South West MEP Ashley Fox has welcomed confirmation that the European Commission is to bring in an exemption from EU VAT rules for microbusinesses.
The so-called VATmoss system, which came into effect at the start of this year, means that businesses have to collect VAT for each individual country they sell to, and keep the records of all their transactions for years.
The extra burden has forced many tiny digital entrepreneurs, such as sellers of e-books or even knitting patterns, to stop trading.
After lobbying from Mr Fox and other Conservative MEPs, as well as from Prime Minister David Cameron, the European Commission has confirmed that it will propose a threshold beneath which companies will be exempt, although the exact figure is still to be established.
Mr Fox said, "Digital entrepreneurs are the lifeblood of economic recovery and these rules are having a devastating impact.
"This outdated law means that tiny companies are facing crippling costs leading many to stop selling altogether. If Europe is to prosper then we need to make sure that the EU's single market is fit for purpose for the digital age."
"If the European Commission is serious about cutting red tape it needs to do all it can to support small businesses"