EU - Commission proposes optional anti-fraud reverse charge for domestic goods supplies

31 January 2017

In an effort to prevent VAT fraud the European Commission has put forward a proposal which will allow European Union (EU) member states to introduce the reverse charge on all domestic sales between businesses with a value over €10,000.

Currently, EU member states can only apply the reverse charge to sales in specific industries (such as mobile phones and precious metals). If the above proposal is accepted then it will mean the reverse charge can be applied across all sectors.

The reverse charge allows the business customer to account for the VAT on the transaction in their own VAT reporting. This removes the requirement for the supplier to charge VAT on the transaction which means that no cash payments of the VAT amounts are exchanged.