The Foreign Affairs Council, on 22 July 2013, adopted two Directives which will enable member states to better combat VAT fraud, facilitating rapid reaction and allowing a specific measure to tackle carousel fraud. Adoption by the Council follows a political agreement reached at the Economic and Financial Affairs Council meeting on 21 June 2013. In a statement, the Council and the European Commission highlighted the temporary and exceptional nature of the two Directives in addressing serious risks of VAT fraud.
The two Directives amend Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. One Directive aims to enable immediate measures to be taken in cases of sudden and massive VAT fraud (quick reaction mechanism), while the other Directive allows member states to apply, on an optional and temporary basis, a reversal of liability for the payment of VAT (reverse charge mechanism), with the aim of closing off certain types of known fraud, in particular carousel schemes.
Both Directives will apply until 31 December 2018. Any renewal thereafter would require a proposal from the Commission and the unanimous approval of the Council. In the meantime, the Commission will prioritise work on a new VAT system with a view to facilitating the prevention of VAT fraud rather than relying on solutions based on derogations.
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