Applying the domestic SME scheme
To apply the domestic SME scheme, the small enterprise must have an annual turnover not exceeding the national annual threshold set by the Member State of establishment (MSEST). This threshold cannot be higher than EUR 85 000.
Member States have the possibility to have more than one annual threshold, called ‘sectoral thresholds’. If a small enterprise can benefit from more than one sectoral threshold, the MSEST would inform the small enterprise about the appropriate sectoral threshold since only one threshold can be applied per taxable person. The tax authorities can reassess the applicable sectoral threshold at the end of each calendar year.
Member States may release small enterprises applying the domestic SME scheme from the obligation to register. If Member States choose not to grant this release and request small enterprises to register, the registration procedure should not take longer than 15 working days.
You can contact your Member State of establishment for more information on how to apply the domestic SME scheme.
Compliance
In case a small enterprise applies the domestic SME scheme only, it must contact its MSEST to receive information on its compliance obligations (such as VAT return). There may not be any compliance obligations as each Member State is allowed to set its own rules and to release small enterprises applying the domestic SME scheme only from some or all compliance obligations.
Leaving the domestic SME scheme
- Voluntary cessation: should an SME want to leave the domestic SME scheme voluntarily, it should contact its MSEST. The MSEST may impose a quarantine period.
- Exclusion: if the annual turnover of the small enterprise exceeds the annual threshold, the small enterprise is excluded from the domestic SME scheme. The effective date of exclusion will depend on whether the MSEST applies a transitional period or not. Upon exclusion, the quarantine period is one or two calendar years depending on the option implemented by each Member State.
You can contact your Member State of establishment for more information on the procedure (if any) for leaving the domestic SME scheme.
If a small enterprise wants to extend the application of the SME scheme to other Member State(s), it will have to apply the rules of the cross-border SME scheme.