Under the EU-wide amendment1 of the special VAT scheme for small enterprises if Member States introduce a scheme that corresponds in substance to (individual) tax exemption for small enterprises, they must allow taxable persons not established in their own territory but established in the Community to apply it from 1 January 2025, under the same conditions as taxable persons established in their own territory.
From 1 January 2025, a taxable person established in the European Union will be able to opt for an exemption in a Member State where he/she is not established, under certain conditions, by registering only in the Member State where he/she is established. In this respect, for the purposes of the application of the new rules on the exemption, the place of establishment should be understood to be the place where the taxable person has his/her registered office or, failing that, where hs/she usually resides (hereinafter collectively referred to as “the place of establishment”).
Therefore, under the new rules, from 1 January 2025
• on the one hand, a taxable person established in the domestic territory will be able to opt to act as an exempt taxable person in respect of transactions carried out in another Member State of the Community where he/she is not established and that Member State grants an exemption for small enterprises,
• on the other hand, a taxable person established in another Member State of the Community may opt for exemption in respect of his/her domestic activities even if he/she is not established in that Member State.
In both cases it is a condition that the taxable person’s annual turnover does not exceed the threshold set by the Member State concerned and that his/her EU wide annual turnover does not exceed EUR 100 000.4 (The application of a cross-border exemption is not conditional on the taxpayer also applying an exemption in the Member State of his/her place of establishment.)
As a result of the amendment, a taxable person established outside the Community will not be able to opt for an exemption either within the domestic territory or in any other Member State of the Community, even if he/she has a permanent establishment or usually resides within the territory of the Community. (NTCA)
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