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    Eurogas, Efet Warn About VAT Fraud


The EU has been urged to renew a legal mechanism by year-end, or else risk a return to massive VAT fraud.

by: Mark Smedley

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Eurogas, Efet Warn About VAT Fraud

Lobby group Eurogas, traders group Efet, and 16 other energy industry associations and regulatory bodies have urged the EU to renew a legal mechanism by end-2018, or else risk massive fraud in value-added tax (VAT).

"Missing Trader Intra-Community VAT fraud remains a persistent threat to the integrity and well-functioning of electricity, gas and emission allowance markets in Europe," said their joint communique September 4. Billions of euros had been defrauded from European government treasuries, prior to the EU Council deciding on the introduction of a derogation from the VAT Directive for electricity, gas and emission allowance transactions in 2013, their statement added.

The derogation enables EU member states to apply the 'Domestic Reverse Charge Mechanism' (DRCM) to these goods and services. Should the EU Council not extend the existing derogation before the end of 2018, it will automatically expire at midnight on December 31 2018 as stipulated in the built-in sunset clause in Article 199a of the EU's VAT Directive.

A proposed prolongation of Article 199a until 30 June 2022 is very short, the ten associations argue, saying it would be preferable to extend it by five more years until December 31, 2023.