HOT OFF THE PRESS:
Just announced by Pierre Moscovici of the European Commission: proposed EU VAT threshold of €10k cross-border sales and the €100k simplifications we have all been campaigning for since December 2014.
In this update:
- Summary – key facts you need to know
- Our position as the EU VAT Action Campaign Team
- We need your support – how you can help
- What is happening with physical goods? And why you urgently need to get your industry body involved.
- Sources for this information
- How to contact us for an interview
- A thank you message from the EU VAT Action Campaign Team
- The first €10k of cross-border Digital EU sales (i.e. not in your home country) each year will revert to your domestic VAT rules – so you won’t need to apply EUVAT or register for VATMOSS, if your EU digital exports fall below this level.
- From €10,001 to €100k of cross-border EU Digital sales you will be allowed the following simplifications:
- 1 piece of data to prove the customer location (e.g. payment processor data or self-declared country), instead of the current (technically-challenging) two
- Your home country invoicing requirements will apply – you will no longer have to comply with 28 different sets of invoicing rules
- These proposals will be presented to the ECOFIN Council of Finance Ministers very soon, who will then have it debated by the technical level working party meetings
- I have just spoken with the EU Commission and they expect agreement in 2017, with a view to implementing these proposals from 1st January 2018
This will help many thousands of micro businesses to continue trading, without having to move to 3rd party platforms (with up to 30% commission charges) or geo-blocking.
Our Position, As The EU VAT Action Campaign Team:
We strongly welcome these measures for the proposed EU VAT threshold and ‘soft landing’ simplifications. Although we campaigned for a higher threshold, and a higher proposed EU VAT threshold is needed, €10k annual digital exports is a sufficiently high level to take most of the smallest businesses out of the need to file VATMOSS returns.
However, they will still need to track their customer’s location, in order to know when they have exceeded this threshold. Member States therefore need to legislate under their Financial Services Legislation to ensure that all payment processors are legally required to provide the country code for all transactions (not currently the case), otherwise micro businesses will still be unable to accurately track their international sales.
The ‘soft landing’ is much-needed and will allow a smoother transition for those businesses that grow beyond the €10k in digital exports.
We will work with the EU Commission and the EU’s ECOFIN Council (Finance Ministers) to see what can be done to bring in these changes significantly earlier than 1st January 2018. Micro businesses have suffered for two years already and further year’s wait is not reasonable.
We are hugely grateful to everyone who has supported the EU VAT Action Campaign and enabled us to get to this stage.
We need your support for this proposed EU VAT threshold:
This is the MOST critical time for these changes. Your Finance Minister needs to know that these rules have hurt your business and that they need to agree to these proposals NOW, at the start of this process, and that they need to urgently bring forward the timing for the proposed EU VAT threshold and simplifications.
How can you do this?
Write to your national equivalent of an MP / MEPs, so that they can lobby your Finance Minister.
If possible, please include basic facts of specifically how the rules have affected you – and their tax revenues.
What is happening with physical goods?
The proposal is that from 2021, physical goods will also have a VATMOSS system and will be subject to the same place of supply rules as digital goods. The existing Small Value Consignment Relief and Distance Selling Thresholds would be removed. The €10k threshold / €100k simplifications proposed for digital sales would then apply to ALL cross-border sales.
It would apply to the non-domestic EU sales as a block, rather than per country. This is a significant shift from the current Distance Selling Thresholds, which are €35k per country, for most Member States. The Commission believes this will be offset by allowing businesses to use the VATMOSS system to report the VAT for these sales, rather than the current process of having to register for VAT in each EU Member State, if you exceed the Distance Selling Thresholds.
However, since margins can be very small on physical goods, especially once you factor in the costs of international shipping, we believe that the proposed €10k EU-wide threshold is far too low and this proposal is likely to significantly reduce international trade. If this affects you and your business, please write to your MP / MEPs / trade association to ensure they lobby on your behalf for a significantly higher threshold for physical goods and services.
Press Release Source: http://europa.eu/rapid/press-release_IP-16-4010_en.htm
The EU Commission’s Impact Assessment Report: https://ec.europa.eu/taxation_customs/sites/taxation/files/swd_2016_379.pdf
Here is a graphic to summarise the proposed changes, from Pierre Moscovici’s team:
How To Contact EU VAT Action
For press interviews, please call (UK +44) 01342 477057 or contact Clare Josa.
Are you an affected business? Join us on Facebook: https://www.facebook.com/groups/euvataction/
Clare, Juliet & the EU VAT Action Team
Author, Speaker, Mentor To Passionate World-Changers
Clare Josa has been a Mentor to Passionate World-Changers since 2002 and is the Author of Dare To Dream Bigger: The ‘Inside Work’ Handbook for Entrepreneurs and Passionate World-Changers.
She and the other co-founders of the EU VAT Action Campaign group, an all-women group of entrepreneurs, have worked as volunteers since November 2014, to ensure that the devastating unintended consequences of the EU Digital VAT legislation on millions of micro businesses, worldwide, would be overturned.
This led to Consultative Status with HMRC and HM Treasury, a meeting at 10 Downing Street and giving keynote speeches at the European Parliament. Their work is formally cited by the EU Commission in their Impact Assessment.
Clare and her colleagues want to thank each and every person who took action to support this campaign. The outcomes achieved were previously described by ‘those in the know’ as ‘impossible’ and ‘pipe dreams’. It is testimony to the change that a group of passionate world-changers can create, when they work together for a positive cause.
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