Press Release: Value Added Tax: Commission believes that German and Austrian requests to apply a generalised reverse charge mechanism cannot be allowed as special derogations

The European Commission has objected to the derogation requests made in accordance with Article 27 of the Sixth VAT Directive by Austria and Germany for a general application of the reverse charge mechanism. Article 27 provides for derogation from the harmonised general rules of VAT if those derogations are targeted, restricted and proportionate. The requests were made in the context of a desire by Austria and Germany to tackle the phenomenon of businesses disappearing without paying their VAT liabilities. The only way to introduce very broad measures to change the VAT system would be by amending the Sixth VAT Directive under Article 93 of the EC Treaty (which requires consultation of the European Parliament and the European Economic and Social Committee).