The European Union announced to further equip the EU’s VAT system to fight and avoid tax fraud in the e-commerce sector. Furthermore, small and medium enterprises (SMEs) shall profit from new VAT regulation.
Maximilian GamplLast Updated on
So, what’s new?
On 8 November 2019, the agreement was published and it is meant to make relevant data on online purchases available to the respective anti-fraud authorities. This shall ensure a more efficient and faster fight against VAT fraud.
Further, the administrative burdens for SMEs shall be reduced to give more scope for cross-border activities.
More VAT payment data to fight VAT fraud
The estimated loss due to VAT fraud in Europe is about € 5 Billion every year and this shall stop.
The authorities and anti-fraud experts within the European Union will have access to data that is relevant for ensuring VAT payments and VAT compliance and consequently VAT fraud could be tackled more efficiently.
The data we are talking about is usually held by payment intermediaries (e.g. direct debit providers) and all those providers will have to provide the authorities relevant payment data for cross-border sales which allows identifying the parties involved faster.
Unfortunately, this will still take a while to start.
NOTE: Those new rules have to be confirmed by the European Parliament before entering into force in January 2024.
Easier VAT regulations for SMEs
EU finance ministers have agreed on applying further updates to the already special VAT regulations for SMEs within the European Union.
The new system should reduce red tape and administrative burdens for small businesses and create a competitive environment for businesses, regardless of their location in the EU, e.g. with uniform threshold limits.
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That means a domestic turnover threshold of €85,000 for companies which are doing business exclusively in their own country shall replace the current limits. Further, there shall also be an EU-wide €100,000 threshold in turnover for SMEs doing business cross-border to be eligible for exemption in another Member State.
Other VAT duties, like VAT registrations and filing, shall also become more simply. More information will follow as soon as there is an update from the EU.
NOTE: This new VAT scheme has to be confirmed by the European Parliament before entering into force in January 2025.