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Progress on plans to tackle VAT fraud 22/07/2013 The European Council of Ministers has adopted two directives aimed at dealing with VAT fraud.

Progress on plans to tackle VAT fraud

The European Council of Ministers has adopted two directives aimed at dealing with VAT fraud.

The two directives amend directive 2006/112/EC on the EU's common VAT system:

  • One is aimed at enabling immediate measures to be taken in cases of sudden and massive VAT fraud ("quick reaction mechanism");
  • The other 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 known fraud, in particular carousel schemes.

The move follows a political agreement at the Council meeting on 21st June. In a statement, the Council and the Commission highlighted the temporary and exceptional nature of the two directives in addressing serious risks of VAT fraud.

Both directives will therefore apply only until 31st December 2018, and will only be renewed if the Commission submits a proposal to that effect, which then receives the unanimous approval of the Council.

In the meantime, the Commission has promised to prioritise work on a new VAT system, with a view to facilitating the prevention of VAT fraud rather than relying on solutions based on derogations.
 

 

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