Value Added Taxes - Emissions Annex Provision

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EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions

A Jolly Contrarian owner’s manual™

(d)(viii) in a Nutshell

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(d)(viii) in all its glory

(d)(viii) Value Added Taxes
(1) All amounts referred to in this Part or in a Confirmation for an EU Emissions Allowance Transaction are exclusive of any applicable Value Added Taxes (“VAT”) which are or may become chargeable in respect of the supply or supplies for which such sums form the whole or part of the consideration for VAT purposes, and any such VAT shall be payable in addition to any such other consideration in accordance with the provisions set out below.
(2) Receiving Party shall either (A) subject to receipt of an appropriate VAT Invoice in respect of such supply or supplies stating inter alia the amount of VAT properly chargeable thereon (the “VAT Amount”), pay to Delivering Party a sum equal to the VAT Amount on the Payment Date; or (B) where, under the provisions of the applicable VAT legislation, Receiving Party is required to self-assess and account for any VAT chargeable in respect of such supply, account for such VAT.
(3) On each date on which an EU Emissions Allowance Transaction is entered into, Receiving Party represents to Delivering Party that:
(A) for VAT purposes, Receiving Party receives the services supplied pursuant to the EU Emissions Allowance Transaction in connection with an establishment of Receiving Party in that party’s VAT Jurisdiction; and
(B) it is a taxable person for the purposes of Article 9 of the European Community Directive 2006/112/EC and receives such supply for the purposes of a business carried on by it.
(4) Subject to each party’s obligations relating to VAT, each party shall cause all royalties, Taxes, duties, and other sums (including any environmental tax or levy) legally payable by that party arising in connection with an EU Emissions Allowance Transaction to be paid, and shall reimburse the other party to the extent that party is required to pay any such royalties, Taxes, duties or other sums for which the first party is primarily liable.


See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs

Resources and Navigation

Index: Click to expand:

Pro tip: for tons of information about EU ETS and EU financial services regulation see Michał Głowacki’s magnificent website.

Emissions trading documentation
ISDA: EU AnatomyEU Wikitext EU Nutshell (premium) • UK AnatomyUK Wikitext (to be merged into EU Anatomy)
IETA: IETA Master AgreementIETA WikitextIETA Nutshell (premium)
EFET: EFET Allowances AppendixEFET Allowances WikitextEFET Nutshell (premium)



You might be thinking, “Jehosophat on a bike, could someone not have made it a bit less complicated than that?” and the answer is, well the JC tried to — in its premium nutshell version.



VAT on Allowances is handled through a “reverse charge” mechanism, designed as an anti-fraud measure shutting the “carousel fraud” loophole that used to allow naughty people to charge VAT and then disappear before remitting it to tax authorities.

The reverse charge makes the customer — typically a carbon emitter like an energy utility, so not the sort of business that can easily upsticks and vanish — rather than the supplier — in the collective imagination, some twenty-five year old blagger with a motor launch acquired with ill-gotten tax receipts moored in Monaco — liable for the VAT.

This stops the supplier charging VAT from the buyer and then scramming for a weekend bender on his launch, The Cheeky Carousel, with some few of coke and bevy of well-proportioned front-row rugby forwards. [This may be a transcription error. NiGEL, can you check? — Ed].

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  • The JC’s famous Nutshell summary of this clause
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See also


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