• Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 7/22/2013

EU - Measures to counter “carousel” VAT fraud 

July 22:  The Council of the European Commission today announced the adoption of measures to enable EU Member States to address value added tax (VAT) fraud, with directive provisions that allow for rapid reaction and as well as a specific measure to counter “carousel fraud.”

According to the EC release [PDF 86 KB], a common example of “carousel fraud” is when supplies are rapidly traded several times without payment of VAT. To address these situations:

  • One EC measure aims at enabling immediate measures to be taken in cases of sudden and massive VAT fraud (a "quick reaction mechanism").
  • A second measure allows EU 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.

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