Austria is to introduce a reverse charge on a number of goods to combat value-added tax fraud, the nation’s Minister for Finance, Maria Fekter, has announced.
Fekter explained that a reverse charge will apply to a list of fraud-prone goods following the vote from the EU Council of Finance Ministers in June permitting states greater freedom to shift the liability to account for VAT from the supplier to the recipient to tackle missing trader intra-community (MTIC) fraud.
Fekter explained the mechanism is “the only way we can avoid sales tax losses and tax fraud scenarios organized VAT fraud, especially carousel fraud and also prevent these frauds [from taking] root in Austria.”
The reverse charge removes the potential for fraud by placing the obligation to account for VAT on the taxable person acquiring the goods or services, who is required to contemporaneously account for both input and output tax. The mechanism removes the chance for fraudsters to perpetrate MTIC, where goods are sold across borders in the European Union (without VAT) and sold to the domestic market inclusive of VAT, normally at a discount. MTIC occurs when VAT is collected on the sale of imported goods to the domestic market inclusive of VAT but the tax collected is never remitted to tax authorities and the seller disappears.
From December 31, 2013, a reverse charge shall apply to:
- Sales of video games consoles, laptops and tablet computers on transactions worth at least EUR5,000 (USD6,900);
- Supplies of gas and electricity to taxable persons for resale;
- Gas and electricity certificates;
- Certain supplies of metals, raw and semi-finished products;
- Investment gold, as defined in subsection 24a, Section 5 and Section 6 of the UStG 1994, Austria’s Value Added Tax Act.