Commission proposes extending EU VAT reverse charge to 30 June 2030

Suppliers and customers in fraud-sensitive sectors keep the reverse charge. The Commission proposes that the optional reverse charge mechanism in Article 199a of the VAT Directive and the Quick Reaction Mechanism in Article 199b, both expiring on 31 December 2026, apply until 30 June 2030.Europa The text is a proposal: it still needs adoption by the Council, acting under a special legislative procedure on the basis of Article 113 of the Treaty on the Functioning of the European UnionEuropa, after opinions of the European Parliament and the European Economic and Social Committee.

Under the normal rule in Article 193 the supplier charges VAT and is liable to pay it. Under the reverse charge the customer, where it is a taxable person, accounts for the VAT in its own return instead; with a full right of deduction it deducts the same amount there, so the result is neutral. The mechanism targets Missing Trader Intra-Community fraud: a trader buys goods VAT-free from another Member State, resells them charging VAT, then disappears before remitting the tax, while the good-faith customer still deducts the VAT paid.

Applying Article 199a is optional and limited to listed supplies. The most used category is trading in greenhouse gas emission allowances under the EU Emission Trading System, used by twenty-two Member States; then mobile phones, used by fifteen, other emission-trading compliance units and game consoles, tablet PCs and laptops, used by fourteen each, integrated circuit devices, gas and electricity supplied to a taxable dealer, and raw and semi-finished metals, used by twelve each, gas and electricity certificates, used by ten, cereals and industrial crops, used by six, and telecommunication services, used by five. Every Member State except Malta uses it for at least one category, and twenty-four told the Commission it has proved useful against fraud.

The Quick Reaction Mechanism in Article 199b covers sudden and massive fraud in sectors outside Article 199a: a Member State may impose a temporary reverse charge after the Commission confirms in writing within one month that it does not object. The measure may apply from the date the Member State receives that confirmation. It bridges the wait for a standard derogation under Article 395, which needs a Commission proposal and unanimous Council adoption and can take up to six months. No Member State has ever used it, but eighteen said it should stay as a deterrent.

The extension is a bridge. Article 199a was introduced for 2010 to mid-2015 and extended to the end of 2018, Article 199b was introduced for 2013 to the end of 2018, and both were then carried to 30 June 2022 and to 31 December 2026 while work on a definitive VAT system for intra-Union trade continued. That work produced no agreement and the Commission withdrew its proposals under its 2025 work programme. The structural answer is now the VAT in the Digital Age package, adopted on 11 March 2025: cross-border supplies of goods and services between taxable persons face near-real-time digital reporting with mandatory e-invoicing from 1 July 2030Europa, feeding a central VIES hub with transaction-level data, while Member States may impose domestic e-invoicing from 2025 and must align it with EU standards by 1 January 2035. A European Parliamentary Research Service study of 22 June 2026 likewise recommended keeping both mechanisms beyond 2026 during that transition, subject to regular review, demonstrated fraud risk and proportionality.

Legal basis: Article 113 of the Treaty on the Functioning of the European Union; the proposal amends Articles 199a and 199b of Council Directive 2006/112/EC and enters into force on the twentieth day following its publication in the Official Journal.