Roche & Cie

VAT: The European Commission proposes new rules for SMEs

26 Feb 2018

In order to modernize the Value Added Tax (VAT), the European Commission is presenting a set of guidelines aimed at simplifying the obligations of SMEs in terms of registration, billing, accounting and reporting.

  1. Companies benefiting from the franchise

SMEs benefiting from the franchise in the Member State in which they are established or in another EU state would be exempted from the obligation to issue invoices. They could also be exempted from:

  • having to declare the start of their activity and to be identified with VAT in the case of companies carrying out operations only in the State in which they are established. In the absence of such an exemption, a simplified procedure for identification should be put in place by the Member States for these undertakings;
  • all or part of the accounting obligations provided for in Articles 241 et seq. of the VAT Directive;
  • Filing VAT returns.

In the absence of such an exemption, the Member States should allow these small businesses to file a simplified VAT return per calendar year (except for the option of filing declarations covering shorter periods).

Member States could, moreover, exempt small undertakings enjoying exemption from all or part of the other obligations provided for by the Directive.

  1. Enterprises not benefiting from the franchise

As regards companies which do not benefit from the exemption, they would be authorized to issue simplified invoices pursuant to Article 220a of the VAT Directive (this also applies to companies which opt for taxation on the basis of VAT). general rules and those whose turnover is above the franchise threshold of up to 2,000,000).

Member States should also for these companies:

  • put in place a simplified procedure to obtain an individual identification number;
  • determine simplified obligations for storing invoices;
  • set the periodicity of VAT returns to a calendar year (unless the company chooses to file returns at a shorter period);
  • do not require installments.

A transposition planned for 2022

Member States should adopt and publish, by 30 June 2022 at the latest, the laws, regulations and administrative provisions necessary for the transposition of the Directive and should apply these provisions as from 1 July 2022.


Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in French Real-Estate and Non-resident taxation.