Public Consultation on the special scheme for small enterprises under the VAT Directive

Policy fields

Taxation

Target groups

The open public consultation will seek the views of business, the public and representative organisations

Period of consultation

From 20.12.2016 to 20.03.2017

Context of the consultation

On 7 April 2016 the Commission adopted an Action Plan on VAT - Towards a single EU VAT area. The Action Plan provides clear orientations towards a robust single European VAT area in relation to the definitive VAT system for cross-border supplies. In view of such reform other aspects of VAT will have to be examined, such as the existing special rules for small enterprises (SMEs) and the VAT rates which can be applied by Member States. Hence the Action Plan also sets out actions to adapt the VAT system to the needs of SMEs and proposes options for a modernised policy on EU rules governing VAT rates.
Some of the initiatives stemming from the Action Plan have already been presented by the Commission, while others are being prepared (for a timeline of all the proposals contained in the Action Plan, see p.14 of that document). As part of the ongoing work, public consultation procedures have been or will be launched in respect of the following legislative proposals:

Towards a robust single European VAT area
Public consultation on the Definitive VAT system for Business to Business (B2B) intra-EU transactions on goods.
Adapting the VAT system to the needs of SMEs
Public consultation on the special scheme for small enterprises under the VAT Directive
Towards a modernised VAT rates policy
Public consultation on the reform of VAT rates.

Objective of the consultation

Diverse and complex VAT rules across the EU can result in high administrative burdens on small businesses ("SMEs"), particularly when trading with other EU Member States. This does not only hamper their growth but may even prevent them from engaging in cross-border trade and reap the benefits from the Single Market.
The current VAT legislation contains specific measures designed to alleviate the effects of small enterprises having to deal with VAT. Those are mainly laid down in a special scheme aimed at small enterprises ("SME scheme"). Under the scheme, Member States are allowed to exempt supplies of goods or services by SMEs with an annual turnover not exceeding a given threshold, or to apply simplified procedures to SMEs for charging and collecting VAT, among others. Member States may also release SMEs covered by this scheme from some or all of their VAT compliance obligations.
However, the present rules suffer from several drawbacks. Those rules still make it excessively complex and costly for SMEs to comply with their VAT obligations and do also not take into account the Single Market perspective, since suppliers from other Member States do not get the same VAT treatment as domestic suppliers. As a result of this, SMEs bear proportionally higher VAT compliance costs than large enterprises.
Therefore, the Commission is preparing a comprehensive simplification package for SMEs that will seek to create a more business-friendly environment, as indicated in its 2016 Action Plan on VAT (COM(2016) 148 final).

This consultation aims at obtaining the views of stakeholders on
(i) the current VAT provisions for SMEs and their application; and
(ii) possible changes as regards the VAT provisions for SMEs
Its results will feed into the review of the SME scheme.

How to submit your contribution
Respondents are offered an online questionnaire via the EU Survey Application which is available at the link below. Responses are submitted through that application. Translations of the questionnaire are available.
View the questionnaire
Questionnaire
Contact details
responsible service	Directorate-General for Taxation and Customs Union VAT - Unit TAXUD/C1
e-mail	TAXUD-C1-SECTOR-C@ec.europa.eu
postal address	European Commission Directorate-General for Taxation and Customs Union VAT - Unit TAXUD/C1 Rue Joseph II 79, Office J79 05/065 B-1049 Brussels Belgium
View the contributions
In the interests of transparency, organisations have been invited to provide the public with relevant information about themselves by registering in the Interest Representative Register and subscribing to its Code of Conduct. If the organisation is not registered, the submission is published separately from the registered organisations. (CIRCABC - PDR-Public (EC VAT) Documents Repository – LIBRARY – Public Consultation on the Special Scheme for SME).
Results of consultation and next steps
Protection of personal data