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VAT fraud: The European Commission presents an action plan to better combat VAT fraud
Commission Européenne - IP/08/1846 01/12/2008
Brussels, 1 December 2008
Today the European Commission adopted a Communication presenting a short term action plan with a list of future legislative measures to enhance the capacity of tax administrations to prevent or detect VAT fraud (in particular "missing trader fraud") and to recover taxes Moreover, it has adopted two measures to amend the VAT Directive. The first aims to prevent the existing abuse by fraudsters of the VAT exemption at importation and the second to give Member States the possibility to make the supplier of goods liable for the VAT loss created by his missing customer in another Member State, when he did not report his supply to his VAT authority.
László Kovács, Commissioner for Taxation and Customs, said: "My aim is to tackle VAT fraud effectively, without creating unnecessary administrative burden for legitimate trade. Each individual measure should bring added value, but it is only the implementation as a whole which will provide to the tax authorities with an adequate framework for combating VAT fraud. The success of the strategy will finally depend on what will be adopted by the Council. I therefore call upon the Member States to take up their responsibility and adopt the measures as soon as possible.".
Missing trader fraud is where a taxable person, having made an intra-Community acquisition on which VAT has not been charged, makes a subsequent domestic supply on which he charges VAT and then disappears without having paid that VAT to the Treasury.
Set of measures to be proposed by the Commission in the future
The Communication provides a global approach to enhance the tools for Tax Administrations to tackle VAT fraud at different stages in the process. The action plan proposes to introduce measures to:
The two measures adopted today
The Commission has also adopted a proposal to amend the VAT Directive in two specific areas:
In May 2006 the Commission presented a Communication with a view to launching a debate on the need for a co-ordinated approach in the fight against fiscal fraud inside the internal market. For two years intense and fruitful discussions followed within the different European institutions, and amongst Member States, business representatives and VAT experts, on how to handle this problem better.
The Commission has decided to concentrate its efforts on strengthening the administrative capacity of the national tax administrations in the fight against VAT fraud.
As a first step, the Commission adopted in March 2008 a legislative proposal in view of ensuring that tax administrations obtain much quickly than today (2 months instead of up to 6 months) information about intra-community transactions (IP/08/454). The Council is expected to adopt this proposal before the end of this year.
Further information on the Communication and the proposal can be found at: