hands counting VAT

Small businesses in Europe to benefit from VAT registration updates.

EU Council to simplify VAT rules applicable to small businesses.

The new rules aim to reduce the administrative burden and compliance costs for small businesses. It is hoped that this will help them grow and conduct cross-border trade more efficiently.

The current VAT system, which provides a VAT exemption for small businesses, is only available to local entities. The negotiated reform will make it possible for small businesses, established in other Member States, to apply for the VAT exemption as well. One of the deciding factors for this release will be the amount of turnover generated.

The new set of rules will reduce VAT compliance costs and improve the design of the exemption, providing the opportunity to encourage voluntary compliance and therefore helps reduce revenue losses due to non-compliance and VAT fraud.

What is changing?

Small businesses will be able to benefit from simplified rules for complying with the VAT rules if their annual turnover remains below the threshold set by the Member State concerned, which does not exceed EUR 85,000.

Under certain conditions, small businesses in other Member States that do not exceed the set threshold will also be eligible for the simplified scheme if their total annual turnover across the EU does not exceed EUR 100,000.

The newly agreed rules mean that there are amendments:

  • To the VAT Directive aimed at revising and simplifying VAT exemption rules for small businesses so that they can benefit from EU-wide VAT exemption;
  • To the regulation on administrative cooperation in the field of VAT to improve administrative cooperation between tax authorities in the application of the updated VAT rules for small businesses.


The new provisions will apply from 1 January 2025.

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