EU Commission proposes optional anti-fraud reverse charge for domestic goods supplies

In an attempt to prevent VAT fraud the EU commission has put forward a proposal which will allow EU member states to introduce the reverse charge on all domestic sales between businesses with a value over €10,000. Currently EU member states can only apply the reverse charge to sales in certain industries such as precious metals and mobile phones. If the proposal is accepted then it will mean the reverse charge can be applied across all sectors. The reverse charge allows the business customer to account for the VAT on the transaction in their own VAT reporting. This removes the requirement for the supplier to charge VAT on the transaction which means that no cash payments of the VAT amounts are exchanged.