ECOFIN Council decided to extend the derogation in Article 199a of the VAT Directive which allows Member States to apply the domestic reverse charge mechanism (DRCM) to transactions in electricity, gas and emission allowances until 30 June 2022.
The domestic reverse charge mechanism is a vital tool to help prevent missing trader intra- community fraud in highly liquid energy and emissions markets in Europe. The extension, as set out in the Commission’s legislative proposal of 25 May 20181, ensures that Member States can continue to apply the domestic reverse charge mechanism in specific sectors, including electricity, gas and emissions. Given that Article 199a contains a sunset clause, the derogation would have run out by the end of the year, had the Council not proactively prolonged it.