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Brussels, 9th January 2004

Excise duties: Commission proposes strengthening co-operation to combat excise duty-related fraud

The European Commission has proposed a Regulation to strengthen cooperation between Member States' tax authorities in the field of excise duties on alcohol, tobacco and energy products, in order to ensure the proper functioning of the Internal Market, facilitate collection of taxes by Member States, ensure equal treatment of traders and combat fraud. In 1996 alone tobacco and alcohol fraud was responsible for an estimated €4.8 billion in lost revenue. The proposed Regulation would in particular ensure more direct contacts between local tax offices of Member States, so as to speed up information flows; establish clearer and more binding rules on cooperation between Member States; require more automatic and spontaneous information exchange (as opposed to information exchange on request); and improve the systems in place for the transmission of information. The proposal would complement the initiative to computerise the movement of excisable goods in the Community adopted in June 2003 (see IP/03/788) and is the counterpart to the strengthened rules concerning administrative co-operation in the VAT field adopted by the EU's Council of Ministers in October (see IP/03/1350).

"This proposal would put tax authorities in a better position to combat the enormous amount of cross-border fraud that occurs in the field of excise duties", said Frits Bolkestein, European Commissioner for Taxation. "The European Commission wants to support Member States' efforts to tackle fraud and to ensure that the freedom that individuals and businesses must enjoy to purchase and trade goods across borders within the Internal Market does not give rise to tax evasion as well as competitive problems for legitimate traders".

Faced with evidence of widespread fraud affecting excise duties imposed on tobacco and alcohol products moving within the Internal Market, a high-level working party recommended in 1998 that a computerised system be set up to monitor movements of excisable goods in bond between traders in different Member States under duty-suspension arrangements. However, it also recommended that if such a computerised system were to yield full benefits legislative measures should be adopted to improve mutual assistance and administrative co-operation in the excise field, particularly through more direct communication between administrative departments and electronic systems. The cost of tax evasion in these sectors was put at €4.8 billion for 1996 alone (no EU figures are available for fraud involving energy products), against a total excise revenue for all Member States of €234 billion for the same year.

The proposed Regulation

The proposal 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. It would strengthen, simplify and replace provisions relating to administrative co-operation in the field of excise duties in two existing Directives (77/799/EEC concerning mutual assistance and 92/12/EEC on the general arrangements for products subject to excise duty). It would, in particular,

  • ensure more direct contacts between local offices of Member States, while giving central liaison offices a role in overseeing this decentralised co-operation

  • establish a three-month time limit within which Member States would have to respond to information requests from each other

  • formalise the procedures whereby officials from one Member State could carry out investigations in another

  • establish procedures for simultaneous audits by officials from two or more Member States

  • introduce an obligation for automatic information exchange, without prior request, in cases where there is, or there is a risk of, serious fraud in a Member State

  • lay down rules concerning time limits for storage and concerning how information held should be exchanged

  • provide for transmission of statistical information to the Commission so as to allow the Commission to play a coordinating and facilitating role

  • provide for information exchange with non-EU countries.

Directives 77/799/EEC and Directive 92/12/EEC would as a consequence be amended to remove the sections dealing with administrative co-operation in the field of excise duties.

Background information

The EU's Council of Ministers and the European Parliament adopted in June 2003 a Decision to computerise the system under which excise goods - alcohol, tobacco and energy products - are moved between traders in the Community in bond under duty-suspension arrangements. The Decision introduces a system which will provide Member States with real-time information about consignments underway, enabling them to plan checks and inspections in advance. The current paper-based system is unable to cope with increasing levels of tax evasion fraud involving alcohol and tobacco, which is particularly prevalent, and is unpopular with traders, who find it cumbersome. This Commission proposes that this computerised system could be used as a vehicle for computerised information exchange under the improved mutual assistance arrangements.

The full text of the proposal to improve administrative co-operation in the field of excise duties can be found on the Europa web site at the following address:

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