Brussels, 7 October 2003
Tax fraud: Commission welcomes Council adoption of new rules to strengthen cooperation between tax authorities
The European Commission has welcomed the adoption by the EU's Council of Finance Ministers of a Regulation to strengthen co-operation between Member States' tax authorities to combat fraud relating to value added tax (VAT). The Regulation has three main objectives: to lay down clearer and more binding rules governing the exchange of information, to provide for more direct contact between national anti-fraud agencies, and to facilitate more extensive exchange of information. The aim is to remedy weaknesses in information exchange and administrative co-operation between tax authorities that had been identified in the Commission report of February 2000 on VAT fraud (see IP/00/115) and the report of the Council's adhoc group on tax fraud of June 2000. The Council has at the same time adopted a Directive to extend the scope of the Mutual Assistance Directive (77/799/EEC) so as to allow Member States to exchange information concerning taxes levied on insurance premiums. The two legal texts are based on a Commission proposal of 19 June 2001 (see IP/01/857 and MEMO/01/230).
“This Regulation and Directive will speed up and broaden the scope of information exchange between national tax administrations” said Frits Bolkestein, European Commissioner for Taxation. “The Regulation in particular will mean that tax authorities will be better equipped to combat the serious VAT frauds that erode revenues as well as creating competitive problems for legitimate traders”.
Regulation with binding rules for the exchange of information
The Regulation establishes a single legal framework with clear and binding rules to replace the two legal instruments currently governing administrative cooperation and mutual assistance in the field of indirect taxation. These instruments have proved inadequate to meet the challenges posed by the Internal Market, being too general, too centralised and not sufficiently intensive to cope with the requirements created by VAT. In particular, the regulation defines more clearly the rights and obligations of tax administrations in terms of co-operation in information exchange, provides for more direct contact between anti-fraud agencies in Member States, and intensifies the level of information exchange. Tax fraud is a growing problem for Member States and several Member states have fraud figures at national level of up to 10% of VAT receipts. The Commission proposed this Regulation in response to a Recommendation contained in the Council's June 2000 report (Council documents 8053/00 and 8668/00) on how tax fraud might be combated more effectively.
Taxing insurance premiums
The Directive amending Directive 77/799/EEC concerning mutual assistance in the field of direct taxation will mean that Member States will also be able to exchange information concerning certain taxes imposed on insurance premiums. In the Internal Market, insurance companies established in one Member State can sell their products in all the others. Up to now, however, tax authorities have had no means by which to recover taxes due on insurance premiums paid to foreign companies.
The Council had agreed the texts of the two legal instruments in February 2003, but because it decided to change the legal base on which the proposals were made, the European Parliament had to be consulted on this change.
The full texts of the Regulation and the Directive will soon be available on the Europa internet site: