A reverse-charging mechanism under which VAT would be paid by the end consumer could help tackle VAT fraud but would be expensive for companies if it is only applied in some countries and only applied temporarily, explains Gerhard Huemer of the UEAPME, which represents small and medium-sized companies. He was speaking on Wednesday 31 August at a public hearing at the European Parliament on the future of the VAT system.
Reverse-charging "can contribute to reducing the administrative burden for SMEs, but if only applied temporarily, it will create additional cost and uncertainty for SMEs", he explained. Stephen Fiedler, representing the German Federal Criminal Police Union, also sees a future for reverse-charging, but only if it is implemented in every EU country "as otherwise criminal gangs will simply move their activities from one member state to another".
Martin Janeček, Czech director-general for tax administration, commented: "To counter fraud you have two options. On the one hand you have conventional measures, which have proven to be ineffective and increases the administrative burden. On the other hand you have the reverse-charging system, which is tax neutral and makes the system safer. In the Czech Republic we managed to bring carousel fraud down by 98% in the sectors in which we applied it."
The Czech Republic is calling for a derogation to allow it to apply a generalised reverse-charging mechanism. The Commission has promised to unveil a proposal to this effect by the end of the year but it seems unlikely that the member states would agree to its unanimously. (Original version in French by Élodie Lamer)