Common energy sector statement: Keeping EU energy and emissions markets protected from VAT fraud beyond 2018
Missing Trader Intra-Community Value Added Tax fraud remains a persistent threat to the integrity and well-functioning of electricity, gas and emission allowance markets in Europe1. Billions of euros had been defrauded from European Exchequers before the Council of the EU decided on the introduction of a derogation from the VAT Directive2 for electricity, gas and emission allowance transactions. The derogation enables Member States to apply the Domestic Reverse Charge Mechanism (DRCM) to these goods and services. Should the existing derogation not be proactively prolonged by the Council before the end of the year, it will automatically expire at midnight on 31 December 2018 as stipulated in the built-in sunset clause in Article 199a3 of the VAT Directive.
As seventeen representative associations of the energy sector, we therefore call on the Council, and in particular the Austrian Council Presidency, to prioritise the decision on the European Commission’s legislative proposal of 25 May 20184 on a prolongation of the derogation in Article 199a of the VAT Directive. This will prevent fraudsters from again successfully implementing large-scale VAT fraud carousels in highly liquid energy and emissions markets in Europe. It will also ensure that market participants can maintain trust in the integrity and safety of electricity, gas and emission allowance markets as an essential part of the economic value chain in Europe.