EU consults on VAT fraud

The European Commission has launched a consultation on the free exchange of tax data between member states to help fight VAT fraud in the area of e-commerce. It seeks to understand from the online marketplaces, tax authorities and payment companies how best to detect and prevent undeclared transactions for VAT purposes.

3 potential solutions are envisaged by the EC, including:

1. Authorities continue as they are, collecting variable levels of information
2. The EC assists the tax authorities in collecting and processing data on a non-regulated basis
3. The EU legal framework is updated to enable tax authorities to collect data from payment intermediaries (not possible at present) to identify non-VAT compliant merchants

The areas to be consulted include:

• VAT fraud on B2C goods e-commerce
• Do the tax authorities have sufficient legislative powers to combat VAT fraud?
• To what extent would further tax harmonisation help prevent fraud?

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