Advances EU VAT Anti-Fraud and E-Commerce Reforms
The Cyprus Presidency of the Council of the European Union (January to June 2026) delivered important progress on several VAT and indirect tax initiatives that will shape the future of EU VAT compliance, anti-fraud enforcement and e-commerce taxation.
Key VAT developments included:
Agreement on EPPO and OLAF access to EU VAT data
- ECOFIN reached a general approach on 5 May 2026 on legislation allowing the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) to access VAT information held at EU level.
- The proposal amends Regulation 904/2010 on administrative cooperation in VAT matters.
- The objective is to strengthen investigations into cross-border VAT fraud by enabling direct access to certain Eurofisc data and analysis.
- Significant technical work focused on data protection safeguards, clarifying access rights for Member States that do not participate in EPPO, and defining the responsibilities of Eurofisc, EPPO and OLAF in monitoring and controlling data access.
- Standardised forms for transmitting Eurofisc analysis reports were also introduced.
Progress on abolition of the €150 import threshold
- Cyprus continued negotiations on proposals linked to the wider 2028 EU Customs Reform package.
- The reforms would remove the current €150 threshold for the Import One Stop Shop (IOSS).
- Today, IOSS is generally limited to imported goods valued at €150 or less.
- Removing the threshold would align VAT rules with the planned removal of the customs duty exemption threshold.
- The proposal would allow higher-value imported goods to be reported through IOSS, potentially simplifying VAT collection on cross-border e-commerce sales.
Debate on fraud controls within expanded IOSS
- Many Member States expressed concerns that extending IOSS to higher-value goods could increase VAT fraud risks.
- Questions were raised about whether existing IOSS controls are robust enough to manage larger transaction values and increased volumes.
- As a result, agreement was not reached and further technical work is required.
Customs warehouses for e-commerce imports
- Cyprus advanced discussions on extending VAT rules to cover goods supplied from dedicated customs warehouses for distance sales.
- The measure would align VAT treatment with provisions already agreed under the Union Customs Code reform.
- The objective is to improve customs supervision and VAT control of imported e-commerce goods entering the EU market.
Extension of VAT anti-fraud mechanisms
- The European Commission confirmed it will publish proposals after summer 2026 to extend:
- the Reverse Charge Mechanism (RCM); and
- the Quick Reaction Mechanism (QRM).
- Both measures currently expire on 31 December 2026.
- These tools allow Member States to respond quickly to major Missing Trader Intra-Community (MTIC) fraud risks.
The Cyprus Presidency did not deliver major new VAT legislation comparable to the recent ViDA package, but it made meaningful progress on VAT fraud enforcement, e-commerce taxation and customs-VAT alignment, laying important groundwork for the next EU Presidency to take forward.
