The European Association of CCP Clearing Houses joined a joint industry call urging the European Commission and EU Member States to keep the EU VAT Directive Article 199a derogation that allows the Domestic Reverse Charge Mechanism (DRCM) for wholesale business-to-business trading in electricity, gas, emission allowances and related environmental and energy attributes, including transfers of certificates such as Guarantees of Origin. The statement warns that the derogation is due to expire on 31 December 2026 while no equivalent, fully operational EU-level alternative is in place. The call highlights the ongoing risk of Missing Trader Intra-Community (MTIC) fraud in these markets and argues that the DRCM has been an effective and proportionate tool by shifting the VAT collection obligation from supplier to buyer, thereby removing the core incentive for missing trader schemes. It points to the introduction of the DRCM for emission allowance trading in 2011 and for electricity and gas trading and energy certificate transfers in 2013, and cites the disruption caused by carbon-market carousel fraud in 2009-2010 that extracted billions of EUR in illicit refunds; it also notes continued Member State take-up, including Hungary extending the DRCM to gas supplies from 1 January 2025. The associations call for either a permanent derogation until definitive EU VAT reform is implemented or an extension of at least ten years, for comprehensive and consistent application of the DRCM across all Member States, and for explicit clarification of which gas and electricity certificates are covered under Article 199a, potentially via EU VAT Committee guidance accompanied by a non-exhaustive list of relevant certificates.
European Association of CCP Clearing Houses 2026-03-03
European Association of CCP Clearing Houses urges EU to extend domestic reverse charge protections against VAT fraud in energy and emissions trading beyond 2026
The European Association of CCP Clearing Houses and other industry groups urged the European Commission and EU Member States to maintain the EU VAT Directive Article 199a derogation, allowing the Domestic Reverse Charge Mechanism (DRCM) for wholesale trading in electricity, gas, and related certificates. They warn of Missing Trader Intra-Community fraud risks and highlight DRCM's effectiveness in mitigating them. The associations call for a permanent derogation or a ten-year extension, consistent application across Member States, and clarification on the certificates covered under Article 199a.