VAT Reverse Charge Extension: Articles 199a and 199b to June 2030

On 1 October 2026 the European Commission adopted COM(2026) 515, a proposal for a Council directive that would let Member States keep using two VAT anti-fraud tools until 30 June 2030: the optional reverse charge mechanism in Article 199a of the VAT Directive and the Quick Reaction Mechanism (QRM) in Article 199b. Under the Directive as it stands, both stop applying on 31 December 2026. The VAT reverse charge extension is a short text, two amendments and an entry-into-force clause, and DG TAXUD presented it on 9 October 2026 as a bridge to the digital reporting rules of the VAT in the Digital Age (ViDA) package.

The stakes sit in domestic invoicing. According to the replies to the Commission’s 2026 questionnaire, every Member State except Malta applies the reverse charge to at least one Article 199a category, and 22 apply it to transfers of greenhouse gas emission allowances. If the option lapsed without replacement, the general rule in Article 193, under which the supplier is liable for the VAT, would govern those domestic supplies again unless a Member State held some other legal basis. The customer-side self-accounting built into ERP tax codes and VAT return mappings would lose its footing. For banks and investment firms that trade allowances, energy or metals, and for any financial firm buying phones, laptops or telecom services in a Member State that uses those categories, the proposal decides whether year-end brings a configuration change.

Payment service providers face a different question, and the answer is a boundary. The proposal amends only Articles 199a and 199b. The CESOP payment-data rules in Articles 243a to 243d of the VAT Directive and the CESOP provisions of Regulation (EU) No 904/2010 sit outside it and run on their own calendar.

Related reading: VAT in the Digital Age (ViDA): E-Invoicing and Reporting Timeline

Key dates for the VAT reverse charge extension

• 1 October 2026: the Commission adopts COM(2026) 515 (interinstitutional file 2026/0292(CNS)). The Council records receipt the same day in Council document 13970/26, dated 2 October 2026.
• 9 October 2026: DG TAXUD publishes its news item on the proposal.
• 31 December 2026: current end of the Article 199a(1) option and of the QRM under Article 199b(6), as set by Council Directive (EU) 2022/890.
• Twentieth day after publication in the Official Journal: entry into force of the amending directive (Article 2 of the proposal). No publication date exists yet.
• 30 June 2030: proposed new end date for both mechanisms.
• 1 July 2030: the ViDA digital reporting requirements (DRR) apply to cross-border business-to-business transactions under Directive (EU) 2025/516.
• 1 January 2035: latest application date under the transitional provision in Article 6(5) of Directive (EU) 2025/516 for aligning domestic digital real-time transaction reporting obligations with the EU model and standards. The provision is limited to Member States that meet its conditions, including qualifying domestic reporting obligations or authorisations existing before 1 January 2024.

The proposed end date and the DRR start date are consecutive days. That is deliberate. The explanatory memorandum says that until the new system is in place from 1 July 2030, it is “reasonable and prudent” to prolong Articles 199a and 199b.

31 December 2026 or 30 June 2026: reading the expiry date correctly

The DG TAXUD news item says the two tools “were due to expire on 30 June 2026”. The legal texts point elsewhere. Recital 1 of the proposal states that the application period of both mechanisms “expires on 31 December 2026”. The explanatory memorandum says the 2022 prolongation ran “until 31 December 2026”. The Spanish tax agency’s note on Directive (EU) 2022/890 records the same end date for both mechanisms. The operative date is the one written into the amended Directive: 31 December 2026.

The six months between the two dates matter to anyone deciding whether national reverse-charge rules have been running without an EU basis since July. On the Directive text they have not. A tax team working from the news item alone could reach the opposite conclusion and start unwinding tax codes that are still lawful, which is exactly the disruption the extension is meant to avoid.

