On 18 January 2018, the European Commission proposed new rules which would allow Member States greater flexibility in setting VAT rates and reduce red tape for small businesses.

The aim of the proposals is to reduce overall compliance costs that small businesses face in complying with their VAT obligations.

The entire package is to have effect from 1 July 2022. Should the UK leaves the EU before then, the proposals may have little relevance to the UK but the remaining member states will welcome the proposed greater autonomy on rates which should encourage cross-border trade.

A copy of the Commission’s press release is available to view here.