Brussels, 18/05/2009 (Agence Europe) - On Monday 18 May, the Council of Ministers of the EU adopted, in every language except English (the English version having been adopted by the EU27 on 5 May), a decision authorising the United Kingdom to extend its measure exempting it from the common system of value added tax (VAT).
In view of the serious nature of VAT fraud in the United Kingdom, London had asked for authorisation to continue to apply a derogation provided for by directive 2006/112/EC with regard to the person liable to pay VAT to the tax authorities, a measure previously granted up to 30 April 2009, by the decision 2007/250/EC of the Council of 16 April 2007. Under article 193 of directive 2006/112/EC, the taxable person is the taxpayer who delivers the goods. This derogation, which Monday's decision has extended until 30 April 2011, allows the United Kingdom under certain circumstances to apply a reverse-charge mechanism, which transfers the VAT payment obligation to the taxpayer receiving certain deliveries of mobile telephones and integrated circuit devices, if the taxable amount is equal to or higher than £5000. The objective of this derogation is to tackle certain aggressive forms of tax evasion, notably carousel fraud, when goods are delivered several times without VAT being paid to the tax authorities, but with the invoice valid for the deduction of VAT being passed on to clients. The application of the reverse-charge system, meaning that the client does not pay VAT to the supplier, removes the opportunity for this form of tax evasion. (O.L./transl.fl)