Juliet McKenna and Clare Josa from EU VAT Action have been meeting on your behalf with key influencers in the European Parliament and EU Commission in Brussels for the past two days, to make your voice heard on the #EUVAT issues.
On Tuesday night, Clare gave a keynote speech to 90 MEPs, EU Commission Staff and EU-wide industry leaders. On Wednesday morning she presented at a breakfast meeting with 30 MEPs and their support staff, as well as EU industry associations.
The MEPs we have met with include Syed Kamall, Vicky Ford, Catherine Bearder, Molly Scott Cato, as well as representatives from Germany, Holland, Croatia, the Czech Republic, Slovakia, Italy, Spain, France and the UK. Vice President Ansip’s office met with us last night and is meeting with us again today, and VP Ansip is raising this topic, on your behalf, during his College meeting on the Digital Single Economy this morning.
The overwhelming response has been positive, especially once people understand exactly how challenging, if not impossible, it is for micro businesses to comply with the complexities of the new EU VAT legislation on digital sales.
We have been helping those we have met to understand:
- That this is an EU-wide issue, and not just the UK
- That there is no ‘quick fix’ with technology – any tech solution would be hugely complex and the data processing alone could risk crashing shared servers
- That businesses DO support the intention behind this legislation, but the administrative burden is disproportionate for smaller businesses
- That the vast majority of micro businesses are using very simple payment processing systems that don’t give them the 2-3 pieces of audit data required to prove the customer’s location
- That the administrative burden, compared to domestic VAT, is disproportionate
- That businesses are closing daily – or ceasing to sell their digital products – because they cannot physically comply with the legislation
- That almost one third of EU micro businesses are now using geo-blocking to prevent non-domestic EU sales, in order to keep trading, despite the new rules
- That these unintended consequences were not foreseen, because it was assumed that micro businesses would not be affected.
- That just because the EU Member States rejected Raponi’s suggestion of a threshold six years ago, it doesn’t mean they would now. Indeed, now we can prove the damage it is doing, it is in the interest of the MS Finance Ministers to take action and agree to lift this administrative burden from the smallest traders.
The positive responses are tempered with fears that all 28 EU Member States would need to agree any changes and that this could take a very long time.
We have been asking for an immediate suspension of the legislation for micro business (EU definition = <€2m turnover), for a finite period of time, whilst proper impact assessments are carried out, the legislation is reworked, and a permanent derogation is negotiated.
The EU could bring this in relatively quickly, but they DO still need support from all Member States.
Please could you help by writing to your Finance Minister / Treasury Secretary, to let them know specifically how the new rules are hurting your business, and please also attach a copy of the interim implementation study.
There is support here for you. They need to keep hearing how much of an issue this is for you, to give them the courage to take the massive action that is needed.
We have strong support from Vice President Ansip, who can see how this legislation is inadvertently damaging the Digital Single Economy. But Donato Raponi still believes this is a mainly UK problem.
More good news is that, in response to David Cameron’s statement last week, President Juncker has asked Mr. Timmermans to urgently investigate the issues with the new EU VAT rules and we hope to be able to meet with him, with Syed Kamall, very soon.
Thank you so much for your on-going support. Please join us over at the EU VAT Action Campaign Group on Facebook to stay up-to-date and join in being part of the solution.
Clare & Juliet
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