BERLIN (Thomson Financial) - German Finance Minister Peer Steinbrueck, whose country holds the EU's rotating presidency, said there was 'no chance' of a deal between EU member states on a reverse charge VAT system to tackle VAT fraud as the proposal currently stands.
'Reverse charge VAT stands no chance of being adopted as a whole series of countries want various issues resolved,' he told a press conference at the two-day informal meeting of European finance ministers here.
He added that 'as far as Germany is concerned, we will be looking at a more accommodative basis for the reverse charge model'.
A 'reverse charge' is where the purchaser must claim for a VAT refund, whereas currently the seller can sell goods without VAT and then claim for a refund.
Austria and Germany have been seeking an optional provision in the VAT directive to apply a reverse charge system for domestic transactions.
Germany has tried a pilot scheme on reverse charge VAT in various German federal states. Steinbrueck said the system proved to be a 'most effective way of combating VAT fraud' and would save Germany 3.5-3.6 bln eur a year.
VAT fraud, otherwise known as 'carousel fraud', is where high-value goods such as mobile phones are imported free of VAT from other EU countries, sell them with tax added, and do not pass the tax on to the country's authorities.
The matter will be discussed further among EU member states at the next formal meeting of EU finance ministers next month, Steinbrueck said.
Yesterday, Spanish finance minister Pedro Solbes said a reverse charge VAT system could work but only if applied to certain specific products. jessica.mortimer@thomson.com jkm/fr/fr COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.