4.5 million per year, to

increase by 10% over 5 years.

Impact of fraud 0

If no measures are implemented, the level of fraud will not change immediately.

-1

Simplification of low risk movements may increase the

scale of fraud. Market effects and

impact on SMEs 0

No change in the market structure over the next five year envisaged.

0

No change in the market structure over the next five

year envisaged.

Efficiency - - -

The desired effect of diminishing burden for the EOs would be

achieved at reasonable price.

Effectiveness - - -

The desired effect of diminishing burden for the EOs would be

partially achieved. Source: own elaboration.