The Directive on the simplification of value added tax (VAT) for SMEs should be on the agenda of the Economic and Financial Affairs Council (Ecofin) on 8 November (see EUROPE 11942/2), even though the issue of national and European thresholds for VAT exemption for small businesses is still not unanimous (see EUROPE 12268/10).
At the meeting of Member States' ambassadors to the EU (Coreper) on Wednesday 30 October, Romania raised this point specifically, according to a European source. The Netherlands and Ireland would have a more general problem with the text and would consider that the planned system is too complex to be applied to very small companies.
However, the Finnish Presidency of the Council of the EU considered that the work at technical level had been completed and that a Ministerial discussion was therefore necessary to try to find a solution.
A new compromise text, dated 25 October, of which EUROPE has a copy, now sets at 85,000 euros the national annual turnover threshold until which supplies of goods and services by small businesses can be exempt from VAT.
The text foresees that, under certain conditions, Member states that allow VAT exemption to small enterprises established in their territory would have to be obliged to apply such exemption to supplies made in their territory by taxable persons established in another Member State. To this end, the Union annual turnover of such taxable person should not exceed 100,000 euros, according to the text.
Many delegations insisted that these thresholds should not be higher, but two Member States made an alternative proposal to set the national and European thresholds at 100 000 euros and 115 000 euros respectively.
On the other hand, the date of application would no longer be a matter of debate between Member States, according to the same source. The Commission had proposed that the new rules should apply from 1st July 2022. The new compromise text now proposes to postpone the date of application to 1st January 2025. (Original version in French by Marion Fontana)