What Articles 199a and 199b let Member States do

Article 193 makes the supplier liable for VAT. Article 199a is a derogation from that rule: for the supplies listed in its paragraph 1, a Member State may make the taxable person receiving the supply liable instead. The customer accounts for the VAT in its own return and, to the extent it has a right of deduction, deducts it in the same return. The target is missing trader intra-Community (MTIC) fraud. As the explanatory memorandum describes it, a trader acquires goods VAT-free from another Member State, sells them on domestically with VAT on the invoice, and disappears before paying that VAT to the tax authority, while the customer acting in good faith deducts it. Under a domestic reverse charge the supplier never collects the VAT, so there is nothing to disappear with.

The option is domestic and voluntary. Each Member State picks the categories it switches on and may lay down conditions for applying the mechanism under Article 199a(1a). The EPRS study published on 22 June 2026 flags the resulting differences in sector definitions, thresholds and procedures across the EU as a source of compliance cost and legal uncertainty for businesses. Two further rules travel with the option. Article 199a(1b) makes the use of the mechanism for points (c) to (j) subject to “appropriate and effective reporting obligations” on the taxable persons who supply the goods or services concerned. Article 199a(2) requires a Member State to inform the VAT Committee when it introduces the mechanism, including its scope, accompanying measures and the criteria for evaluating it.

The counts come from the Member State replies reported in the explanatory memorandum of COM(2026) 515. The EPRS study, built on its own fieldwork, puts telecommunication services at 4 Member States. The explanatory memorandum gives counts only. The EPRS study shows in its Figure 2 how many Article 199a categories each Member State applies, and Table 14 in its Annex 3 lists the measures in force in 2026 by Member State and supply category, with the applicable thresholds. The table here says how common a category is, and the rule that applies to a given entity still has to be read in national law.

Article 199b works differently. In cases of imperative urgency, a Member State may designate the recipient as liable for VAT on specific supplies to combat sudden and massive fraud liable to lead to considerable and irreparable financial losses, in sectors outside the Article 199a list. The measure must come with appropriate control measures on the suppliers concerned and may last no more than nine months. The Commission has one month either to deliver a negative opinion or to confirm in writing that it does not object, and the Member State may apply the measure from receipt of that confirmation. The explanatory memorandum describes the QRM as a bridge to an ordinary derogation under Article 395, which can take up to six months and needs a Commission proposal and unanimous Council adoption.

What COM(2026) 515 amends, sentence by sentence

Article 1(1) replaces the introductory wording of Article 199a(1) so that it reads: “Until 30 June 2030, Member States may provide that the person liable for the payment of VAT is the taxable person to whom any of the following supplies are made”. Article 1(2) replaces Article 199b(6) so that the QRM special measure “shall apply until 30 June 2030”. Article 2 provides for entry into force on the twentieth day following publication in the Official Journal, and Article 3 addresses the directive to the Member States.

What the text leaves out is just as useful to a tax team, because each absence rules out an assumption. The list in points (a) to (j) is unchanged. Supplies outside Article 199a may nevertheless be covered by other reverse-charge provisions of the VAT Directive, including Article 199, or by a valid derogation under Article 395. The QRM remains a separate temporary mechanism for qualifying cases of sudden and massive VAT fraud. Paragraphs (1a), (1b) and (2) of Article 199a are untouched: national conditions, the supplier-reporting rule for points (c) to (j) and the VAT Committee information duty stay as drafted. The option stays an option, and nothing obliges a Member State to keep applying a category it uses today.

There is no transposition article and no retroactive-application clause. Whether a national rule keeps running past 31 December 2026 depends on how that rule is drafted: one that tracks the Directive’s period follows whatever period applies, while one that hard-codes 31 December 2026 would need its own amendment. A national rule that stays on the statute book does not by itself supply the EU authorisation. Article 199a(1), as amended by Directive (EU) 2022/890, limits the Member States’ option to 31 December 2026, and COM(2026) 515 proposes to change that limit without having changed it yet.

The permanent reverse-charge cases in Article 199, such as certain construction services and supplies of scrap, have no end date and sit outside the proposal. So does Article 196, which makes the customer liable for business-to-business services received from a supplier not established in its Member State.

