Europe plans to expand cases in which SMEs may be exempted from VAT

The European Council approves a project that seeks to reduce administrative burdens and delimit the costs of complying with the tax regulations of this tax.

The European Council has reached an interim agreement for a proposal for a directive that seeks to simplify the VAT rules applicable to small businesses, within the framework of operations within the different States of the European Union. The objective of this agreement is to reduce the administrative burden and the cost of compliance with regulations for small businesses and contribute to creating a fiscal framework that helps SMEs to grow as they can establish commercial roads in other countries in a way more efficient.

Reduce costs

In that sense, the proposal raises the possibility that small corporations can exempt VAT, not only in the Member State in which they are implemented (as is currently the case), but also to companies located in countries other than those accrue VAT.

According to the proposal of the European Council, small businesses can be accepted as long as their annual turnover is lower than the threshold established by the Member State concerned, that is, with a maximum of 85,000 euros.

It is also contemplated that small companies from other Member States that do not always exceed that threshold can be accepted under the simplified standard, so that their total annual turnover in the EU as a whole does not exceed 100,000 euros.

VAT regulations

The regulation involves a modification of the VAT Directive, which aims to review and simplify the rules on VAT exemption for small businesses, so that they can qualify for exemption throughout the EU and would also amend the Regulation on administrative cooperation in the field of VAT to improve administrative cooperation when applying the new VAT rules.