EU moves to tighten crackdown on VAT fraud worth up to €32.8 billion a year

EU finance ministers agreed on Tuesday to tighten efforts against VAT fraud across the bloc. Member states will strengthen cooperation with the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) as part of the crackdown. VAT fraud costs the EU and its countries between 12.5 billion euros and 32.8 billion euros each year, according to estimates.

A significant share of VAT fraud involves so-called carousel fraud, also known as “missing trader fraud.” In these schemes, goods are repeatedly traded between EU member states without VAT being remitted, after which the tax revenue disappears when an intermediary company becomes insolvent or disappears. Such fraud is typically conducted by organised criminal groups operating across national borders.

Under the new agreements, EPPO, which has offices in Rotterdam, and OLAF will gain more direct access to critical VAT data regarding cross-border business transactions within the EU. This includes information from Eurofisc, the EU's network for combating VAT fraud.

"In recent years, we've made great strides in combating VAT fraud. But with billions of euros still leaking from our budgets every year, authorities require the proper instruments to crack down on these criminal activities faster," stated Makis Keravnos, the Cypriot Minister of Finance.

The agreement reached on Tuesday, according to Keravnos, provides investigative authorities with the information they need to “swiftly prosecute criminals and protect the national and EU revenues that benefit us all."

The new anti-fraud measures are subject to approval by the European Parliament, with a vote anticipated in July.