Directive (EU) 2018/1695 amending Directive 2006/112/EC as regards the period of application of the optional reverse charge mechanism and of the quick reaction mechanism against VAT fraud

Summary:

On 25 May 2018 the European Commission presented a proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax (the VAT Directive). The Council of the European Union adopted the new Directive on 6 November.

Further information:

The purpose of the proposed amendment to is to prolong: (1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud in supplies of goods and services, and (2) the possibility to use the Quick Reaction Mechanism (QRM) to combat fraud.

Member States generally consider the reverse charge mechanism an effective and efficient tool in fighting VAT fraud. Due to the introduction of the reverse charge mechanism fraud decreased significantly or disappeared in the defined sectors. This view is also shared by the consulted business stakeholders who consider the reverse charge mechanism as an efficient, temporary measure for combatting fraud.

Regarding the Quick Reaction Mechanism, although it has never been used, most Member States consider that it remains a useful tool and a precautionary measure against exceptional cases of sudden VAT fraud.

Official

EUR-Lex: COM(2018)298: Proposal to amend Directive 2006/112/EC as regards the period of application of the optional reverse charge mechanism and of the quick reaction mechanism against VAT fraud https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2018:298:FIN

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ESO Records

Report on the effects of Articles 199a and 199b of Directive 2006/112/EC on combatting fraud https://www.europeansources.info/record/report-on-the-effects-of-articles-199a-and-199b-of-directive-2006-112-ec-on-combatting-fraud/

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