On January 20, 2016 the Dutch Minister of Finance sent a summary of discussions held during the ECOFIN meeting from January 14 and 15, 2016 to the Dutch Parliament. One of the subjects discussed during the ECOFIN meeting is combating of VAT fraud and the potential introduction of a general applicable reverse charge mechanism for VAT.

With respect to the subject of combating VAT fraud and a potential introduction of a general applicable reverse charge mechanism for VAT, the Dutch Minister of Finance notes the following:

The subject was put on the agenda by the Czech Republic. The purpose for putting it on the agenda was to exchange views on the possibilities of combating VAT fraud by the introduction of a general applicable reverse charge mechanism. The Czech Minister of Finance indicated that he would like to investigate via a pilot in the Czech Republic whether it is possible to better combat VAT fraud by introducing a general applicable reverse charge mechanism.

This was then discussed in the ECOFIN Council. According to the Dutch Minister of Finance opinions varied. However, according to the Dutch Minister a large majority of the Member States thought it was a good idea to have a pilot in one Member State. The whole ECOFIN Council also emphasized the importance of an effective way of combating fraud. However, some of the speakers, including the European Commission, expressed their concerns with respect to having 2 different VAT systems in Union. Furthermore the risk that such a pilot might have effects on the surrounding countries was mentioned.

The president of the Council concluded that it is of the utmost importance that VAT fraud is combated and that the ECOFIN Council is looking forward to the VAT Action Plan that the European Commission will publish in March. In this plan also the option of a general applicable reverse charge mechanism will be analysed, including the practical and juridical consequence. Furthermore it was agreed that the subject VAT fraud will be on the agenda of the informal ECOFIN meeting that is going to be held in April. Because of the view of a large majority of the participants of the meeting, the president of the Council has requested the European Commission to again review the advantages of a possible pilot and how the potential disadvantages of such a pilot can be mitigated.

Click here to be forwarded to the summary of discussions that the Dutch Minister sent to the Dutch Parliament (the report is only available in Dutch) The remarks regarding combating VAT fraud can be found under 4 “Algehele verleggingsregeling btw” on page 3.

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