More VAT flexibility and less red tape is proposed for EU members. The European Commission has proposed new rules to give European Union members more flexibility to set VAT rates. The move comes in response to demands to extend to small companies the VAT exemptions that exist for domestic companies trading cross-border. It also examines the problem of smaller companies suffering from disproportionate VAT compliance costs. Overall VAT-related compliance costs will be cut by as much as 18% per year.