European Association of CCP Clearing Houses calls for extending EU VAT reverse charge and quick reaction mechanisms beyond 31 December 2026

The European Association of CCP Clearing Houses (EACH) has published a position paper urging EU authorities to extend the optional VAT reverse charge mechanism and the related Quick Reaction Mechanism beyond 31 December 2026, and arguing that the sunset date should be removed. EACH says maintaining these tools would help limit VAT fraud in high-value commodities markets and reduce liquidity and operational costs for CCPs and clearing members, particularly in the clearing of electricity, gas and EU emission allowances. The paper explains that the reverse charge shifts VAT liability from seller to customer and can enable a nil VAT outcome by offsetting input and output VAT, improving traceability and limiting opportunities for missing-trader fraud. It notes that the mechanism, alongside the Quick Reaction Mechanism, was extended until 31 December 2026 under Directive (EU) 2022/890 amending the EU VAT Directive. EACH argues that, without a reverse charge for domestic supplies, EMIR-compliant CCPs can be forced to pre-finance VAT from their own liquidity for months in certain transaction chains, and that uncertainty about the post-2026 regime has already led some clearing houses to add VAT parameters to margin for 2027 deliveries, increasing clearing costs. EACH supports keeping the mechanisms in place beyond 2026 until a definitive EU VAT system is introduced, and says deleting the sunset date would avoid recurrent renewal exercises.