Summary:
The provisions of the transitional common system of Value Added Tax (VAT), which provide for exemption from tax on intra-Community supplies, exports and, in some cases, imports of goods, are often the subject of misuse by organized crime groups to tax evasion. These groups are undergoing complex arrangements, such as "scammer" fraud, "carousel type" fraud and the fraudulent use of the customs regime 42, resulting in tax evasion and a large loss of public revenue for both Member States and the European Union itself, as this loss is reflected, among other things, in the "VAT gap".
To that end, initiatives to combat the widespread phenomenon are at the heart of the public debate, and the urgent need for effective protection of the European Union's financial interests is also strongly underlined by the case-law of the Court of Justice of the European Union. In the context of administrative co-operation and concerted efforts by Member States to reduce or even eliminate the phenomenon, bodies with a key task of combating fraud have been set up, including the OLAF and the European Public Prosecutor's Office EPPO) while the exchange of information is mainly structured through the SCAC, VIES, Eurofisc, Multilateral Audit (MLC) standard forms and cross-checks between customs tax and tax authorities. However, the phenomenon of fraud has managed to highlight the vulnerabilities of the transitional VAT system. as a result, it has become clear to the competent bodies that a lasting and effective response to illicit fraud approaches requires a systematic reform of the common VAT system. so that it is internally shielded from fraud.
Keywords:
VAT, fraud, taxation, carousel, customs regime 42, common VAT system, tax evasion, missing trader, exchange of information