Bulgaria has confirmed it is joining four other countries calling for the widespread introduction of the domestic reverse charge to help fight VAT. In addition to Bulgaria, the countries backing the measure include: Austria; Hungary, Slovakia and the Czech Republic.
It is anticipated that Germany will join the group as it has already sat in attendance on a number of the meetings so far.
The reverse charge is commonly used on intra-community supplies across EU countries to reduce the requirement for companies to register in multiple countries. It shifts the burden of VAT reporting from the supplier to the customer and effectively means there is no VAT paid. Since the huge growth in VAT fraud exploiting this regime, countries have been introducing it on sales between businesses in the same country. So far, this has been restricted by the European Commission to sectors linked to fraud such as mobile phones, computer chips, carbon trading licences and previous metals.
The five countries are now calling for it to be extended to all transactions above €10,000. Their aim is to reduce fraud in the region – EU VAT fraud is estimated at over €100 billion per annum.