A small business established in Slovenia has annual EU-wide turnover of EUR 70,000, comfortably under the EUR 100,000 EU-wide ceiling, and wants to sell VAT-exempt to consumers in other member states without registering for VAT separately in each of them. Since 1 January 2025, under the SME scheme reform in Council Directive (EU) 2020/285, how does it access this cross-border exemption?
- It must separately apply for the exemption to the tax authority of every other member state where it has consumers, since granting the exemption remains a purely national decision for each destination country
- It notifies its own Slovenian tax authority of its intention to use the cross-border exemption, receives an identifier with an 'EX' suffix from that authority, and then files a single quarterly report to Slovenia disclosing the turnover generated in each other member state where it applies the exemption
- It automatically qualifies for the exemption in every member state the moment its EU-wide turnover is confirmed to be under EUR 100,000, with no notification or registration step required
- It can only use the exemption in member states where its Slovenian domestic turnover alone, rather than its EU-wide total, stays under that particular member state's own domestic exemption threshold
Why B? And why not the others?
Correct answer: B. It notifies its own Slovenian tax authority of its intention to use the cross-border exemption, receives an identifier with an 'EX' suffix from that authority, and then files a single quarterly report to Slovenia disclosing the turnover generated in each other member state where it applies the exemption
The 2025 SME scheme reform lets a small business access the exemption across the EU through a single point of contact: it notifies its own member state of establishment, is issued an identifier carrying an 'EX' suffix, and then files one quarterly report to that home authority showing the turnover it generated in each other member state where it wants the exemption applied, rather than dealing with each destination country separately. The option requiring separate applications to every destination member state describes the old, purely domestic version of the scheme that the 2025 reform specifically replaced by introducing mutual recognition through the home member state. The option treating the exemption as automatic once the turnover figure is confirmed skips the mandatory notification and EX-identifier steps that the reform still requires before the exemption can actually be applied in other member states. The option tying eligibility to Slovenia's own domestic turnover in each destination country conflates two separate thresholds: the domestic threshold (up to EUR 85,000) governs exemption within a business's own member state, while the EUR 100,000 EU-wide ceiling is the specific test that unlocks the cross-border exemption described in the scenario.
Source: Council Directive (EU) 2020/285, amending the EU VAT Directive's special scheme for small enterprises; effective 1 January 2025