EU proposes exempting SMEs from cross-border VAT obligation

31 January 2018

During January 2018, the European Commission (EC) published a proposal to eliminate foreign VAT obligations for small to medium sized EU enterprises (‘SMEs’).

When selling in their own EU countries these types of businesses do not have to VAT register if their sales turnover within the last 12 months, is below a certain threshold. These thresholds are different in each EU member state and only apply to resident companies.

This means that when the same businesses sell in other EU member states as non-resident companies they immediately have to VAT register and charge local VAT on the first sales that they make in the country.  With the exception of companies selling from one EU member state directly to consumers in another EU member state, as this is known as distance selling and is subject to its own thresholds.

As this has a significant administration cost to these types of businesses and restricts the free movement of goods within the EU, the EU is now proposing:

  • To introduce a €2 million revenue threshold across the EU, under which small businesses would benefit from certain simplification measures;
  • 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 avoid a VAT registration.

LATEST NEWS

France to introduce e-filing for 13th Directive VAT...

From 1 July 2021, non-EU businesses must request 13th Directive VAT refund claims electronically through a fiscal representative established in France. These...

SEE MORE
LATEST NEWS

Norway extends reduced VAT rate to September 2021

Norway has confirmed that the temporary reduced VAT rate reduction, from 12% to 6%, will be extended from 30 June 2021 to 30 September 2021. The reduced VAT...

SEE MORE
LATEST NEWS

Canada: GST to be charged on digital goods and...

From 1 July 2021, the Canadian Revenue Agency (CRA) will introduce Goods and Sales Tax (GST)/Harmonised Sales Tax (HST) on sales of e-commerce goods and...

SEE MORE

Gated Content

The following email providers are not accepted: gmail, hotmail, yahoo. Please use proper company email.