Taxation and Customs Union

Cooperation between tax administrations and businesses

Businesses have a prominent role in the administration of VAT. They collect the tax on behalf of tax administrations; they know the market, the stakeholders and business models and hold the information necessary for tax administrations to assess VAT liabilities.

Therefore, a fast and efficient dialogue and cooperation between tax administrations and legitimate business is essential when it comes to combatting VAT fraud.

In February 2016 the VAT Forum approved a "Guide on administrative cooperation between Member States and Businesses ".

The purpose of the guide is to facilitate and encourage increased administrative cooperation between Member States and Businesses in order to effectively combat fraud without further complicating the EU VAT system.

Each Member State can find the most suitable way to implement the recommendations of the guide according to its own national legal, economic, political and social environment. Therefore, the guide also includes recommendations for a proper follow-up.

The Guide should facilitate:

  • a better and more pro-active interaction with legitimate business before new anti-fraud measures are introduced in order to evaluate impacts on legitimate business
  • concrete actions to be taken by the various stakeholders on a pan-European level and nationally to share understanding of how businesses and markets operate, and to identify and jointly work on measures where the market is vulnerable to VAT fraud and thus foster timely and efficient cooperation.
  • the implementation of these actions through national measures, thanks to recommendations on how this can be achieved
  • increased development and exchange of best practices across the EU especially around cooperative compliance between legitimate business and tax administrations, know your counterparty-procedures (KYC) and know your taxpayer-procedures (KYT).

When implementing anti-fraud measures it is important that Member States cooperate closely with businesses and learn from experiences of other Member States. Measures that require businesses to report more data to tax administration should be carefully designed not to increase administrative burden. To fight VAT fraud many Member States collect transactional data through so-called VAT listings. 12 Member States that have introduced such a system have shared their experiences in the report “VAT listings – implementation in EU Member States”.