VATLive > Blog > EU VAT > EU VAT fraud terrorism warning - Avalara

EU VAT fraud terrorism warning

  • EU VAT
  • 05 July 2018 | Richard Asquith

EU VAT fraud terrorism warning

Europol has warned the European Parliament (“EP”) that a share of the estimated €60billion EU VAT fraud is going to fund terrorism in the region.

Pedro Felício, head of Europol's economic operations and property crime unit, raised warnings of the scale of the problem on 28 June. He was speaking at a joint meeting in Brussels of the EP's Special Committee on Financial Crimes, Tax Evasion, and Tax Avoidance and the Special Committee on Terrorism.

Examples of terrorism-related VAT fraud cases include:

  • Sweden and Denmark were hit by a £8.5 million tax scam last year, the proceeds of which is suspected of being used to fund terrorists such as al-Qaida.
  • Germany broke up a terrorism-linked £54m VAT fraud scheme for terrorist organisations in 2015.
  • Documents found in a cave in Pakistan that Osama bin Laden used as a hideout led investigators to a criminal network based in Italy that stole £0.9 billion through VAT fraud on CO2 certificates.

Last year, the UK was one of the 8 EU states which declined to join an EU initiative launching a joint task force, European Public Prosecutor’s Office (EPPO), to fight such VAT fraud.

EU agrees to fight VAT fraud

On June 22 the EU Council agreed on measures to strengthen administrative cooperation to better prevent VAT fraud. The proposed regulation will improve the exchange and analysis of information shared by member states’ tax administrations and with law enforcement bodies, and strengthen Eurofisc, a network of national tax officials for exchanging information on VAT fraud.

EU proposals for a ‘Single VAT Area’ for 2022 also aim to make the current EU VAT regime more ‘robust and simpler’ for companies, will see VAT charged on cross border-trade between businesses. Presently, such trade is VAT-exempt and enables ‘unscrupulous’ firms to collect VAT without remitting the money to the state.

Latest news
Poland delays VAT cut to reform reduced rates
October 22, 2018

Poland’s Ministry of Finance has announced that it will recategorise many supplies to within the current reduced VAT rate category. However, this will mean Poland will not...
Hungary VAT registration threshold HUF 12m Jan 2019
October 17, 2018

Hungary has received permission to introduce an VAT registration threshold for businesses of HUF 12 million from 1 January 2019. This is approximately €48,000, based...
UK MTD pilot goes public; Oct 2019 groups & non-resident delay
October 16, 2018

HMRC announced today that it is opening the test pilot for its Making Tax Digital for VAT programme to the public.  However, HMRC also announced...

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.