Why June 2030: the hand-off to ViDA

The extension is the latest in a chain that has kept both articles alive on fixed-term permissions since 2010 and 2013.

The 2018 extension was timed to coincide with the expected start of the so-called definitive VAT system for intra-EU trade in goods. That system never arrived. The Commission withdrew its proposals in its 2025 work programme, by which time it had already developed the ViDA package. The Council adopted ViDA on 11 March 2025; it was published in the Official Journal on 25 March 2025 and entered into force on 14 April 2025. Under its digital reporting requirements, cross-border business-to-business transactions will from 1 July 2030 require near real-time digital reporting combined with structured electronic invoices in a standard EU format. The explanatory memorandum adds that tax authorities will then have access to transaction-based information, “including bank details”, through a centralised hub it calls central VIES.

ViDA also lets Member States introduce domestic e-invoicing obligations, a possibility the DG TAXUD timeline dates to the package’s entry into force. Recital 4 of the proposal links the extension to both strands: Member States need time to put the cross-border DRR in place “and to introduce or adapt domestic e-invoicing rules”. Our ViDA e-invoicing and reporting timeline sets out the full sequence of ViDA dates.

One question the proposal leaves open is what happens to domestic reverse charges after 30 June 2030. The EU-level DRR covers cross-border business-to-business transactions. The domestic leg of a carousel, the sale on which the missing trader charges VAT, is covered by digital controls only where a Member State runs its own e-invoicing or reporting system. The EPRS study framed the post-2026 choice as “continuity with targeted reform”. COM(2026) 515 chose continuity and set a date; it says nothing about the period after that date.

Where banks and trading desks meet the reverse charge

Emission allowances are the category with the widest uptake, and they are a traded instrument. A bank or investment firm that buys or sells EU ETS allowances as a taxable person in one of the 22 Member States applying point (a) handles domestic transfers under the reverse charge: the seller invoices without VAT and the buyer self-accounts. The same pattern applies where a desk trades physical gas or electricity sold to a taxable dealer (12 Member States), gas and electricity certificates (10) or raw and semi-finished metals (12) in a Member State that uses those categories. Point (j) carves out supplies that fall under the special scheme for investment gold in Articles 344 to 356, so investment gold follows its own rules.

The explanatory memorandum ties the ETS directly to the extension. It calls it “essential that the ETS is further protected from VAT fraud”, in particular in light of the extension to the so-called ETS2 system. It does not say whether national reverse-charge rules written for point (a) reach ETS2 allowances. That turns on how each Member State drafted its rule, and the proposal leaves it open.

For a credit institution without a trading desk, the contact point sits in accounts payable. Where a bank, payment institution or e-money institution buys mobile phones, tablets, laptops or telecommunication services from a domestic supplier in a Member State applying points (c), (g) or (h), the invoice can arrive without VAT and the buyer has to account for it. Whether a given purchase is caught depends on the national conditions, so a value threshold or a product definition can put two similar invoices on different sides of the line.

The reverse charge moves the payment of VAT from the supplier to the customer. It leaves the recoverable amount where it was. The explanatory memorandum says the result is neutral for the customer “insofar this person has a full right of deduction”. A largely exempt credit institution does not have that full right.

My reading: under a domestic reverse charge such an institution self-assesses the output VAT and deducts only its recoverable share in the same return, so the irrecoverable cost matches what it would have borne on a normal invoice, and the payment now runs through the institution’s own VAT return. The control risk shifts with it. A reverse-charge purchase that is booked as a VAT-free invoice, with no self-assessment, understates the institution’s own liability.

