Chamber highlights simplified VAT scheme for ambitious SMEs
The Cyprus Chamber of Commerce and Industry (Keve) issued a circular this week to inform members about significant changes to the European Union VAT regime that have already come into force.
The new rules aim to drastically reduce administrative burdens and strengthen the outward-looking nature of small businesses within the single market.
Under the previous system, a small business could only receive a VAT exemption in the member state where it was established.
With the new regime, eligible small and medium-sized enterprises (SMEs) can now benefit from VAT exemptions in other EU member states where they make sales, even if they do not maintain a permanent establishment there.
To join the new scheme, a business must cumulatively meet specific eligibility criteria related to its financial performance.
The total annual turnover within the European Union must not exceed 100,000 euros for the enterprise to qualify for the cross-border benefits.
Additionally, the domestic turnover must not exceed the national exemption threshold of the member state where the exemption is requested, which can be up to 85.000 euros depending on the country.
The reform introduces significant facilities in the daily operation of businesses, including a single registration process.
This allows the application for exemption in other member states to be completed through a single procedure in the state where the company is established.
The chamber noted that the changes lead to reduced bureaucracy, offering the possibility of submitting a single quarterly declaration and issuing simplified invoices.
Eligible businesses will be able to sell goods and services without the charging of vat, which the organisation believes will increase their overall competitiveness.
The European Commission has launched an official platform providing information and tools regarding the implementation of the special VAT scheme for SMEs.
Available on the platform is a self-assessment tool and eligibility simulator, through which businesses can check if they meet the criteria for the regime.
Furthermore, useful information, informative leaflets, and guides regarding the implementation of the special scheme can be found on the website of the Tax Department.
“The new rules aim at the drastic reduction of the administrative burden and at the strengthening of the extroversion of small businesses within the single market,” the chamber stated in its official communication.
“Eligible SMEs will now be able to benefit from a VAT exemption also in other EU member states where they carry out sales, even if they do not have a permanent establishment there,” the circular confirmed regarding the scope of the reform.