EU proposes exempting SMEs from cross-border VAT obligation
- EU VAT
- 20 January 2018 | Richard Asquith
On 18 January 2018, the European Commission (EU) published a proposal to eliminate foreign EU VAT obligations for small enterprises (‘SME’).
Currently, EU small businesses selling in their own country are exempt from VAT if their sales are below a set threshold. This threshold varies between member states, e.g. €10,000 in France; and £85,000 in the UK. However, when selling in other EU states, SME’s enjoy no such simplification – they must register and charge local VAT on the first sale. This imposes a VAT compliance cost on small companies, and restricts the free operation of the Single Market for small companies.
The EU is now proposing:
- A €2 million revenue threshold across the EU, under which small businesses would benefit from simplification measures, whether or not they have already been exempted from VAT;
- The possibility for Member States to free all small businesses that qualify for a VAT exemption from obligations relating to identification, invoicing, accounting or returns;
- A turnover threshold of €100,000 which would allow companies operating in more than one Member State to benefit from the VAT exemption
Poland’s Ministry of Finance has announced that it will recategorise many supplies to within the current reduced VAT rate category. However, this will mean Poland will not...
Hungary has received permission to introduce an VAT registration threshold for businesses of HUF 12 million from 1 January 2019. This is approximately €48,000, based...
HMRC announced today that it is opening the test pilot for its Making Tax Digital for VAT programme to the public. However, HMRC also announced...