European VAT changes: too little, too late

A year ago, I reported in this article how the European Union was strangling small businesses with its absurdly complex and demanding sales tax (VAT) laws. Many others complained, there were direct contacts with the tax authorities in the UK and in the rest of Europe, government ministers were appraised of the problems – there was a real hue and cry.

Small businesses will be delighted to learn that the European Commission has not ignored these matters, and after careful deliberation, has published its response, in the form of an “Action Plan on VAT”.

Bearing in mind that the first word is action, you might be surprised to learn that what actions are proposed will not occur for some time. Indeed, the deadlines which the Commission has set itself are all mañana and make-believe:

  • proposed legislation to modernise and simplify VAT for cross-border e-commerce by the end of 2016;
  • proposed simplified package for smaller business by the end of 2017;
  • proposed ‘definitive’ VAT system for cross-border trade within the EU by the end of 2017;
  • proposed increased freedom for Member States on VAT rates policies by the end of 2017.

Of course, those are only dates by which the Commission will propose what should be done. In all likelihood it will take another year or two before successful legislation will make its way through the EU’s august organs. So we just have to hold our accounts, businesses, and breaths for another few years, and they might make things better.