EU VAT win for small businesses

Britain’s small businesses and sole traders have claimed a minor victory on the controversial VAT ‘Mini One Stop Shop’ (VAT MOSS) ruling, after the European Commission has said it will propose an exemption for small companies and sole traders selling across EU borders.

The Commission has confirmed it will propose a threshold beneath which companies will be VAT exempt but it is yet to give a figure.

The VAT MOSS ruling came into force from January 1 2015 and seeks to stop large tech firms from reducing their VAT bills by registering digital sales in other countries such as Luxembourg. UK enterprises do not have to register for VAT until they have £82,000 in revenues, while many EU countries have a lower figure or no threshold at all.

There was a huge backlash from organisations and business owners when the ruling was first announced last year which led to the the HMRC  “tweaking” the regulation so that small businesses with VAT registration turnover of less than £82,000 would not have to charge UK VAT on domestic sales – but would still have to register for VAT in the UK to use MOSS.

This latest update by the European Commission will be welcomed by small business owners but there are limitations – the threshold exemption could take years to come into effect as many EU member states have previously blocked plans to set a threshold.

What’s your view on VAT MOSS? Share your thoughts in the comment section below