Could There Be an End in Sight to the Controversial EU VAT Rules?

12 May 2015, 16:12

We’ve reported before on the huge mess the EU VAT rules created when they were brought into action on 1st January 2015. Many traders selling eBooks and other virtual products of a similar nature discovered – virtually overnight – that they had to comply with complicated EU rules in order to pay VAT on sales. The idea is that VAT should be paid at the correct amount according to the country the buyer is in. This is down to the seller to work out, and as you will know if you have been affected, this is not an easy matter. Even with the VAT Moss solution offered by HMRC, it has not been an easy thing to cope with.

After intensive campaigns run by several groups, including Enterprise Nation, the European Commission has now published a strategy which promises to introduce a threshold that will take smaller sellers out of the need to sort out VAT on sales. The only downside is the proposals won’t be considered until next year – and by then it will be too late for some businesses.

Indeed, some reports have indicated that smaller sellers have already packed up their businesses. Some have been forced to close down because the small level of sales they made did not warrant the immense amount of extra work that was required to stay abreast of the new rules.

It would seem research only accounted for the likes of small businesses in this sector and not microbusinesses, as they are called. To this end, someone earning maybe £50 extra per week by selling a few eBooks online would be caught up by the new rules. They wouldn’t deem it worthwhile to comply with all the legislation to continue earning what could be a significant amount of money for them. Instead it was the end of the road for their business.

So while this progress is just that – progress – it won’t come quickly enough for some people to be able to get the most out of it. And yet again it seems to be the little people that suffer. The idea was to ensure the big guys such as Amazon would pay the proper amounts of tax instead of finding ways to sidestep it. But it looks as though it hasn’t worked out that way.

We will wait and see what the changes bring, but we still have to wait a while for these proposed changes to come into force (if they ever do). For some though, it is already too late. Perhaps they can start up their businesses again, but for some it won’t be that easy. And indeed, the whole debacle could have left a very bad taste in their mouths. Hopefully a single threshold across the whole of Europe will allow some to continue or recommence their sales, but we shall have to wait and see what is decided.