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Poland introduces anti-VAT fraud energy domestic reverse charge

Risk of missing trader VAT fraud in energy wholesale markets prompts zero-rating until February 2025

Poland has become the latest country to introduce the VAT reverse charge on domestic energy trading transactions. This removes the VAT cash payment on wholesale deals which are subject to missing trader fraud. Instead of the seller of the trade being responsible for charging Polish VAT, their customer instead takes on the liability to report the VAT. This means the seller does not have to charge or collect VAT.

Whilst ostensibly used to combat VAT fraud, Poland has made clear it is introducing the VAT simplification to help its wholesale trades remain competitive with other countries that have already introduced the domestic reverse charge.

This will apply between 1 April 2023 and 28 February 2025.

The new rules apply to:

  • gas system
  • electricity in the power system; and
  • services for the transfer, including commodity exchanges, of greenhouse gas (CO2) emission allowances.

Many other European countries have introduced this fraud measure, including:

  • Czech Republic
  • Denmark
  • Germany
  • Ireland
  • Italy
  • Portugal
  • Romania
  • UK

Optional general and domestic reverse charge in EU

The EU’s VAT Directive permits two types of optional reverse charge

  1. General Reverse Charge:  Non-resident companies selling goods domestically to other businesses, where countries elect the may provision of Article 194 of the EU VAT Directive, or similar rules outside of the EU (see list below); and
  2. Domestic Reverse Charge: resident and non-resident companies selling fraud-sensitive goods where the country has elected under Article 199 of the EU VAT Directive (see below).

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 & electricity 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 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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