European Commission criticises member states on VAT fraud

The European Commission (EC) published its first findings last week on the review of activities of the EU 28 member states in attempting to stop VAT fraud.  The EC estimates that ‘VAT Gap’, which included VAT fraud, in the EU is now over €200bn per annum.

The EC’s report criticises the level of co-operation and responsiveness to the fraud problem, and raises a number of specific points, including:

• Many member states are still refusing to the automatic exchange of information to help track potential fraudulent cross-border trading
• Countries are often slow to respond to requests for information or help from the EC
• Member states should undertake joint audits of vat trading
• Member states should make better use of existing regulatory mechanism to combat fraud together
• Eurofisc needs to improve its own risk analysis methodologies to help identify suspicious activities.

The EC will update this report at the end of 2015 to provide an indication of progress.