The Committee on Economic and Monetary Affairs of the European Parliament (Econ) has adopted several of MEP Alfred Sant's proposed changes to the European Commission text on a special VAT exemption scheme for small enterprises across the EU.
The scheme updates existing arrangements by which small and medium sized enterprises are exempted from certain VAT obligations that are administratively burdensome. It also extends the exemption system to SMEs that begin to export.
Dr Sant’s amendments focused on facilitating the operations of small enterprises in small economies similar to those in Malta and Gozo.
They served to strengthen the measures already found in the Commission’s draft intended to lighten the compliance burdens on small enterprises across the EU and help them engage more in EU cross-border trade due to the extension of the exemption scheme.
MEP Sant is shadow rapporteur on behalf of the committee’s S&D Group.
Econ supported Dr Sant’s proposal that only maximum turnover thresholds for small enterprises should be set for exemption. This should be done for the sake of flexibility and to ensure that it is possible for member states to set appropriate lower thresholds proportional to the size and the needs of their economy.
Econ also adopted Dr Sant's amendment in favour of SMEs that exceed the ceiling set for exemption in a given year. The Commission proposed that as soon as this happens, the exemption ceases. Dr Sant proposed that this would happen if the ceiling is exceeded two years in a row to counter the impact of seasonal or irregular factors on demand.
“This would allow small enterprises in certain sectors, such as the construction sector, which are confronted with seasonal factors and irregular demand, to adjust more flexibly to a loss of their VAT exemption status due a growth in their sales revenues,” Dr Sant said.
He stressed that making the VAT process simpler for SMEs should by no means allow for facilitating abuses or disappearance of tax money.
The report is expected to be discussed at the Plenary of the European Parliament in September.