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EU Commission presents SME Relief Package

Small and medium-sized enterprises (SMEs) are a key driver of Europe’s green and digital transitions. For this reason, the EU Commission wants to relieve the burden on SMEs and it thus presented proposals, firstly, on late payments in commercial transactions and, secondly, on simplified VAT rules for cross-border activities.

The aim of the new Regulation on combating late payment in commercial transactions (cf. EU Commission press release of 12.9.2023) is to curb the widespread practice of delaying payments because these then compromise the cash flow of SMEs and, moreover, deplete competitiveness and the resilience of supply chains. That is why a stricter maximum payment limit of 30 days will be introduced. Furthermore, an automatic payment of accrued interest and compensation fees would also be ensured. 

In addition, new enforcement and redress measures will be introduced to protect companies against bad payers.

The new Directive on simplified VAT rules is intended for SMEs that are involved in cross-border activities. It will ensure that SMEs will be able to calculate the tax assessment basis of their permanent establishments in other Member States in accordance with the provisions of their home Member State. Once most of the Member States have agreed, the new provisions will apply from 1.1.2025.

Please note: The EU Commission is planning further, non-legislative measures, such as reducing the reporting obligations, simplifying access for SMEs to funding as well as enabling a skilled workforce for SMEs by continuing to support training actions.

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