European Parliament study, 22 June 2026
The European Parliament has published a study examining the effects of the reverse charge mechanism under articles 199a and 199b of VAT Directive 2006/112/CE.
These provisions allow Member States to depart from the normal rule that the supplier collects VAT. In situations presenting a particular fraud risk, they can shift the responsibility to the customer instead.
The study assesses how effectively this mechanism achieves its primary objective: combating VAT fraud, particularly carousel fraud. It finds that reverse charge reduces risks associated with supplier insolvency or disappearance, by eliminating the risk that collected VAT will not be remitted.
However, the Parliament highlights the mechanism’s limitations. Its application varies across Member States, fragmenting the common VAT system and creating additional compliance burdens for businesses operating in multiple jurisdictions.
The study also notes that reverse charge remains a targeted anti-fraud tool. It cannot replace a broader VAT system reform, which would require better data exploitation and stronger cooperation between Tax Authorities.
