Carbon market VAT scrutiny shifts to Climex

The Dutch government has announced changes to the way carbon permits will be taxed, following concerns about a 49% leap in volumes on Dutch carbon exchange Climex in June. The growth came despite an overall drop in trading volumes across all European emissions exchanges, and caused concern after a similar spike in French emissions exchange BlueNext's volumes had led to rumours of VAT fraud.

The Dutch government will introduce a 'Reversed Charge Mechanism' in which the buyer will be charged VAT rather than the seller. It will only apply to Dutch based entities trading on Climex from 15 July, in an effort to prevent VAT 'carousel' fraud, where goods are imported VAT-free then sold on to domestic buyers at a price including VAT. The perpetrators then disappear without paying the tax to the government.

Axel Posthumus, the chief executive officer of Dutch carbon exchange Climex, says the