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VAT and Administrative Cooperation
Recent developments in this area
Although EU legislation already offers a wide range of tools for tax administrations to cooperate in the fight against VAT fraud and to ensure the correct application and collection of VAT, the Commission is, at the same time, well aware of the problems that the current VAT system encounters in terms of VAT carousel fraud and missing trader fraud. Therefore, it has recently adopted a VAT action plan "towards a single EU VAT area", aiming to make the future VAT system more fraud proof, while maintaining the fundamental principle of free movement of goods.
This plan includes actions to improve the administrative cooperation and fight against VAT fraud in order to tackle the VAT-Gap. More information can be found on the dedicated page.
The administrative cooperation between Member States and the fight against fraud in the field of VAT is governed since 1 January 2012 by the Council Regulation (EU) 904/2010 of 7 October 2010, OJ L268 of 12/10/2010, p.1.
The aim of the Regulation is to reinforce and streamline administrative cooperation between Member States concerning VAT enabling tax administrations to better combat VAT fraud.
The following links provide information about the Regulation:
- What is administrative cooperation and why is it important?
- Why is there a Regulation on administrative cooperation?
- What does the Regulation provide for?
- What are the most recent changes introduced in the Regulation?
- Implementing rules
VAT fraudsters operate increasingly cross border, whereby the supplies involve different Member States and even non–EU countries. Such tax evasion and tax avoidance extending across the frontiers of Member States lead to budget losses and violations of the principle of fair taxation. They are also liable to bring about distortions of capital movements and of the conditions of competition. They thus affect the operation of the internal market.
Therefore, tax administrations can no longer deal with these sophisticated fraud mechanisms individually and they need to work together with colleagues from other Member States and third countries to effectively tackle these schemes and prosecute the fraudsters.
Administrative cooperation concerns not only cooperation between tax authorities, including tax administrations from non-EU countries but also involves cooperation with the customs administrations and law enforcement bodies of EU Member States, which is vital for the correct application of VAT rules in cross border transactions and to detect and reduce VAT fraud.
The results of the VAT gap study (insert link) shows that Member States are missing out a considerable amount of VAT revenues.
Since the organisation and the management of tax systems is primarily the responsibility of the Member States, the assessment, collection, auditing and the recovery of VAT fall under the responsibility of Member States. The Regulation therefore aims at assisting Member States' tax administrations by putting in place instruments for cooperation and fighting VAT fraud.
The Regulation establishes the information that Member States must collect, store in their domestic databases and make electronically available to other Member States. The Regulation also defines access rights to this information, and establishes administrative cooperation mechanisms and instruments dedicated to fight VAT fraud, such as Eurofisc .
In particular, the Regulation provides for:
- A definition of the responsibility of Member States in terms of administrative cooperation and protection of other Member States' tax revenues;
- a precise definition of the information to be collected and exchanged with other Member States via the automated access to databases by competent authorities;
- the databases on VAT-taxable persons and their intra-Community transactions, with a range of information on the taxable persons and their transactions;
- a framework guaranteeing the quality of information contained in Member States databases through common minimum standards for registration/deregistration of taxpayers and risk analysis mechanisms;
- an official network aimed at fighting fraud through a multilateral, fast and focused exchange of information which facilitates decentralised cooperation against specific types of frauds (Eurofisc).The mechanism for requesting other Member States' information and conduct administrative enquiries;
- The presence of foreign officials during controls;
- The cross-border notification of decisions emanating from the tax authorities of another Member State;
- The procedures for organising multilateral controls;
- The provisions on data protection as provided for in Directive 95/46/EC (see page 31) of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.
Exchange of information for specific procedures
In order to establish the one-stop shop scheme provided for by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, and to apply the refund procedure for taxable persons not established in the Member State of refund provided for in Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, rules on the exchange and storage of information by Member States are required have been put in place.
Commission Implementing Regulation (EU) No 79/2012 of 31 January 2012 lays down detailed rules for implementing Articles 14, 32, 48 and 49 and Article 51(1) of Regulation (EU) No 904/2010, repealing Regulations (EC) No 1925/2004 and (EC) No 1174/2009.