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EU 2025 VAT registration thresholds equivalence for foreign businesses

  • Mar 9, 2020 | Richard Asquith

From January 2025, member states will provide small, non-resident businesses with the same VAT registration thresholds as those for domestic businesses. It is part of the EU Action Plan for VAT and other reforms.

Currently, member states may exempt small, resident businesses from VAT under an annual sales threshold which they set. Foreign businesses, however, face a zero-threshold when then sell in another member state. This creates high compliance costs particularly for small businesses, which leaves them at a competitive disadvantage compared to local companies. This hinders the efficient operation of the single market.

Member states have now agreed domestic and foreign enterprises will have the same registration thresholds, which cannot exceed €85,000 p.a. However, foreign companies can only benefit from this if their total pan-EU sales are €100,000 or below. This will prevent large enterprises benefiting from this new small company threshold. 

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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