Tax & Accounting Blog

VAT Fraud in EU Gets Increased Attention

Blog, Indirect Tax, ONESOURCE March 4, 2016

The European Court of Auditors has released a report entitled Tackling intra-Community VAT fraud: More action needed. The report was not flattering, as executive summary item II succinctly demonstrates:

This audit addressed the question of whether the EU is tackling intra-Community VAT fraud effectively. The Court found that the EU system is not sufficiently effective and that is adversely affected by the lack of comparable data and indicators on intra-Community VAT fraud at EU level.

The European Commission’s reply accepts that “(t)here are very few countries which estimate the size of intra-Community fraud; even these countries do not publish the methodology used, and the estimates themselves are mostly confidential.”

The auditors made 14 recommendations, focused primarily on data collection and exchange in many areas including between import and VAT agencies within member states, between member states, and between Member States and non-EU countries in the area of B2C e-commerce services.

Worthy of note is that the 2 Member states that do publish estimates regarding intra-community VAT fraud, the United Kingdom and Belgium, have reported decreases. In the UK the losses are estimated to have decreased by 500,000 GBP in the last 5 years. In Belgium missing trader fraud was estimated to cost 94 million euro in 2009 and 28 million euro in 2011.