The Action Plan on VAT, proposed by the European Commission in January 2018, focuses, among other things, on the simplification of rules for SMEs with cross-border transactions.
Under the current rules, mandatory registration limits are laid down by individual Member States and are often only applicable to domestic entities. The European Commission considers the current situation discriminatory towards businesses that also carry out cross-border trade within the EU. In addition to the existing local limits, the new regulation also proposes an exemption limit of EUR 100,000 which can be applied to companies operating in multiple Member States.
The proposals include the introduction of a new category of SMEs with a turnover between EUR 100,000 and EUR 2 million. Businesses with a turnover of less than EUR 2 million could use the simplified rules regardless of whether or not they are exempt from VAT.