Accountancy Europe has published a new paper, based on advice from EC’s DG TAXUD, on the new VAT e-commerce rules that will enter into force in the EU from 1 July 2021. It is aimed especially for SME accountants.
The paper outlines the main upcoming changes, and describes how SMEs’ obligations under various e-commerce scenarios in the EU Single Market will change. It urges SMEs’ accountants to inform their SME clients about these changes, and help them adapt their businesses accordingly.
This update, published on 5 May, neither replaces nor completes the 2020 EU Industrial Strategy.
Rather, it pays increased attention to regulatory burdens for SMEs. New announced actions aim to benefit SMEs and start-ups, whether it be from a strengthened Single Market, reduced supply dependencies or the accelerated green and digital transitions. The Strategy also includes some measures dedicated to SMEs such as on increased resilience, combating late payments, and supporting solvency.
The EC recommends that Member States allow loss carry back for businesses to at least the previous fiscal year (2019). Member States may also extend that period to allow loss carry back up to the previous three years (2020 and 2021) against already taxed profits in the fiscal years 2019, 2018, and 2017. They should allow businesses to immediately claim the carry back of losses which they estimate to incur in fiscal year 2021, without the need for waiting until the end of the year. €3 million per loss making fiscal year should be the maximum amount for the loss carry back.
The recommendation is a soft-law instrument and does not oblige Member States to act.
The stakeholder expert group, and its final report published on 25 May, provides EC with expert opinions and analysis regarding the functioning and success of SME growth markets. They also identify areas where further action or a different policy approach might be necessary for the success of SME Growth Markets in particular, and for improved SMEs access to public markets more generally.
The areas covered include listing requirements, SME research, SME indices and the attractiveness of public SME equity to institutional and retail investors.
This is the seventh installment of financial support under the SURE instrument, disbursed on 25 May. As part of today’s operations, Belgium has received €2 billion, Bulgaria €511 million, Cyprus €124 million, Greece €2.54 billion, Spain €3.37 billion, Italy €751 million, Lithuania €355 million, Latvia €113 million, Malta €177 million, Poland €1.56 billion, Portugal €2.41 billion and Estonia €230 million.
SURE loans will help Member States cover the costs directly related to the financing of national short-time work schemes, including for the self-employed.
Accountancy Europe believes that it is crucial that SMEs can retain the skills of their workforce for their mid-term post-COVID resilience. SURE funding will enable Member States to support SMEs with this.
The EC published a list of indicators on 9 June to help track capital markets’ developments and measure progress achieved by the EU’s capital markets union (CMU) project.
These indicators will help identify whether certain rules need to be adjusted to boost Europe’s capital markets or if new measures are required.
The indicators include several SME specific ones too, such as:
All these SME indicators show progress since 2015, when EC’s CMU project kick-started.
European Parliament (EP) Plenary session held a debate on SMEs in the EU and heard EC’s statement on State of the SMEs Union on 7 June.
During the debate, MEPs who took the floor stressed that SMEs had been hardest hit by the pandemic, especially when it came to those operating in the culture, tourism and hospitality sectors. They also called for less regulatory burden on SMEs, with several MEPs even stating that the ‘one in, one out’ principle did not go far enough. MEPs underlined the need to provide SMEs with adequate access to liquidity as many continue to face insolvency.
Commissioner for Jobs and Social Rights, Nicolas Schmit, assured that EC was working to reduce the regulatory burden in line with the SME strategy presented last year.
The Portuguese Presidency of the Council presented Member States its progress report on the proposal for a Directive on measures to ensure a high common level of cybersecurity in the EU on 4 June.
Many Member States repeatedly drew attention to SMEs. For example, Italy said: “Special attention should be paid to the inclusion of SMEs, but also of medium-sized enterprises. We need to target the right actors and not create huge administrative burdens, which would not be sustainable for our economies”.
The EC and the EU Intellectual Property Office (EUIPO) have recently launched the Ideas Powered for Business SME Fund, a €20 million grant scheme aimed at businesses that wish to develop their intellectual property (IP) strategies and protect their IP rights at national, regional or EU level.
The next funding window opens on 1 July. Successful applicants can get reimbursed for:
Accountants should take note of this funding opportunity, inform their SME clients and advise them to apply if relevant for the business. Small accounting practices that fulfil the EU SME definition may also apply for their own firm, if relevant.
UK e-commerce sellers are facing £180m in additional red tape costs as the EU imposes sweeping VAT reforms on sales from outside the bloc, according to a consultancy.
The new rules, which will be introduced on 1 July, were originally designed to stop an estimated €7bn in annual VAT fraud by non-EU e-commerce sellers, many of which are located in China. After the UK’s departure from the EU, British companies will also need to comply.
SMEs exporting to EU customers are set to face the biggest upheaval because of the changes, which remove VAT exemptions for SMEs and shipments not exceeding €22.
A staggering 6 in 10 UK businesses still don’t use social media to boost their customer base, according to a poll. For instance, more than a quarter of 500 small and medium sized organisations do not post on Facebook, despite this platform’s popularity for communications purposes.