VAT Fraud: Economic Impact, Challenges and Policy Issues

15-10-2018

Each year, the EU Member States lose billions of euros in VAT revenues on account of fraud. As the EU VAT system is undergoing profound modernisation, this study seeks (i) to take stock of the current state of play, (ii) to assess the current regulatory framework and the proposals under discussion, and (iii) to offer a selection of recommendations. An initial conclusion is that, while the European Commission has put a considerable amount of work into the modernisation of the EU VAT system, remaining risks of fraud cannot be ignored. A second substantial conclusion is that a different approach and the use of new technologies would allow the Member States to remove significant obstacles that currently impede an effective fight against VAT fraud. This study was provided by Policy Department A at the request of the TAX3 Committee.

Each year, the EU Member States lose billions of euros in VAT revenues on account of fraud. As the EU VAT system is undergoing profound modernisation, this study seeks (i) to take stock of the current state of play, (ii) to assess the current regulatory framework and the proposals under discussion, and (iii) to offer a selection of recommendations. An initial conclusion is that, while the European Commission has put a considerable amount of work into the modernisation of the EU VAT system, remaining risks of fraud cannot be ignored. A second substantial conclusion is that a different approach and the use of new technologies would allow the Member States to remove significant obstacles that currently impede an effective fight against VAT fraud. This study was provided by Policy Department A at the request of the TAX3 Committee.

External author

Marie LAMENSCH, Emanuele CECI