European Commission Opposes Further Latvian Reverse Charge for Timber Supplies

Summary 

• Latvia requested a further extension of the domestic reverse charge for timber supplies and related services beyond 31 December 2026. 

• The European Commission objected, pointing to the measure’s long duration, repeated extensions and the absence of newly identified conventional anti-fraud measures. 

• The Commission stated that postponement of mandatory B2B e-invoicing from 2026 to 2028 does not by itself justify another Article 395 derogation. 

Extended article 

The European Commission has objected to Latvia’s request to continue applying a domestic reverse-charge mechanism to timber supplies and related services. The derogation from Article 193 of the VAT Directive has operated continuously since 2004 and was most recently extended to 31 December 2026. 

The Commission considered that, after more than two decades and seven extensions, Latvia had sufficient time to introduce conventional anti-fraud controls. It also noted that the request did not identify new conventional measures adopted since the latest extension. The Commission further rejected the argument that Latvia’s postponement of mandatory B2B e-invoicing to 1 January 2028 could independently justify another derogation. The proposal now proceeds within the EU authorisation process, but the Commission’s formal position is against extension. 

External sources: Read the Commission document COM(2026) 514 | Read Article 395 of the VAT Directive 

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