Faced with annual losses of some €50 billion due to cross-border Value Added Tax (VAT) fraud, EU Member States have agreed new measures to tackle the problem.
Proposed by the European Commission last November, the measures aim to build trust between Member States so that they can exchange more information and boost cooperation between national tax authorities and law enforcement agencies.
The Commission has identified three main issues that the EU faces in this area: missing trader fraud and carousel fraud; VAT fraud arising from imports from outside the EU; and VAT fraud in the sale of second-hand cars.
It is anticipated that, by focusing on strengthening cooperation between Member States, the new rules will enable fraud – including that which takes place online – to be tackled more quickly and efficiently.
Among other things, information and intelligence on organised gangs involved in the most serious cases of VAT fraud will now be systematically shared with EU enforcement bodies.
The agreement approved by economy and finance ministers will also strengthen Eurofisc – an existing network of national tax officials which exchanges information on VAT fraud.
Although the legislation is expected to be published shortly, its application is to be deferred until 1 January 2020 in order to allow the technical changes required to enable information held by the various authorities concerned to be exchanged.
“The EU is making real progress on VAT reform, towards a system that is fit for purpose and that stops criminals in their path,” Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said.
Taken together, he added, the Commission’s package of VAT proposals, of which these rules are part, will have a profound impact on VAT fraud and a positive effect on the public finances and budgets of EU countries.