FIA and 17 other trade associations active in energy markets jointly submitted a statement highlighting an urgent need to confirm the extension of the VAT derogation for a domestic reverse charge mechanism (“DRCM”) in European electricity, gas and emission allowance markets. The option for member states to apply DRCM was introduced to combat VAT fraud in those markets and, unless extended, will expire on 31 December 2018. Before the introduction of DRCM, billions of VAT had been defrauded from European Exchequers. The associations recommend an extension of the derogation by at least five years, a confirmation that DCRM also applies to Certificates of Origin, and comprehensive application of DRCM across all EU member states to ensure market participants can maintain trust in the integrity and safety of electricity, gas and emission allowance markets.
