It’s Not ‘All Ears’, It’s Action Too In The European Commission On EU VAT

Your voice is being heard

On December 17th our team had a long conversation with a Cabinet Member from Andrus Ansip’s (European Commission Vice-President) office. These are the people responsible for the digital economy in the EU, so they’re the decision-makers and the ones who can help us to create the changes that are so desperately needed.

Here’s a summary of where we’re up to:

  1. Andrus Ansip is now fully aware of the impact that the EU VAT rules are having on the smallest businesses.
  2. He is taking action on your behalf, both writing to and meeting with senior people across the EU, in the last few days before Christmas, to try to find solutions that will allow everyone to keep trading.
  3. They are looking at short-term solutions and medium-term solutions.
    4. They are open to ideas from YOU as to what those solutions could reasonably be. They do not pretend to have all the answers.
    5. There are no promises, but there IS hope.

You ARE being heard.

Those in Andrus Ansip’s team now understand that:

  • Most of the smallest businesses cannot comply with the legislation because they can’t collect the required 3 pieces of location evidence. 90% are using basic PayPal buttons and the most they will be able to get is the customer’s account address – one piece of not-completely-reliable data.
  • Most can’t display the correct price on their sales pages because they don’t know where the customer is until after they have purchased, so have no way of applying the correct VAT rate during the purchase process.
  • Even if they could code the VAT rates into their payment solution, most platforms offer just one rate of VAT per country. It is very likely that some transactions will require two rates, for different kinds of products. This is not possible for the smallest businesses to manage during the checkout.
  • These businesses don’t get any of the data until after the transaction, so it creates a massive administrative burden of manually checking each transaction and then going back to a customer if the data looks incorrect, then analysing and storing the data to complete their VAT-MOSS return.
  • Our case studies show that each EU Member State’s interpretation of what is a ‘digitally-delivered service’ is different. Even if you comply with your own Member State’s interpretation, you could still be prosecuted by another Member State if the interpretations differ.
  • The legislative assumption was that most businesses sell through 3rd party platforms (our quantitative study shows it’s only 40%). The Commission now understands that most of the 3rd party platforms only heard about the new EU VAT rules in November 2014 and will be unable to comply by January 1st.

What We Are Campaigning For:

Given all of this, most businesses have a choice at the end of this month either to break the law or close or remove digitally-delivered services. How can we make sure they can keep trading?

  1. Emergency exception to allow the implementation to be suspended for micro businesses and sole traders for 1 year, whilst workable solutions are found.

  2. If this cannot be agreed before January 1st, then an emergency exemption to allow acceptance of the customer’s self-declared address as proof of place of supply for micro businesses and sole traders who don’t have access to the required 3 pieces of evidence (the 3rd being needed for the cases where the first two conflict).

*** What Andrus Ansip’s team needs from you: ***

Keep going with today’s Wednesday Action Challenge (writing to Andrus, Pierre Moscovici and Donato Raponi). Copy in your national MP and your MEPs.

PLUS lobby your equivalent to the Treasury (those who represent you on the EU Fiscal Attache) – we are compiling a list.

The reason the Commission needs you to lobby your representative on the EU Fiscal Attache is because if we want to get a legislative change, it is much more likely to be passed in a short timeframe if the Member States push for it, than if the EU suggests it. *** Your representative needs to lobby Pierre Moscovici. ***

So PLEASE do the Wednesday Action Challenge. And PLEASE also send your email to the Fiscal Attache member (we’re compiling a list) for your country, asking them to lobby for a sensible exemption threshold for micro businesses and sole traders.

And please have a quick look at the discussion thread for ‘how can we stay in business while we buy time for EU negotiations’ thread. (https://www.facebook.com/groups/euvataction/permalink/354280038090837/)

And please share your inspiration on the thread for potential short-term and long-term solutions:
https://www.facebook.com/groups/euvataction/permalink/354280581424116/

As I said, it’s not promises, but it IS hope. And, for me, it feels miraculous.

Thank you all for the part each of you has played.
We are making progress.

Clare & the EU VAT Action Team

7 thoughts on “It’s Not ‘All Ears’, It’s Action Too In The European Commission On EU VAT

  1. Clare and the team. This is such good progress. Thank you for all of your hard work. If all we could achieve is a year’s grace, that would be a lifesaver. If we can also achieve collecting one piece of data, that would be miraculous! I missed Wednesday’s action, but will make time today.

  2. I’ve now spent weeks working through all this legislation, and I’ve worked out exactly what all of us need to do and how to do it. The good news is that it’s simple and achievable by anyone with a good knowledge of web technology, VAT, and accounting. All you’ll need is to amend your websites, and to have the resources to track and manage the simple administrative requirements. To help you out, I’m creating an ebook which will in just 476 pages outline in easy English the simple rules for us to follow. To help pay for my time, this ebook will be available to purchase online from my website for just 50p from 2nd January 2015.

    UPDATE: Unfortunately due to the complexity of the new VAT rules, I’m not able to sell the ebook and comply with the EU regulations. Therefore sales of the ebook are suspended for the indefinite future.

  3. Reblogged this on Shalini's Weblog… Fairly Random… mostly about Rescue Dogs and commented:
    New EU VAT laws will affect small businesses & their customers massively!
    The EUVat Action group – http://euvataction.org/ – has been working tirelessly to find some solutions for small business owners like myself and I am VERY grateful. There is some progress and some positivity and it appears some people in the EU are listening. Hopefully they will act soon to stop many businesses form closing down or changing how they currently work.

    1. Hi Chris – yes – this is all part of the negotiations. Not sure where it will end up yet.
      Our big challenge is proving that this is an EU-wide issue, and not just a UK whinge. Our UK VAT threshold gives us a competitive advantage over other EU member states, so if we are a lone voice in the requests for thresholds for this, we won’t get very far.
      That’s why we need everyone, EU-wide, writing to their MEPs to explain specifically what the problems are, and filling in the survey / signing the petition: http://www.euvataction.org/take-ation-now/

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