Prevention of Sales Tax Fraud in Power and Gas Trading: EEX welcomes Legislative Amendments in France and the Netherlands

Prevention of Sales Tax Fraud in Power and Gas Trading: EEX welcomes Legislative Amendments in France and the Netherlands


Following the introduction of the reverse charge procedure for trading in emission allowances in a large number of EU member states in the year 2010, France and the Netherlands have introduced corresponding tax law amendments for national power and gas trading transactions. The national procedures supplement international rules; however, in this context, they are limited to the French and Dutch wholesale markets. The sales tax treatment of the final consumers remains unchanged in both cases.
The national reverse charge procedure introduced in France can effectively help to prevent sales tax fraud. Under this procedure, the sales tax liability is transferred from the seller to the buyer so that the sales tax payment is moved to the end of the tax chain. The buyer does not pay sales tax to the seller but withholds it. The sales tax liability and the input tax are netted out accordingly. Moreover, the tax offices pay out input tax amounts much less frequently or they do not have to forego sales tax already incurred but not paid over.
The zero rating procedure for certain power and natural gas deliveries which will now be used in the Netherlands has a similar effect. In this context, the zero percent sales tax exclusively applies to power above a defined voltage and to natural gas above a defined pressure stage.
Iris Weidinger, Chief Financial Officer of EEX Group, comments: “Both procedures contribute to the more effective prevention of so-called VAT carousels than has been the case so far. EEX continues to advocate the preventative introduction of an adequate procedure throughout Europe in order to comprehensively prevent cases of fraud before significant tax damage occurs and the market is harmed.”
The European Energy Exchange AG (EEX) is the leading European energy exchange. It develops, operates and connects secure, liquid and transparent markets for energy and related products on which power, natural gas, CO2 emission allowances and coal are traded. The clearing house European Commodity Clearing AG (ECC) provides clearing and settlement of all trading transactions.