Relief for SMEs at proposed VATMOSS threshold

SMEs and sole traders look likely to benefit from proposals to introduce a threshold for compliance with VAT Mini One Stop Shop (VATMOSS) regulations.

Small businesses trading e-services across the EU are currently obliged to charge VAT at the native rates of their customers living in the 28-strong membership, which has meant added workloads operating with several different rates.

SME exemption

Now the European Commission has stated at a meeting in Dublin that it will introduce a threshold that will mean the smallest businesses can be exempt from the rules, thus saving them both time and money.

Chief executive of Association of Independent Professionals and the Self-Employed (IPSE), Chris Bryce, said that VATMOSS had been designed with large multinationals in mind. The idea was to tackle widespread tax avoidance issues, but life had been made "far more difficult for our smallest businesses" as an unintended result.

"We don't want entrepreneurs to be discouraged from selling their services online for fear of having to deal with unnecessary red tape. We are therefore pleased the commission has taken on board our calls for an exemption for smaller businesses with a modest turnover, many of which are sole traders," Bryce explained.

"Sadly it could be a long time before improvements to VATMOSS pass through the European Parliament. The commission should now consider what interim measures can be taken to reduce the burden on businesses that in all likelihood will be exempted in future," he concluded.