EU Proposes to Extend the Optional Reverse Charge Mechanism and the Quick Reaction Mechanism Until 30 June 2030

In October 2026, the European Commission proposed a Council Directive (COM(2026) 515 final) amending the VAT Directive (2006/112/EC). The proposal would extend the optional reverse charge mechanism (RCM) and the Quick Reaction Mechanism (QRM), two VAT anti-fraud tools that are currently due to expire on 31 December 2026.

What Is the Optional Reverse Charge Mechanism Under Article 199a?

Article 199a of the VAT Directive allows Member States to designate the taxable person receiving a supply, rather than the supplier, as the person liable for VAT. It applies to certain supplies that are particularly exposed to missing trader intra-Community (MTIC) fraud. Examples include greenhouse gas emission allowances, mobile phones, integrated circuit devices, and gas and electricity supplied to taxable dealers.

Because VAT is not charged on the invoice, the supplier cannot collect it and then disappear without paying it to the tax authorities.

What Is the Quick Reaction Mechanism Under Article 199b?

The QRM allows a Member State, in cases of imperative urgency, to introduce a temporary reverse charge for sectors not covered by Article 199a. This requires sudden and massive fraud to have occurred.

Once the Member State notifies the measure, the Commission has one month to respond. This is much faster than a standard derogation under Article 395, which requires unanimity in the Council and can take up to six months.

What Does the Proposal Change?

The proposal only replaces the expiry date in both articles with 30 June 2030. It does not change the categories of goods and services covered or the conditions of application.

This would be the latest in a series of extensions. The most recent one, through Directive (EU) 2022/890, extended both mechanisms until the end of 2026. That deadline was set while negotiations on the so-called definitive VAT system were still ongoing. Those negotiations did not lead to an agreement, and the Commission ultimately withdrew its proposals in its 2025 Work Programme.

The proposal still needs to be adopted unanimously by the Council, after consulting the European Parliament.

Why 30 June 2030?

The new date is aligned with the entry into application, on 1 July 2030, of the digital reporting requirements under the VAT in the Digital Age (ViDA) package.

From that date, intra-Community B2B transactions will require structured e-invoices and near real-time data reporting. Tax authorities will also be able to cross-check information at transaction level. The Commission considers that this system should contribute significantly to the fight against MTIC fraud. Until then, it proposes keeping the current mechanisms in place.

Which Member States Apply the Reverse Charge Mechanism?

The proposal is based on a consultation of all Member States:

• All Member States except Malta apply the reverse charge to at least one category under Article 199a.
• The most widely used category is emission allowances (22 Member States), followed by mobile phones (15).
• 24 Member States consider that the mechanism has been useful in combating fraud.
• 18 Member States support keeping the QRM, in its current or a slightly amended form, even though it has never been used.

The Commission also refers to the European Parliamentary Research Service (EPRS) study The implementation and impact of the VAT reverse charge mechanism in the EU, published on 22 June 2026. According to the Commission, the study recommends maintaining both articles during the transition to ViDA. It also calls for their use to be reviewed regularly and justified by a demonstrated fraud risk.

How Marosa by Wolters Kluwer Can Help You

At Marosa by Wolters Kluwer, we are closely monitoring the progress of this proposal through the Council and will update this article as it moves forward. Our team already supports businesses applying domestic reverse charge rules across multiple Member States and can help you assess how this extension affects your operations.

Have questions about the reverse charge in your Member States? Speak to one of our VAT experts.