CESOP and payment data: the part of the anti-fraud toolkit the proposal leaves alone

Payment data reporting sits on a separate legal track. Council Directive (EU) 2020/284 inserted Articles 243a to 243d into the VAT Directive, and Council Regulation (EU) 2020/283 amended Regulation (EU) No 904/2010 to create the central electronic system of payment information, CESOP. Both apply from 1 January 2024. PSPs keep records of cross-border payments and report them where, in a calendar quarter, they provide payment services corresponding to more than 25 cross-border payments to the same payee, counted per Member State and per payee identifier under Article 243b(2); under Article 243b(3) the payer’s PSP is relieved of that duty for a payment where at least one of the payee’s PSPs is located in a Member State, though the payment still counts towards its threshold. Member States collect the data no later than the end of the month following the quarter and transmit it to CESOP by the tenth day of the second month following the quarter, under Article 24b of Regulation (EU) No 904/2010.

The two instruments share a purpose and differ in mechanics. The reverse charge changes who owes the VAT on a domestic supply. CESOP makes PSPs report payment flows that Eurofisc liaison officials use to find sellers who should be paying VAT and are not. COM(2026) 515 amends Articles 199a and 199b only, so the CESOP scope, data set and quarterly calendar continue exactly as before. Our CESOP reporting guide covers that quarterly cycle, and our note on CESOP filing errors and fixes covers the data-quality side.

A separate Commission exercise could change CESOP, and it is easy to conflate with this proposal. On 18 August 2025 the Commission published two questionnaires asking Member States and PSPs about letting PSPs report only to the Member State where their headquarters are located, either as a mandatory route or as an option. Its summary of the results counts around 350 of the circa 1,700 PSPs reporting payment data as reporting to two or more Member States, and estimates a EUR 40 million reduction in those PSPs’ annual operating costs if such a change were introduced. Credit institutions in the survey preferred the status quo, while most payment and e-money institutions favoured home-Member-State reporting. The summary reports survey results and cost estimates only, and COM(2026) 515 contains nothing on the idea.

PSPs that also sell to consumers across borders have a third set of obligations under the e-commerce VAT rules, covered in our guide to EU e-commerce VAT, OSS, IOSS and CESOP. None of those obligations moves with this proposal either.

The Quick Reaction Mechanism: extended, though never used

The QRM has never been activated. The EPRS study says so directly, and the explanatory memorandum records that 18 Member States still considered it useful to keep “in the same or slightly amended form”. Recital 3 adds that Member States considered it useful “as a deterrent”, because it lets the Commission react very quickly to sudden and massive fraud. The EPRS study was cooler. It found the mechanism “generally considered difficult to use in practice” and recommended prolonging it only if it becomes “more practical and operationally usable”. The Commission’s proposal extends it unchanged.

For a tax team the relevant feature is speed. If a Member State did activate the QRM, a domestic reverse charge could apply to a sector outside the Article 199a list as soon as the Commission confirmed in writing that it does not object, a confirmation due within one month of the Commission telling Member States that it holds all the information it needs, for up to nine months. No ERP tax-code table anticipates the category in advance, because the category is defined only when the fraud appears.

How the proposal becomes law, and the year-end timing risk

The legal basis is Article 113 TFEU, so the Council adopts the directive unanimously under a special legislative procedure after consulting the European Parliament and the European Economic and Social Committee. The proposal’s citations still carry blank placeholders for both opinions, and the DG TAXUD news item says only that the proposal “will now be discussed by the Council”. It gives no adoption date.

Because the text enters into force on the twentieth day after publication and contains no retroactive-application clause, the extension takes effect without a gap only if the Council adopts it and it is published in the Official Journal early enough for that twentieth day to fall on or before 31 December 2026. The 2022 round shows how late these extensions can land: Directive (EU) 2022/890 was adopted on 3 June 2022 and published on 8 June 2022, for mechanisms whose application period ended on 30 June 2022.

A working list for tax reporting teams before 31 December 2026

The proposal sits under several live processes. The items below are a working list for a VAT or indirect-tax reporting function at a bank, investment firm or PSP.

