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EU Parliament votes VAT reverse charge extension to Dec 2025

Legislator endorses continuation of anti-VAT fraud measure and Quick Reaction Mechanism until 31 December 2025

The European Union Parliament has voted to retain the VAT reverse charge mechanism to help reduce the VAT Gap – amount of uncollected EU VAT.  The reverse charge is an optional variation on the EU VAT rules that offers member states the choice to remove cash payments of VAT in certain high-risk sectors where criminal gangs have targeted.

The reverse charge effectively takes the VAT cash payment out of susceptible transactions. This includes:

  1. the optional VAT reverse charge mechanism in relation to supplies of specific goods and services susceptible to fraud – computer chips; and
  2. use of the Quick Reaction Mechanism (QRM) against VAT fraud. [European Union, European Commission, 02/10/22]

Supplies suspectable to VAT fraud include:

  • Goods: mobile phones, computer chips, microprocessors, hi-fi equipment, new and used vehicles and precious metals.
  • Services: carbon credits, gas and electricity, cloud computing and VoIP, and green energy certificates.

The European Commission Taxud is launching a EU VAT Gap Initiative in 2022 to help exchange ideas between EU member states’ tax administrations to help close the gap.

EU VAT General and Domestic Reverse Charge rule by country

Country General RC (art 194) Domestic Reverse Charge (art 199)
Domestic goods * Immoveable Property Installation Construction Scrap metal Mobile Phones Gas & electrcity Carbon Trading
Austria Yes Yes Yes Yes Yes Yes Yes Yes
Belgium Yes Yes Yes Yes - - Yes Yes
Bulgaria - - Yes - Yes - Yes -
Croatia Yes Yes Yes Yes Yes - Yes Yes
Cyprus - - Yes Yes Yes Yes Yes -
Czech Republic Yes - Yes Yes Yes Yes Yes Yes
Denmark - - Yes - Yes Yes Yes Yes
Estonia Yes Yes Yes - Yes - Yes -
Finland Yes - Yes Yes Yes - Yes Yes
France Yes - Yes Yes Yes - Yes Yes
Germany - Yes Yes Yes Yes Yes Yes Yes
Greece Yes - - - Yes Yes Yes Yes
Hungary  - Yes Yes Yes Yes - Yes Yes
Ireland - Yes Yes Yes Yes - Yes Yes
Italy Yes Yes Yes Yes Yes Yes Yes Yes
Latvia - - Yes Yes Yes Yes Yes -
Lithuania Yes - Yes Yes Yes - Yes -
Luxembourg - - - - - - Yes Yes
Malta Yes - Yes Yes - - Yes -
Netherlands Yes Yes Yes Yes Yes Yes Yes Yes
Poland Yes - Yes Yes - - Yes -
Portugal Yes Yes Yes Yes Yes - Yes Yes
Romania Yes Yes Yes - Yes Yes Yes Yes
Slovakia Yes Yes Yes Yes Yes Yes Yes Yes
Slovenia Yes Yes Yes Yes Yes - Yes Yes
Spain Yes Yes Yes Yes Yes Yes Yes Yes
Sweden  Yes - Yes Yes Yes Yes Yes Yes
Non-EU
Norway - - - - - - - -
Switzerland Yes - Yes - - - Yes -
UK - - Yes - - Yes Yes Yes
* Further local rules on the VAT status of the supplier and their customer need to be considered to determine if RC applies

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