Taking into account that ETMA’s last version (3.0) was designed in 2008, the question may arise whether the text of the master agreement shows the required elasticity, to cover the multiplicity of approaches taken recently in the matter of VAT taxation of EUAs, CERs and ERUs trading. Let’s remind that they are ranging from exemption from VAT and zero rate, through “reverse charge” to standard rate.


According to the clause 7.1 of the Emissions Trading Master Agreement for the EU Scheme (IETA - version 3.0 2008),

All amounts referred to in this Agreement are exclusive of any applicable VAT chargeable on the supply or supplies for which such amounts form the whole or part of the consideration for VAT purposes. The VAT treatment of any Transfer under a Transaction shall be determined pursuant to the VAT law of the jurisdiction where a taxable transaction for VAT purposes is deemed to take place. If VAT is properly chargeable on any such supply or supplies, the Receiving Party shall pay to the Delivering Party an amount equal to the VAT, if any, chargeable in the Delivering Party's jurisdiction; provided, however, that (i) such amount shall only be required to be paid once the Delivering Party provides the Receiving Party with a valid VAT invoice in relation to that amount and (ii) the Receiving Party shall be under no obligation to make any payment to the Delivering Party in respect of VAT which the Receiving Party must self-assess under the reverse charge rule or any similar system in the Receiving Party's jurisdiction. Each Party shall to the extent permitted by law provide the other with any additional valid VAT invoices as required for the purposes of this Agreement and, to the extent required by law, shall correctly account for any VAT properly due in its jurisdiction.”


The various choices of the Member States as regards tackling the problem of VAT fraud in greenhouse gas emission allowances trading were envisioned in "Current provisions for VAT treatment of CO2 transfers in the EU".

Surprisingly, regardless of under which of the said jurisdictions are established the parties to the transaction in emissions trading, provisions laid down in the clause 7.1 of ETMA seem to be correct.

This clause is, in my opinion, formulated in such a manner that the wording of ETMA does not require special changes in Part 2 (Other Provisions) of the Schedule 2 (Elections).

The same wording of the provisions relating to the VAT taxation can be found in the clause 4.2 of the Single Trade Agreement (STA).

Despite possible complications stemming from different VAT treatment of EUAs trading in various Member States, the odds are that nothing will change in the near future in that matter. In particular, the Proposal for a Council Directive amending Directive 2006/112/EC as regards an optional and temporary application of the reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud sanctions the reverse charge mechanism as an option only (see for details).



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