EUROMETREC urges Poland to adopt Reverse Charge VAT to prevent tax fraud in scrap trading

An Open Press Conference organized by Polish recycling associations (IGMNiR and IPHGZ) will be held in Warsaw on December 15, 2010 in a bid to encourage the Polish Parliament's adoption of a draft law on Reverse Charge VAT for scrap. The Press Conference will start at 12 noon in the Paris Room of the Sheraton Hotel, 2 Boleslaw Prus Street.

The Polish government is considering the adoption of a bill on Reverse Charge VAT in a political thrust to control VAT fraud in the scrap collection and trading sector following other Member State leads.

EUROMETREC – the European Metal Trade and Recycling Federation – supports its Polish national member association's promotion to apply the Reverse Charge procedure to scrap. In addition to the threat to national tax revenues, hundreds of fully licensed and authorised scrap companies across the EU are themselves put at risk by VAT fraud.

The scrap metal industry is important in the EU as it generates high volumes of sought-after raw materials for recycling and production of new products. If VAT legislation is not effective, the inherent structure of the scrap market together with the high value of materials traded can lead to substantial reduction of VAT income for the national budget.

The Reverse Charge VAT system has proven its effectiveness in preventing VAT fraud on scrap metal transactions in a number of European countries (e.g. France, Spain, Austria, Italy, Hungary, Slovakia and most recently Germany, amongst others), leading to a substantial drop in such fraud.

A considerable threat to state revenue collection, tax evasion should be tackled as a priority in the current economic situation. The decision to apply the Reverse Charge VAT system for scrap should not be overshadowed by other tax legislation issues.

Together with Polish industry leaders, Eurometrec Delegate Jeff Kimball will address the Press Conference and continue to support the effort in Poland guided by his extensive experience with the implementation of the Reverse Charge system in Central Europe.

Member States of the European Union abide by Council Directive 112/2006/EC on VAT which allows for a Member State to apply in certain circumstances and under particular conditions a Reverse Charge procedure for VAT to prevent fraud.

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