Brian Hayes MEP

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New EU VAT rules need to work better for small businesses – Hayes

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Brian Hayes MEP for Dublin today said that new EU VAT rules for digital services need to be amended quickly to reduce administrative burdens for small businesses.

“Since January 2015, companies providing cross-border digital services such as e-books need charge VAT at the rate that applies in the customer’s EU Member State. The problem is that, for example, Irish SMEs may need to account for up to 81 different VAT rates that are in place across the EU. The new rules can be time-consuming for many sole traders and micro-businesses who sell independently.”

“This month, the European Commission announced that a common EU VAT registration threshold would be introduced to help digital start-ups avoid unnecessary administrative burdens. The threshold would set a sales limit at which point digital start-ups have to register for VAT. Currently in Ireland, the VAT registration threshold of an EU business selling to Irish customers is €35,000.

“However, the Commission has indicated that the new threshold will not come in until 2016 which is disappointing. Small businesses are already finding it difficult to cope with the new VAT rules in place. The Commission has enough time to introduce a new VAT threshold by the end of 2015.”

“The new rules do, however, give Ireland an advantage – as a net recipient of online services, Ireland stands to win big over the next number of years – it is estimated that Ireland will gain VAT revenues of €100m in 2015, rising to €150m in 2019. The new VAT rules ensure that there is more competition between EU Member States. Big online trading firms can no longer use countries like Luxembourg for their low VAT rates.”

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