• Inventory. For each Member State where the entity is VAT-registered, record which Article 199a categories the national law applies and on what conditions. The Commission’s counts show how common a category is, not which Member States apply it, so the inventory has to come from national law.
• National end dates. Check whether each national provision refers to the Directive’s application period or specifies its own expiry date. A national provision may remain formally in force after the EU authorisation expires, but that does not independently authorise continued use of the Article 199a derogation. Confirm both the applicable EU authorisation and the national legal basis before continuing or changing reverse-charge treatment.
• Tax codes and return mappings. Reverse-charge purchase and sale codes, and the VAT return boxes they feed, stay in use while the national rule stays in force and the Article 199a(1) option remains available to the Member State. Any change at year-end should follow confirmation of both the national legal basis and the EU authorisation position.
• Supplier-side reporting. Where the entity supplies goods or services in points (c) to (j), for example energy or metals sold by a trading desk, the national reporting obligation under Article 199a(1b) continues for as long as the Member State keeps the mechanism.
• Council tracking. Follow interinstitutional file 2026/0292(CNS) through the Council and watch for publication in the Official Journal.
• CESOP. No change. The quarterly calendar and data set stay as they are.

Frequently Asked Questions

What happens to supplies made in early 2027 if the directive is published too late to enter into force by 31 December 2026?

The proposal is silent on that case. It contains no retroactive-application clause, and the Council could add transitional wording before adoption. How a Member State treats supplies made between 1 January 2027 and a late entry into force would then depend on its national law and on any such wording. A team facing that scenario would need its national tax authority’s position before changing invoicing.

Does the extension matter for cross-border trades between two businesses?

Article 199a decides who is liable on supplies within one Member State, and the explanatory memorandum describes it in those domestic terms. Cross-border flows are allocated by other provisions of the VAT Directive, for example Article 196 for business-to-business services received from a supplier not established in the customer’s Member State. The proposal amends none of those provisions.

Does a Member State have to notify the VAT Committee again when the extension takes effect?

The proposal leaves Article 199a(2) unchanged, and that paragraph ties the information duty to the introduction of the mechanism. The proposal is silent on renewed notification for an extension of an existing measure.

A reverse-charged supply is paid by bank transfer. Does its VAT treatment affect our CESOP reporting?

CESOP classifies a payment as cross-border by the location of the payer and the payee, determined from identifiers such as the IBAN or BIC under Article 243c, and then applies the more-than-25-payments test per payee. The VAT treatment of the underlying supply plays no part in either step. The Commission’s CESOP guidelines treat a payment whose identifiers place payer and payee in the same Member State as national, and it is not reported.

Is investment gold traded by a bank caught by point (j)?

Point (j) excludes supplies covered by the special scheme for investment gold in Articles 344 to 356, as well as supplies under the special arrangements for second-hand goods, works of art, collectors’ items and antiques (Articles 311 to 343) and metals already covered by point (d) of Article 199(1). The extension does not alter those exclusions.

Does the QRM extension change the nine-month limit on a QRM measure?

No. The proposal replaces only paragraph 6 of Article 199b, the end date. The nine-month cap in paragraph 1, the one-month Commission response period and the parallel Article 395 route are unchanged.

Related Articles

• VAT in the Digital Age (ViDA): E-Invoicing and Reporting Timeline: the Directive (EU) 2025/516 timeline for structured e-invoicing and digital VAT reporting from 1 July 2030.
• CESOP Reporting Explained: the quarterly cross-border payment reporting obligation for EU payment service providers.
• CESOP 2026 Filing Errors and Fixes: common data-quality problems in CESOP payment data messages and how to correct them.
• EU E-Commerce VAT at Five: OSS, IOSS and CESOP Obligations: OSS, IOSS and the deemed-supplier rule for sellers, marketplaces and PSPs.
• EU Tax Simplification Package 2026: What the DAC Recast Means for DAC6, DAC7 and CESOP Reporting: which tax reporting obligations the 2026 DAC recast proposal would change and which it leaves alone.

