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EU Auditors Call For Renewed Efforts On VAT Fraud

by Ulrika Lomas, Tax-News.com, Brussels

04 March 2016


The current European Union system for fighting cross-border value-added tax fraud is not effective enough, according to a new report by the European Court of Auditors.

The auditors said that while the EU has a range of tools at its disposal, a number of these need to be strengthened or more consistently applied. Improving the system will require action by member states, the European Parliament, and the European Commission, they added.

Auditors visited five EU member states – Germany, Italy, Hungary, Latvia, and the UK – as part of their investigation. They found that in most cases there are no effective cross-checks between customs and tax data, and that there is a lack of cooperation and an overlap of powers between administrative, judicial, and law enforcement authorities. Although VAT information is shared between member states' tax authorities, the auditors discovered that there are problems with the accuracy, completeness, and timeliness of the data exchanged. With the exception of Italy, there was no automatic checking of VAT numbers available in the electronic customs clearance systems of the states visited.

The auditors recommended that the European Commission propose legislative amendments that will enable effective cross-checks between customs and tax data. The report said that the Commission should focus its monitoring of member states on improving the timeliness of their replies to information requests and the reliability of the VAT Information Exchange System. In addition, the Commission was urged to take the lead in establishing a common system for collecting statistics on intra-community VAT fraud and encourage member states to address weaknesses and better coordinate their policies on reverse charges.

The auditors stressed that the European Council should now approve the Commission's proposal on the joint and several liability of suppliers for VAT losses in the member state of destination. They likewise called on the Council to authorize the Commission to negotiate and sign Mutual Assistance Arrangements with the countries where a majority of digital service providers are established. They also said OLAF (the European anti-fraud office) should be given powers to investigate intra-community VAT fraud.

TAGS: tax | European Commission | value added tax (VAT) | Hungary | tax avoidance | law | audit | Latvia | United Kingdom | enforcement | tax authority | Germany | Italy | revenue statistics | tax reform | European Union (EU) | Europe | Tax | Tax Evasion

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