The European Parliament's FISC subcommittee held a public hearing on 2 June 2026 on combating VAT fraud, exposing divergences between experts favouring the reverse charge mechanism (RCM) as a temporary tool and those pushing for permanent digital solutions under the VIDA package.
Professor Rita De La Feria (University of Leeds) argued that RCM is not a long-term solution as it undermines VAT's third-party reporting advantage and can transform VAT into a retail sales tax. She stressed that fraud is now widely seen as unacceptable, but perceptions of prevalence remain high, partly due to focus on multinational tax avoidance. She called for better legal design, harmonization, and fewer exceptions.
Cristina Veinsier (Accountancy Europe) noted RCM has helped combat fraud in sectors like construction and mobile devices but creates administrative burdens and risks shifting fraud to other sectors. She suggested prolonging RCM until digital reporting requirements (DRR) under VIDA are fully operational (2030) and keeping it for fraudulent sectors even after.
Marta Val Jimenez (Repsol) shared Spain's experience in the fuel sector, where criminal networks controlled the entire supply chain, making RCM ineffective. Spain instead imposed guarantees, joint liability for excise warehouse holders, monthly VAT settlements, and near-real-time invoicing (SII system), which improved fraud detection.
MEP Herbert Dorfmann (EPP, Italy) asked about linking RCM phase-out with VIDA implementation and the cost burden of RCM on SMEs.
The hearing highlighted divergences between those favouring RCM as a temporary tool and those pushing for digital solutions. Next steps include the VIDA package's DRR implementation by 2030 and possible prolongation of RCM until then. Affected stakeholders include businesses (especially SMEs), tax authorities, and consumers.