Italy widens anti-VAT fraud domestic reverse charge
- 14 November 2014 | Richard Asquith
The application of the domestic reverse charge is to be extended in the Italian VAT regime in an effort reduce fraud. The 2015 Finance Bill contains the following range of trading situations where the customer will now become responsible for the reporting of both the input VAT and output (sales) VAT. The vendor will therefore charge no VAT.
- Domestic supplies of energy and fuels around the supply of electricity and gas
- Trading in carbon emission credits
- Services related to construction, including building works, renovations and clearing sites.
EU Rapid Response Mechanism on VAT fraud
The above measures should pass into law from 1 January 2015. They are dependent upon approval from the European Commission’s Rapid Response Mechanism on VAT fraud. This offers member states to opportunity to introduce the reverse charge on domestic trades with 30 days approval notice from the EC. It may only be applied in the case of goods prone to large-scale missing trader and carousel fraud.