The Council of the European Union has agreed on a general approach to tackling value-added tax (VAT) fraud in the carbon permit trading markets by allowing member states, on an optional and temporary basis, to introduce a reverse charge mechanism.
The aim of the draft directive agreed by EU finance ministers is to close off certain forms of tax fraud, in particular so-called carousel schemes whereby supplies are traded several times by different suppliers without VAT being paid to the tax authorities.
The draft directive would allow, until June 30, 2015, liability for the payment of VAT on emission allowances and services to be shifted from the supplier (as normally required by EU rules) to the customer.
The Council intends to continue to work on other elements of the proposal as regards the application of the reverse charge mechanism to mobile phones and electronic circuit devices with a view to reaching an agreement as soon as possible.
Member states that are at present authorized to apply the reverse charge mechanism on mobile phones and electronic devices will be allowed to continue to apply that until an agreement is reached in the Council on a new decision or new directive.
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