EU – Reform of SME Schemes and Simplified VAT Compliance

Objective of the New Framework: The EU aims to create a more equitable VAT compliance landscape for small and medium enterprises (SMEs) by introducing a cross-border SME scheme, allowing businesses established in one Member State to maintain VAT exemptions when supplying goods and services in other Member States.
Cross-Border SME Scheme Requirements: Effective January 1, 2025, SMEs must register for the cross-border SME scheme, keep their annual EU-based turnover below €100,000, and not exceed their home country’s small enterprise threshold to benefit from VAT exemptions in other EU Member States.
Impact on VAT Compliance Costs: The new cross-border SME scheme is expected to reduce the compliance burden and costs for EU-based small enterprises by minimizing the need for multiple VAT registrations and simplifying the overall VAT obligations for cross-border transactions.