- European Commission escalates infringement proceedings against France by issuing a reasoned opinion for failing to provide all IT functionalities required under Directive (EU) 2020/285. These systems are essential to enable the exchange of VAT-related information between Member States and to support the proper functioning of the EU’s special VAT scheme for small enterprises from 1 January 2025.
- The missing IT functionalities jeopardise the cross-border SME VAT exemption regime, under which qualifying small businesses can benefit from VAT exemptions not only in their Member State of establishment but also when making supplies in other EU Member States. Efficient and complete data exchange between tax authorities is a fundamental condition for the scheme to operate correctly and securely across the Single Market.
- France now has two months to comply or provide a satisfactory response. The Commission had already sent a letter of formal notice in October 2025 after identifying deficiencies in the implementation of the Directive. If the shortcomings persist, the Commission may refer the case to the Court of Justice of the European Union (CJEU), potentially exposing France to further legal consequences.
Source ec.europa.eu
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