MEPs call for reform of microbusiness VAT

MEPs call for reform of microbusiness VAT

European parliamentarians have called on the European Commission to propose reforms to the European Union’s (EU) VAT Mini One-Stop Shop (MOSS) system, claiming it is forcing small publishers out of the intra-EU export market. 

The new registration rules came into force on January 1st and insist that, for instance, a British e-book supplier selling into Poland must charge Polish VAT; Estonia, Estonian VAT; France, French VAT and so on.

In a debate on the issue at the parliament in Strasbourg, British Conservative MEP Dr Syed Kamall said: “Perhaps you sell e-books online…You know that you need to register for VAT…you find that you need to keep accounts for up to 10 years and calculate up to 88 different VAT rates set by the countries you sell to.” Automation may not work properly and a third party VAT service may charge large fees and delay sales. He called for a “threshold or an exemption to save their micro-businesses.”

Dutch liberal MEP Sophie in ‘t Veld also called for action to solve the problem, and quickly: “We are legislating at Flintstone speed but the digital market is moving on.” If the Commission waited until 2016 to react, “so many small businesses will have gone down already, because they cannot survive.”

UK Labour MEP Neena Gill was also concerned about publishing: saying designers of knitting sewing patterns for instance faced €5,000’s worth of compliance costs. She also called for threshold for charging VAT on intra-EU exports, noting that businesses turning over £81,000 and more must register in Britain – but for the EU, “we may need to go lower to achieve our ambitions.”

Commission vice president for the digital single market Andrus Ansip said the Commission was reviewing the problem and might propose a VAT threshold – however not before 2016.