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.