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EU 2025 VAT SME Scheme – registration thresholds equivalence for foreign businesses

2025 SME Scheme sets pan-EU VAT registration threshold to limit compliance for micro-businesses

The European Member states have agreed for member states to extend the same VAT registration thresholds enjoyed by domestic businesses to EU taxpayers from other member states (non-resident).  The aim is to encourage EU businesses to trade within the Single Market by cutting the costs and paperwork of VAT until their trade takes off.

EU companies must VAT register immediately in other EU states

Currently, non-residents must immediately VAT register if supplying eligible goods or services in another EU state. The EU distance selling thresholds were withdrawn on 1 July 2021 as part of the EU VAT e-commerce package reforms.

2025 – new €85,000 EU VAT registration threshold

From 2025, member states will be able to set a VAT registration threshold of €85,000 for domestic and non-residents. However, non-residents would be limit to a total income in other member states totalling €100,000 combined. This would prevent traders deliberately selling limited amounts in each state and thus evading VAT.

EU VAT reforms

Reform (click for details) Update
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2035 Harmonisation of EU e-invoicing and domestic regimes Jan 2035
2030 Digital Reporting Requirements and e-invoicing harmonisation July 2030
Structured e-invoices supercede paper invoices July 2030
EC Sales lists replaced by Digital Reporting Requirements July 2030
2028 EU Customs reforms Published May 2023
€150 import consignment threshold removed Published May 2023
2027 Single VAT Registration in the EU - extension of OSS July 2027
Call-off stock VAT simplification ends July 2027
Harmonisation of B2B Reverse Charge rules July 2027
Proposal for VAT treatment of the platform economy July 2027
2026 DAC8 harmonised crypto asset reporting Approved May 2023
2025 VAT registration thresholds equivalence foreign businesses 1 Jan 2025
Virtual events VAT rule changes 1 Jan 2025
Financial Services VAT exemption reform proposals Consultation complete; proposal awaited
Tour operator margin scheme VAT reforms EC undertaking fresh review
2024 Payment providers' seller transaction reporting and bookkeeping obligations In effect since 1 Jan 2024
2023 DAC 7 - marketplace reporting harmonisation In effect since 1 Jan 2024
2022 IOSS reforms to prevent double taxation On hold
EU reduced VAT rate freedoms Entered into force 6 April 2022
VAT in the Digital Age proposals Published Dec 2022
EU DAC8 cryptocurrency tax reporting proposals Published Dec 2022
VAT Gap Initiative Q3 2022
EU Definitive VAT System On hold
2021 One-Stop-Shop (OSS) single EU VAT return In effect since 1 July 2021
Ending €22 import VAT exemption; new IOSS return In effect since 1 July 2021
Marketplace deemed supplier EU VAT reforms In effect since 1 July 2021
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option

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