The Council adopted two Directives that will enable member states to better combat VAT fraud.
The two Directives, adopted on July 22, 2013, amend Directive 2006/112/EC on the EU’s common VAT system:
- Directive 2013/42/EU is aimed at enabling immediate measures to be taken in cases of sudden and massive VAT fraud (“quick reaction mechanism”);
- Directive 2013/43/EU allows member states to apply, on an optional and temporary basis, a reversal of liability for the payment of VAT (“reverse charge mechanism”), with the aim of closing off certain types of fraud, in particular carousel schemes.
With the “reverse charge mechanism”, liability for the payment of VAT is shifted from the supplier (as normally required by EU rules) to the customer for supplies for certain goods and services. Under the new Directive, member states have the option of applying it temporarily within an extended pre-determined list of sectors, by derogation from the provisions of the VAT Directive.
The “reverse charge mechanism” will now potentially apply to the following sectors: mobile phones, integrated circuit devices, supplies of gas and electricity, telecoms services, game consoles, tablet PCs and laptops, cereals and industrial crops, as well as raw and semifinished metals.
With the “quick reaction mechanism”, an accelerated procedure will enable member states to apply a “reverse charge” to specific supplies of goods and services for a short period of time, by derogation from the provisions of the VAT Directive.
When a member state wishes to introduce a specific measure using the “quick reaction mechanism”, the Commission will have a short period in which to confirm whether it objects, taking into account the views of other member states.
Both Directives will apply until 31 December 2018, and any renewal thereafter would require a proposal from the Commission and the unanimous approval of the Council.