The European Commission has announced a new legal framework aimed at enhancing information exchange and access to value-added tax (VAT) data to strengthen the EU’s capability in tackling fraud that harms the Union’s financial interests.
The introduction of real-time digital communication for cross-border trade will provide member states with crucial information to intensify efforts against VAT fraud, particularly carousel fraud.
Carousel VAT fraud entails cross-border transactions among member countries, exploiting exemptions on intra-community sales between companies while applying the tax on domestic consumer sales.
This type of cross-border fraud, where goods move between borders without tax and VAT is applied to internal sales, results in an annual loss for the EU estimated between 12.5 billion and 32.8 billion euros.
In 2022, the gap between expected and collected VAT revenues in the EU was 89.3 billion euros.
The EU aims to mitigate these losses with the proposal, identifying it as “the next step in the ongoing fight against VAT fraud.”
The European Public Prosecutor’s Office and the European Anti-Fraud Office will have immediate access to VAT data, enabling swift EU-wide fraud investigations.
Efficient direct communication channels are also being established.
The proposal will now be submitted to the Council for approval by EU countries and to the European Parliament and the Economic and Social Committee for consultation.
Following legislative approval, the amendments will become effective, initiating the implementation phase.
