Redressement économique après la crise de coronavirusRedressement économique après la crise de coronavirus - Lutte contre la fraude à la TVA

Question parlementaire n° E-003608-2020 de monsieur Antonius Manders du 16.06.2020

Redressement économique après la crise de coronavirus - lutte contre la fraude à la TVA

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Question for written answer E-003608/2020

to the Commission

Rule 138

Support economic recovery from coronavirus crisis by improving functioning of internal market: stop VAT fraud, with an annual cost of €40 billion, within the EU

QUESTION

The internal market has a central role to play in the economic recovery from the coronavirus crisis. Recently, the European Commission presented the ‘Next Generation EU’ recovery instrument, which will be financed from new ‘own resources’ of around €30 billion per year. To achieve a successful economic recovery, however, we need to improve the functioning of the internal market even further. Research has shown that VAT fraud within the EU has an annual cost of €40 billion. Criminal organisations are using VAT carousels to reclaim VAT that has not been paid. These practices are difficult or impossible for the tax authorities to prevent, due to the complex web of intra-Community transactions. Some of this amount could be ‘recovered’ by further stepping up controls. However, the same result could also be achieved by abolishing VAT on business-to-business transactions in the EU. This situation already applies in the US and would mean lower accountancy costs, fewer tax auditors and less VAT fraud: ‘less is more’. Broadly speaking, only the VAT paid by final consumers flows into the public purses of the Member States, as businesses are refunded the VAT they have paid and pay over the VAT received.

1. Does the Commission agree with me that this VAT fraud needs to be stopped?

2. Does the Commission intend to combat this fraud through a legislative initiative?

3. If not, why not? And is the Commission prepared to carry out research into abolishing VAT on business-to-business transactions?

ANSWER

given by Mr Gentiloni on behalf of the European Commission

Cross-border value added tax (VAT) fraud is a constant concern for the Member States and the Commission, which work together to combat this phenomenon.

Eliminating VAT from business-to-business transactions, as suggested, would transfer the burden for the collection of VAT to the final step of the commercial chain of transactions. This will make the VAT system very vulnerable to fraud and other events, such as insolvencies. One of the benefits of the current VAT system is the fractioned payment of the tax along the whole commercial chain of transactions. This reduces the risk that the abovementioned circumstances might have on the non-collection of the tax.

To secure the VAT collection, the Commission adopted a proposal on the definitive VAT system(1). Once adopted, it will reduce both cross-border VAT fraud and the administrative burden for businesses. The proposal is currently being discussed in the Council.

The Commission will continue the fight against tax fraud, evasion and avoidance, while also simplifying the rules and using new technologies, to make life easier for taxpayers. This is why on 15 July 2020 it adopted a communication for an action plan for fair and simple taxation supporting the recovery strategy(2).

This plan includes proposals to make the VAT system more robust by reinforcing the instruments for assessing, collecting and controlling VAT in the Member States. It also includes proposals to strengthen Eurofisc, the network for the prevention of cross border VAT fraud. This will allow national tax authorities to be more efficient in detecting and combating that type of fraud.

(1) COM(2018) 329 final

(2) COM(2020) 320 final .