Make your voice heard and sign the EU-wide petition, asking for the new EU VAT rules to be relaxed for the smallest businesses and sole traders.
Click Here To Sign The Petition Now
And here’s what it’s about:
LETTER TO PIERRE MOSCOVICI
A unilateral suspension of the introduction of the new EU VAT laws for micro businesses and sole traders
PLEASE SIGN THIS PETITION to call for THE EUROPEAN COMMISSION to unilaterally suspend the introduction of the new EU VAT laws for micro businesses and sole-traders, which if allowed to come into force will unfairly disadvantage the EU’s smallest businesses.
The new EU VAT regulations coming into force on 1 Jan 2015 bring corporate levels of regulation and administration not just to the Boardrooms, but also to the kitchen tables of sole-traders. Hundreds of thousands of the smallest businesses are faced with a stark choice at the end of this month – either to close their cherished businesses or to break the law. That is not a reasonable choice to force them to make.
Whilst the majority of us support the intention of this new legislation, designed to put a stop to billions of euros of the consumer tax being lost due to multi-nationals locating in low tax jurisdictions, the implementation of these rules will cripple, and potentially force into closure, hundreds of thousands of micro-businesses across the EU. The costs in paperwork, bureaucracy, and amendments to websites and payment processing will simply mean that many businesses are no longer viable.
Not concerned because you sell physical products rather than digital services? This is just the first wave of legislation – YOU are next in the EU’s sights. Similar rules are planned to extend to all products as early as 2016, eradicating any distance selling thresholds you currently enjoy.
The European Commission argues that this will create a level playing field because means that sellers will no longer be able to unfairly undercut by businesses by locating themselves in another EU member state with a lower VAT rate – but in reality it will unfairly disadvantage the EU’s smallest companies; creating a divide between the multi-national companies who can afford to comply with this complex and archaic piece of legislation and those sole-traders and micro-businesses that simply can’t.
Still don’t think this affects you because you aren’t a business owner? Not only will the range of products available for you to buy be greatly diminished, but the information collected by those businesses that do survive needs to be retained for 10 years – creating a huge data security risk for us all. Where currently you only have to worry about your payment provider/card handler storing your personal data, going forward millions of small businesses across the world will now have a requirement to do so.
The opportunities offered by the digital economy have been a lifeline to hundreds of thousands of people: mothers, carers, chronically ill, people with disabilities, retirees and so on, who would otherwise not be able to go out to work in a traditional pattern and have created flourishing and innovative businesses from their kitchen tables. What The EU Commission doesn’t seem to recognise is that closing this avenue of business will crush the microbusiness community – in the process costing governments far more in welfare payments than the small amount of consumer tax they would ever raise from these businesses!
At a time when the European Commission is trying to lower trade barriers for the world’s largest businesses, they are putting up trade barriers for the smallest ones, thereby stifling innovation and creativity in small start-ups who could be leading the way and taking advantages of new opportunities in a growing digital market place.
We need the EU to realise the impact of these new regulations before it is too late and they have completely destroyed the EU’s sole-trader and micro-business community.
It would be ideal for very small businesses if at the least there were a minimum threshold, such as $50,000 or more. I’m seeing quite a lot of small business owners in the position that they will literally have to close their businesses because of the risk involved. In my case, I don’t even fully understand what is required OR if it’s possible for me to fulfill those requirements, so I’m removing my most affordable digital offerings until further notice.
Why don’t the EU force payment processors like Paypal to determine this information. Most sites never see the actual payment data and even if we do there is no reliable solution if the IP country doesn’t match the billing country. If you sell a €1.99 product do you really want to spend hours trying to contact the buyer to resolve the discrepancy? They won’t be legally obliged to respond (they have the product already anyway) and how do we store this ‘evidence’ if its done on the phone. In fact even if we store the IP of the transaction how would HMRC verify its true? The whole system has been designed by people whip have no ida hat they are talking about. In fact that the way the EU is run in every part really.
That’s one of the things we’re lobbying for, Adrian. The payment processors could easily handle the confirmation of place of supply for vendors.
However, it still doesn’t fix the tricky issue of how to display the correct price to a customer on your sales page and how to handle the fact that some countries have more than one VAT rate for digital services, so you can have different VAT rates (and even different countries!) wanting a slice of the VAT from one transaction…
Or knowing which format of VAT invoice has to be sent to customers in the 10 or so different EU Member States that legally require one…
The administrative burden on the smallest businesses from this legislation is crippling.
And we won’t even get into the data protection issues from this data needing to be held for 10 years…
Just a quick note to say thanks to the founder of this site – it has been a nightmare to work out what is going on. As a small business owner (one man shop) it’s crazy what we’re being forced in to. As a provider of digital eBooks I’m very tempted to stop selling and switch to selling on a service like Amazon which surely defeats the point of helping small business to flourish.
You’re welcome Andreas. We created it to help people in exactly your position. There’s a new update today that might help you.
Yes, as you say, the solutions to be able to keep trading often defeat the original intentions behind the legislation…
Clare & the EU VAT Action Team