EU moves to combat VAT carbon fraud
Friday December 11, 2009
The EU Council has agreed on a general approach to combating VAT fraud in the carbon permit trading markets.
Under a new draft directive devised by EU finance ministers, loopholes facilitating carousel fraud, where supplies are traded without paying VAT, will be closed off.
EU member states will be allowed to introduce a reverse charge mechanism through which they can tackle VAT fraud.
Member states that are currently allowed to apply the reverse charge mechanism on electronic goods and mobile phones will be allowed to continue to do until a new decision or directive is reached relating specifically to those goods.
The draft directive also stipulates that the liability for the payment of VAT on emission allowances and services will be shifted from the supplier to the customer until June 30th 2015.
Earlier this year, the European Commission laid out plans to tackle the rise in VAT fraud, prompting the UK, France and the Netherlands to suspend or amend VAT on EU emission allowances amid suspicions of widespread fraud.