What changed in October 2026?
On October 1, 2026, the European Commission adopted a proposal to extend the optional Reverse Charge Mechanism (RCM) and the Quick Reaction Mechanism (QRM) against VAT fraud until June 30, 2030. The Commission published the proposal on October 9, 2026. The mechanisms had been due to expire on June 30, 2026, and the proposal would keep them available while the EU’s broader VAT in the Digital Age reforms are implemented.
This is a legislative proposal, not yet an enacted extension. Businesses should therefore distinguish between current national measures, the proposed continuation, and the future permanent framework.
How the mechanisms work
Under the RCM, a Member State may shift responsibility for accounting for VAT from the supplier to the customer in specified fraud-sensitive sectors. The customer reports the output VAT, normally alongside any recoverable input VAT, rather than paying VAT to the supplier.
The QRM provides a faster response option when sudden and significant VAT fraud is detected in another sector, subject to EU conditions and procedural safeguards.
Practical example
Assume a company sells goods in a sector covered by a national reverse-charge rule. A €100,000 invoice may be issued without charging VAT, provided the invoice contains the required reverse-charge reference and the customer accounts for the VAT. A failure to apply the mechanism correctly can create an underpayment exposure, even where the customer could otherwise have recovered the VAT.
Planning actions for businesses
- Map affected transactions: Identify products, services, countries, and customer types that may fall within national reverse-charge rules.
- Review invoicing logic: Ensure ERP systems can suppress VAT, insert the required wording, and retain evidence supporting the treatment.
- Monitor national implementation: The proposal does not itself create a uniform transaction rule; Member States apply the mechanisms under the EU framework.
- Prepare for digital reporting: The Commission links the temporary tools to the future VAT in the Digital Age framework, including mandatory e-invoicing and real-time reporting for specified cross-border supplies.
- Document customer status: Maintain VAT identification and transaction records sufficient to support the treatment during an audit.
The main planning message is continuity with uncertainty: companies should not assume that temporary anti-fraud measures will disappear, but they should also avoid treating the October proposal as final law until the Council completes the legislative process.