The EU Parliament’s economic and monetary affairs (ECON) committee has published its draft report recommending amendments to the Commission’s proposals for a special VAT scheme for small businesses. These amendments are aimed at greater harmonisation across member states.
The EU Parliament’s economic and monetary affairs (ECON) committee has published its draft report recommending amendments to the Commission’s proposals for a special VAT scheme for small businesses. These amendments are aimed at greater harmonisation across member states.
The European Commission put forward its proposals in January, as a follow-up to its ‘cornerstones’ for a new definitive single EU VAT area set out in October 2017.
Under the SME VAT scheme, as proposed by the Commission, member states would be given greater flexibility to apply a range of reduced rates between zero and 15%, subject to an overall average of 12%. A new list specifically excluding certain products from reduced rates would replace the current framework. SMEs below a €2m revenue threshold would qualify for simplified registration and record keeping, while a new exemption would apply to companies operating in more than one member state with a turnover below €100,000.
The Commission proposed allowing member states to continue setting their own exemption threshold, subject to a maximum turnover of €85,000. The ECON committee has recommended replacing this figure with both upper and lower limits for the exemption threshold, set at €50,000 and €15,000 respectively. The intra-community acquisitions threshold would be raised from €10,000 to €25,000.
A further amendment would make it mandatory, rather than optional, for member states not to require a VAT return from those businesses falling within the exemption thresholds. The ECON committee calls for the Commission to set up an online portal through which businesses would notify member states of their intention to use the exemption. The member state of establishment would then share this information with other states.
In addition, the committee has recommended setting up a one-stop shop for submitting VAT returns. This is intended to reduce language difficulties, which the ECON committee regards as the biggest hurdle for SMEs in cross-border trade.
The requirement for annual VAT returns should be removed from the proposal, in favour of allowing more frequent returns. The report notes that ‘small entrepreneurs themselves also ask for frequent updates on their bookkeeping and financial situation’.
Finally, the report recommends implementing the SME measures from 1 January 2020, more than two years earlier than the Commission proposal and before the rest of the definitive VAT regime.
The EU Parliament’s economic and monetary affairs (ECON) committee has published its draft report recommending amendments to the Commission’s proposals for a special VAT scheme for small businesses. These amendments are aimed at greater harmonisation across member states.
The EU Parliament’s economic and monetary affairs (ECON) committee has published its draft report recommending amendments to the Commission’s proposals for a special VAT scheme for small businesses. These amendments are aimed at greater harmonisation across member states.
The European Commission put forward its proposals in January, as a follow-up to its ‘cornerstones’ for a new definitive single EU VAT area set out in October 2017.
Under the SME VAT scheme, as proposed by the Commission, member states would be given greater flexibility to apply a range of reduced rates between zero and 15%, subject to an overall average of 12%. A new list specifically excluding certain products from reduced rates would replace the current framework. SMEs below a €2m revenue threshold would qualify for simplified registration and record keeping, while a new exemption would apply to companies operating in more than one member state with a turnover below €100,000.
The Commission proposed allowing member states to continue setting their own exemption threshold, subject to a maximum turnover of €85,000. The ECON committee has recommended replacing this figure with both upper and lower limits for the exemption threshold, set at €50,000 and €15,000 respectively. The intra-community acquisitions threshold would be raised from €10,000 to €25,000.
A further amendment would make it mandatory, rather than optional, for member states not to require a VAT return from those businesses falling within the exemption thresholds. The ECON committee calls for the Commission to set up an online portal through which businesses would notify member states of their intention to use the exemption. The member state of establishment would then share this information with other states.
In addition, the committee has recommended setting up a one-stop shop for submitting VAT returns. This is intended to reduce language difficulties, which the ECON committee regards as the biggest hurdle for SMEs in cross-border trade.
The requirement for annual VAT returns should be removed from the proposal, in favour of allowing more frequent returns. The report notes that ‘small entrepreneurs themselves also ask for frequent updates on their bookkeeping and financial situation’.
Finally, the report recommends implementing the SME measures from 1 January 2020, more than two years earlier than the Commission proposal and before the rest of the definitive VAT regime.