Council Directive (EU) 2022/890 of 3 June 2022

What it is

to extend the application period of the optional reverse charge mechanism for supplies of certain goods and services susceptible to fraud and of the Quick Reaction Mechanism against VAT fraud. ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion. BACKGROUND: tax fraud in the field of value added tax (VAT) leads to considerable budget losses and has an impact on the operation of the internal market. Article 199a of Council Directive 2006/112/EC provides for Member States to use, on an optional basis, the reverse charge mechanism for the payment of VAT on supplies of pre-defined goods and services that are susceptible to fraud, and in particular, Missing Trader Intra-Community (MTIC) fraud. The European Parliament adopted by 605 votes to 2, with 27 abstentions, following a special legislative procedure (consultation), a legislative resolution on the proposal for a Council directive amending Directive 2006/112/EC as regards the extension of the application period of the optional reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud and of the Quick Reaction Mechanism against VAT fraud. Parliament approved the Commission's proposal without amendments. The proposal for a Directive amending Council Directive 2006/112/EC on the common system of value added tax (the ‘VAT Directive’) consists of extending until 31 December 2025: 1) the possibility for Member States to apply the reverse charge mechanism to combat existing fraud affecting supplies of goods and services referred to in Article 199a(1) of the VAT Directive and 2) the possibility to use the Quick Reaction Mechanism (QRM), as provided for in Article 199b of the VAT Directive, to combat fraud via the application of the reverse charge mechanism in specific cases.

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