VATLive > Blog > EU VAT > EU VAT fraud reverse charge evaluation - Avalara

EU VAT fraud reverse charge evaluation

  • Mar 8, 2018 | Richard Asquith

EU VAT fraud reverse charge evaluation

The European Commission has published this week an impact study of the effectiveness of the anti-VAT fraud domestic reverse charge mechanism.

The EU VAT Directive’s Article 199a permits the emergency imposition of the reverse charge (zero-rated VAT) on domestic VAT transactions of certain, high fraud risk goods and services. This was introduced to fight missing trader and carousel fraud, estimated to contribute to around €50billion in annual VAT fraud in the EU.

Most member states commented that they believed the mechanism was highly effective against fraud on sales of laptops, computer chips, mobile phones and similar small, high value goods. Although only for short periods. A number of states believed it just encouraged criminal gangs to move to other sectors, including rare metals and wholesale electricity trading markets.

Article 199a is due to expire at the end of this year, and the positive outcome of the study should encourage the Commission to extend it further. In the longer term, the proposed introduction of the definitive VAT regime, with destination-based VAT, should overcome many of the VAT fraud challenges.

Latest news
Poland delays VAT cut to reform reduced rates
October 22, 2018

Poland’s Ministry of Finance has announced that it will recategorise many supplies to within the current reduced VAT rate category. However, this will mean Poland will not...
Hungary VAT registration threshold HUF 12m Jan 2019
October 17, 2018

Hungary has received permission to introduce an VAT registration threshold for businesses of HUF 12 million from 1 January 2019. This is approximately €48,000, based...
UK MTD pilot goes public; Oct 2019 groups & non-resident delay
October 16, 2018

HMRC announced today that it is opening the test pilot for its Making Tax Digital for VAT programme to the public.  However, HMRC also announced...

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2019 Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.