In the Official Journal of 26 July 2013, Directive 2013/42/EU was published to enable immediate measures to be taken in cases of sudden and massive VAT fraud (Quick Reaction Mechanism). The Directive entered into force on 15 August 2013 and applies until 31 December 2018.
On 31 July 2012, the European Commission published the Draft Council Directive COM(2012)428 on the introduction of a Quick Reaction Mechanism (QRM) to combat VAT fraud.
On 21 of June 2013, the Council of the European Union then reached political agreement on a package of measures aimed at enabling Member States to better combat VAT fraud.
The measures will be based on two Directives:
- one aimed at enabling immediate measures to be taken in cases of sudden and massive VAT fraud (Quick Reaction Mechanism), and;
- the other allowing member states to implement, on an optional and temporary basis, a reversal of liability for the payment of VAT on the supply of certain goods and services ("reverse charge mechanism").
The proposed Quick Reaction Mechanism would involve an accelerated procedure for allowing Member States to apply a "reverse charge mechanism" to specific supplies of goods and services for a short period of time, by derogation from the provisions of the (EU VAT Directive (2006/112).
The proposed "reverse charge mechanism" is aimed at closing off certain types of known VAT fraud in particular carousel fraud – by allowing liability for the payment of VAT to be shifted from the supplier (as normally required by EU rules) to the customer. Member States would have the option of applying it within a pre-determined list of transactions.
To read the full Directive please click here.