Key Takeaways

• Plan against 31 December 2026, the end date in Directive (EU) 2022/890, until an amending directive appears in the Official Journal; reverse-charge codes do not need unwinding on the strength of the news item’s 30 June 2026 date.
• Budget no new categories and no new relief from COM(2026) 515: it would move two end dates to 30 June 2030 and leave the ten categories, national conditions and points (c) to (j) supplier reporting as they are.
• Build the year-end decision on national law and the EU authorisation: map each reverse-charge rule the entity relies on to its Article 199a point, check whether its text carries its own end date, and confirm which Article 199a(1) period applies.
• Partially exempt banks: check that reverse-charge purchases of phones, laptops and telecom services post self-assessed VAT, since an unbooked reverse charge understates the bank’s own liability.
• Trading desks in emission allowances, energy or metals: domestic reverse charges after 31 December 2026 depend on timely Council adoption and on each national rule’s wording; ETS2 coverage needs a national answer.
• PSPs: keep the CESOP quarterly cycle unchanged; the home-Member-State single-reporting idea was surveyed in August 2025 and sits outside COM(2026) 515.
• Diary 30 June 2030 against the 1 July 2030 DRR start: the proposal sets no rule for domestic reverse charges after that date.

Sources and References

• European Commission, Proposal for a Council Directive amending Directive 2006/112/EC as regards the extension of the application period of the optional reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud and of the Quick Reaction Mechanism against VAT fraud, COM(2026) 515 final, 1 October 2026, 2026/0292(CNS): PDF
• European Commission, DG TAXUD, Commission proposes extending key anti-VAT fraud tools until June 2030, 9 October 2026: taxation-customs.ec.europa.eu
• Council of the European Union, document 13970/26 (transmission of COM(2026) 515), 2 October 2026: data.consilium.europa.eu
• Council Directive 2006/112/EC on the common system of value added tax (VAT Directive): ELI; consolidated text of 14 April 2025, showing Articles 199a and 199b with the 31 December 2026 end date: EUR-Lex
• Council Directive (EU) 2022/890 of 3 June 2022 (extension of Articles 199a and 199b to 31 December 2026): EUR-Lex; Agencia Tributaria note on Directive (EU) 2022/890: sede.agenciatributaria.gob.es
• Council Directives 2010/23/EU, 2013/43/EU, 2013/42/EU and (EU) 2018/1695 (introduction and earlier extensions of Articles 199a and 199b), as cited in footnotes 1 to 4 of COM(2026) 515 final
• Council Directive (EU) 2025/516 of 11 March 2025 as regards VAT rules for the digital age: ELI
• European Commission, DG TAXUD, VAT in the Digital Age (ViDA): taxation-customs.ec.europa.eu
• European Parliamentary Research Service, The implementation and impact of the VAT reverse charge mechanism in the EU, 22 June 2026: eprs.europarl.europa.eu
• Treaty on the Functioning of the European Union, Article 113: EUR-Lex
• Council Directive (EU) 2020/284 of 18 February 2020 (requirements for payment service providers): EUR-Lex
• Council Regulation (EU) 2020/283 of 18 February 2020 (CESOP, amending Regulation (EU) No 904/2010): EUR-Lex
• European Commission, DG TAXUD, Guidelines for the reporting of payment data from payment service providers and transmission to CESOP: taxation-customs.ec.europa.eu
• European Commission, CESOP simplification: key results of the surveys with Member States and payment service providers (published by ANAF): static.anaf.ro

Before 31 December 2026: the national-law check that decides year-end

COM(2026) 515 would give the reverse charge and the QRM another three and a half years and change nothing else. Whether a bank, trading desk or PSP sees any difference on 1 January 2027 depends on two things outside the proposal’s text: Council adoption and publication in time for the twentieth-day entry into force, and the wording of each national reverse-charge rule.

The artifact to produce now is the Member State by category inventory of reverse-charge rules the entity relies on, with each rule’s national end-date wording recorded beside it, ready to set against the Official Journal publication date when it comes.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.