Proposals for Directives amending the rules on the fixing of rates and those applicable to small enterprises

On January 18th, 2018, the Commission proposed two directives aimed at giving Member States more flexibility in setting VAT rates and simplifying the rules for small businesses.

With regard to the VAT rates, the Commission proposes that the standard rate should be definitively fixed at a minimum level of 15% and that Member States may apply a maximum of two reduced rates fixed at 5% minimum.

However, it would be possible to apply a reduced rate (below 5%) and a VAT exemption with recovery right if the VAT average rate of the Member State is higher than 10%.

A negative list of supplies of goods and services for which no reduced rate could be applied should be established, with a review every 5 years.

In addition, special rules for small enterprises should be amended, notably as regards the franchise regime. Finally, several obligations for small businesses should be simplified, in particular concerning accounting and VAT returns.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]