While the tax authorities of Member States already exchange some information on business and cross-border sales, this cooperation relies heavily on the manual processing of information. At the same time, VAT information and intelligence on organized gangs involved in the most serious cases of VAT fraud are not shared systematically with EU enforcement bodies. Finally, a lack of investigative coordination between tax administrations and law enforcement authorities at national and EU level mean that this fast-moving criminal activity is not currently tracked and tackled quickly enough.
Cooperation between Member States
Therefore the proposed measures improve the exchange of information between Member States' tax administrations and the coordination of their actions, including joint audits. Furthermore they initiate an operational cooperation between Member States' tax administration’s and Eurofisc (EU’s existing network of anti-fraud experts) and law enforcement authorities (OLAF, Europol, EPPO) on cross border activities at an EU level. The proposals would strengthen cooperation between Member States, enabling them to tackle VAT fraud more quickly and more efficiently, including on fraud that takes place online.
The proposed changes will take effect gradually. The following changes will be effective from the entry into force of the new regulation:
- Exchange of information between tax authorities without prior request, Member States need to have the tools to act as quickly as possible. The proposal would put in place an online system for information sharing within 'Eurofisc', the EU's existing network of anti-fraud experts. The system would enable Member States to process, analyse and audit data on cross-border activity to make sure that risk can be assessed as quickly and accurately as possible. To boost the capacity of Member States to check cross-border supplies, joint audits (a single audit of tax officers from two or more Member States) would allow officials from two or more national tax authorities to form a single audit team to combat fraud - especially important for cases of fraud in the e-commerce sector.
- New powers for Eurofisc: while the involvement of joint processing and analysis of data will remain voluntary, Member States will be required to grant access to their VIES data. A new element will be that Eurofisc will also be able to coordinate joint administrative inquiries and forward information on serious cases to Europol and OLAF (European Anti-Fraud Office).
- Cross-border VAT refund: administrative burdens will be lifted in cases where a cross-border VAT refund request procedure is carried out parallel to a VAT recovery assistance request. Accordingly, the amount claimed by the Member State of establishment may be retained by the Member State of refund if the tax debtor agrees to the direct transfer;
- Disclosure of serious VAT fraud cases to OLAF and European Public Prosecutor's Office (EPPO): VAT offences within the scope of the provisions will be cases involving at least two Member States and a total damage of at least EUR 10 million.
- From the 1st of January 2020 sharing data on customs procedures 42/63 (import with an exemption of VAT) and vehicle registrations with tax authorities will enter into force. The aim of this proposed rules is to tackle the abuse of the VAT scheme for importing goods without VAT. Information will be shared between the Member State of import and the Member State of destination to cross-check whether the goods actually arrived at their declared destination. A further advantage of the system is that the undervaluation of the goods for customs purposes can be detected. The Proposal also contains rules on the exchange of information with the help of the EUCARIS (EUropean CAR and driving license Information System) platform to tackle fraud involving second-hand cars.
From July 1, 2021 additional information on Member States' VAT rules will be made available on the Commission's website like VAT rates and measures targeting small enterprises.