On October 1, 2026, the EU Commission submitted a proposal for a Council Directive amending the EU VAT Directive 2006/112/EC(VAT Directive), as regards the extension of the application period of the optional reverse charge mechanism(RCM) in relation to the supplies of goods and services that are prone to fraud, and of the quick reaction mechanism(QRM) against VAT fraud.
Background
Member States (MS) can voluntarily mandate cross-country applicability of Article 199a. When the MS chooses this path, the suppliers are obliged to use the RCM for those domestic supplies. The use of RCM through Article 199a reduces the % of Missing Trader VAT fraud for the types of supplies that have been previously identified by the respective MS as the types prone to fraud.
The QRM is a different compliance tool against tax fraud. The usage of QRM is under Article 199b of the VAT Directive. Member State which got a permission from the Commission to mandate the application of the QRM in the country have the possibility to combat VAT fraud in the sectors where sudden and unexpected fraud occurred, concerning supplies of goods and services which are not listed under Article 199a of the VAT Directive.
The permission to adhere to the QRM is part of the very quick procedure. Within a month from the submission of the application, the Commission needs to decide whether it will give a asked derogatory right to the MS applicant for the use of the QRM.
Timeline
The Commission is asking the Council to extend the applicability period for RCM and QRM(under Articles 199a and 199b of the VAT Directive) until June 30, 2030.
Impact
If the Council accepts the proposal for a Directive to amend the VAT Directive, and greenlights the extension for the applicability of the RCM and QRM, Member States will have the right to mandate the use of these compliance tools within domestic trade.
What’s Next
The EU Council should decide in the upcoming period on the “destiny” of the Commission’s proposal.