The European Commission on Monday 17, opposed a request for a derogation submitted by Lithuania, which would allow it to apply the reverse charge mechanism in the sector of petroleum products and additives.
In a communication to the EU Council, it states that such a derogation could have adverse impacts on fraud at the retail level and on other Member States.
Lithuania requested, under Article 395 of the VAT Directive, that the EU Council, acting upon a proposal from the Commission, authorise it to apply the reverse charge mechanism in relation to domestic supplies of petroleum products (gas oil and petrol) in order to fight VAT fraud. Depending on the country, 5 to 6% of the petrol and gas oil placed on the Lithuanian market is reportedly traded fraudulently, depriving Lithuania's budget of about €20 million per year.
In its Communication, the Commission concludes that a more comprehensive solution should be found, including appropriate control measures and measures to accelerate investigations and prosecute effectively.
In addition, it points out that since petrol and gas oil are consumables that are particularly sensitive to price changes, consumers/buyers are prepared to cross the border to obtain the best price. Thus, in the Commission's view, there is a risk of fraud moving to neighbouring Member States.
It also notes that, in the past, it had already indicated its intention to refuse a request for a derogation for the application of the reverse charge mechanism to the same products. (Original version in French by Marion Fontana)