Value added tax (VAT) is an important source of tax income for the EU Member States, but every year there is an estimated € 150-160 billion of tax revenue lost due to shortcomings in the VAT system, including fraud.

The European Council agreed on 22 June 2018 on measures to strengthen administrative cooperation in order to improve the prevention of VAT fraud which could be summarized in the following points:

• Improve the exchange and analysis of information shared by the member states’ tax administrations with law enforcement bodies;
• Strengthen Eurofisc, a network of national tax offices for the exchange of information on VAT fraud.

It is important that the legislative proposal has the right balance between requests for and analysing of information and data protection and privacy on the other. The easier exchange of information between the Member States should implement a set of operational targets, as the reduction of time loss of late replies and a better quality of requests for information, always considering the relevant data protection and privacy legislation.

A further very important point is that the information exchange between Eurofisc and Europol is a two-way information, which should accelerate the exchange of files and the working flow.

The whole introduction of the reform is planned in several consecutive steps and will take some years; the next steps are the Vote in the Plenary and then the Adoption by Council (which needs unanimity to adopt the regulation, after consulting the Parliament).

As the present proposal will change the VAT Administrative Cooperation Regulation (Regulation EU No 904/2010), it will introduce the concept of “certified taxable person” in the VAT Information Exchange and will address the most widespread forms of cross-border fraud:

• “missing trader” or “carousel” fraud, where supplies are purchased and resold without payment of VAT;
• Fraud in the trade of used automobiles;
• The fraudulent abuse of a scheme for VAT-free imports of goods.

Interconsulting Studio Associato is at your disposal for any further information related the above proposal and its possible effects as well as for any VAT assistance in the EU or for international businesses.