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Major Carbon Tax Fraud Trial Begins In Paris

by Ulrika Lomas, Tax-News.com, Brussels

31 January 2018


A group of almost 40 people have gone on trial in the French capital Paris accused of defrauding the French state out of hundreds of millions of euros in value-added tax related to transactions in EU emissions trading credits.

In what has been called the "fraud of the century" in France, the 36 defendants are accused of defrauding the Government out of EUR385m (USD477m) from 2008 to 2009 by pocketing VAT that should have been remitted to the tax authority.

EU emissions trading allowances are free from VAT, and until several member states changed their VAT rules to tackle the problem, fraudsters could purchase allowances and sell them on with VAT added and pocket the difference.

Such fraudulent practices were common in the EU emissions trading markets around 10 years ago, and by 2009 it was estimated that member states had been deprived of approximately EUR5bn in VAT revenue.

However, legislation which permitted member states to apply a reverse charge mechanism on an optional and temporary basis - an option which was taken up by France - was agreed by the EU Council in December 2008, and this helped to stamp out missing trader fraud in the emissions credits market.

The trial is expected to last until the end of March 2018

TAGS: environment | tax | value added tax (VAT) | tax authority | legislation | France | trade | Europe | Tax | Tax Evasion

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