Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-03-08-Speech-2-656-000"
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"en.20110308.29.2-656-000"2
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"Because of the VAT fraud situation in relation to certain agricultural products, the Commission is in contact with Romania in order to determine the most appropriate way forward in dealing with this problem.
One of the possible solutions to deal with the so-called carousel fraud in this sector would be to apply the reverse charge mechanism. Under this arrangement, which is not an exemption scheme, supplies remain taxed but the person liable for the payment of the VAT to the tax administration is no longer the supplier but the recipient taxpayer.
The fact that the recipient is liable to pay the tax instead of the supplier is the only modification to the standard regime, according to which a taxpayer supplying goods to another taxpayer collects the VAT and pays it to the State while the recipient taxpayer can deduct this amount via his VAT declaration.
Both under the standard and the reverse charge regimes, should the recipient be a final consumer, he will not be able to deduct VAT and will bear it entirely.
Therefore, VAT still remains neutral for taxpayers and there would be no distortion of competition. Because the recipient can simultaneously pay and deduct the very same amount in his VAT return, this modification has the merit of removing the need for an effective payment of the VAT to the tax administration. Therefore, it avoids fraud arrangements that are based on non-payment of the VAT by the supplier followed by deduction of the VAT by the customer, who is in possession of a valid invoice.
A downside of this system is the fact that it could create other risks of fraud, since all VAT would be collected at the last stage in the supply chain.
Therefore, such a system should, in the Commission’s view, preferably be limited to agricultural products which are normally sold to intermediaries – taxable persons – and not destined for supply to final consumers.
In any case, as this arrangement would deviate from the normal VAT rules set out in the VAT Directive, Romania would have to be granted a derogation by the Council on the basis of that directive; the Commission is still examining the issue."@en1
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