The European Parliament has given the green light to reforms which will cut red tape for small enterprises when complying with VAT rules.
The initiative was spearheaded through the Parliament by the EPP Group’s Inese Vaidere MEP. "The reforms will reduce VAT compliance costs for small businesses in the European Union by 18 percent and significantly ease administrative requirements", Vaidere said.
"More than half of all enterprises are small enterprises, thus the changes will significantly boost cross-border trade, economic growth and job creation", she added.
It is estimated that the reforms will reduce VAT accounting costs for small businesses by 18% from €68 billion to €56.1 billion across the European Union while cross-border trade for small businesses could increase by 13.5%.
While the current scheme provides that VAT exemption for small businesses is only available to national operators, the proposed reforms will allow a similar VAT exemption to be applied to small businesses established in other Member States.
The Directive provides that small businesses will be able to benefit from simplified compliance rules if their annual turnover does not exceed a threshold of €85,000.
MEPs gave their approval to the reform with 592 votes in favour, 22 against and 51 abstentions. "I am happy about the broad support for this proposal by my colleagues”, Vaidere concluded.
The new rules will apply from 1 January 2025.
The EPP Group is the largest political group in the European Parliament with 182 Members from 26 Member States