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2015 special report - EUROFISC – a multilateral warning system of the Member States for combating VAT fraud

Oct 02, 2015

Präsident Kay Scheller


“VAT fraud causes significant shortfalls in tax revenues. In order to effectively combat VAT fraud, European Member States need to work more closely together. They need to share information more speedily about presumptive fraud cases and increase the quality of their data”, said Kay Scheller, President of the Bundesrechnungshof, on the occasion of the publication of a joint report of the supreme audit institutions of Austria, Germany and Hungary on combating VAT fraud.

Progress is being made. Since 2011, EU Member States have implemented EUROFISC, an early warning system, which enables them to share information on suspected companies and their customers. EUROFISC increases the chances of national administrations to detect fraudsters in due time. The quality of data, IT support, response times and response rates of the Member States, however, need to be enhanced to effectively combat VAT fraud within the EU. For example, the feedback ratio to mutual requests among the Member States on the status of companies in 2011-2013 was at only 33 per cent in one working field of EUROFISC.

This is the conclusion of a joint audit mission carried out by the supreme audit institutions of Austria, Germany and Hungary. They reviewed how their countries use the EUROFISC network. As to Germany, the Federal Ministry of Finance has promised to take up the recommendations of the SAIs and to address the existing weaknesses of EUROFISC.

The European Commission estimates the annual shortfalls in tax revenues within the EU to be about €168 billion. A part of this is due to carousel fraud in roundabout transactions. Fraudsters take advantage of weaknesses in the EU’s VAT system. They sell goods imported tax-free to domestic missing traders and earn the VAT amount incurred. Instead of transferring this amount to the government, they keep it and disappear from the scene.

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