Labour MEP lobbying European Commission on VAT rules

WEST Midlands Labour MEP Neena Gill is at the forefront of a campaign by her party to get the European Commission to address concerns about new EU rules on VAT for digital services, books, eBooks and papers.

Under the new regulation, VAT on digital products sold in the EU will be chargeable in the place of purchase rather than the place of supply. These new rules – introduced to stop big corporations diverting sales through low-VAT countries – are having an impact on smaller companies and sole traders.

While a VAT Mini One-Stop Shop has been introduced in an attempt to help these small businesses, many are finding the system impossible to use and the rules impossible to comply with, Labour says.

Gill said: “Today, an EU business wishing to make cross-border sales faces a VAT compliance cost of at least €5,000 annually for each targeted country.

“On top of this, EU businesses face significant distortions from VAT free goods supplied by non-EU business. These distortions cost EU business turnover of up to €4.5bn annually.

“These inconsistencies need to be tackled ASAP in an appropriate way.”

Gill has already addressed the appropriate commissioner on the issue, asking for a common EU-wide simplification measure.

“We are moving in the right direction, but I asked him to be more specific about thresholds and timing,” she said.

“I have had a number of businesses in the West Midlands contact me  – from people who sell knitting patterns as PDFs to digital start-ups – they fear these changes could put them out of businesses – they are worried about their livelihoods.

“I, together with the 264,000 early-stage businesses in the UK alone, look forward to clear and convincing answers from the Commission on these questions.”