Small and medium-sized enterprises (SMEs) account for 99% of all businesses in the EU, playing a crucial role in economic growth and job creation. However, SMEs face higher tax compliance costs compared to larger enterprises. Research by the European Commission shows that SMEs bear a heavier burden in relative terms, while larger enterprises have greater absolute costs. The decision to outsource tax compliance activities influences companies’ tax compliance costs, with 74% of microenterprises choosing to outsource. To ease the VAT compliance burden for SMEs, many EU member states have implemented the ‘SME scheme’, which exempts businesses below a certain threshold from VAT registration and collection obligations. However, exemption thresholds vary significantly among member states. Effective January 1, 2025, the SME scheme will undergo significant amendments, with a maximum threshold set at €85,000 for small businesses.
Source Forbes
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