Tax fraud and tax evasion are complex issues that pose global challenges. While national measures are important, they can never succeed alone. That is why the EU and its Member States need to work together, using common tools and systems, and exchanging best practices. Cross-border cooperation remains crucial to getting results.
Recovering unpaid tax
Effective collection of taxes is a cornerstone of an efficient and fair taxation system. Taxes that remain unpaid lead to budgetary problems for Member States, and risk to put an excessive burden on the honest taxpayers who correctly fulfil their tax obligations.
Fraudsters try to escape their tax obligations, taking advantage of the fact that tax officials cannot recover taxes themselves outside their national borders. Therefore, a system that enables tax authorities in one EU country to request assistance from another Member State for gaining access to the money owed is an essential tool in the fight against tax fraud.
The EU has long promoted such 'tax recovery assistance' among its Member States. Its usefulness is borne out by the fact that the amounts of tax recovered cross border on the basis of EU law were multiplied by 11 between 2003 and 2011. The adoption of new EU rules in force since 1 January 2012 should give a new impetus to the growth of this type of assistance.
Read more on the present system of mutual assistance for recovering taxes.
Exchanging information for assessing taxes
Through greater collaboration by broadening and deepening the kind of information that can be exchanged automatically or on request EU tax administrations will make it more difficult for tax evaders to remain undetected. Furthermore, since1 January 2013, tax administrations are no longer able to cite bank secrecy as a reason for not providing information to another tax administration. Information exchange systems cover all sorts of taxes, from VAT to the taxation of savings. The VAT Information Exchange System in particular has helped businesses and tax officials for 20 years.
Taxpayer identification numbers
Properly identifying taxpayers is essential to the fight against fraud and evasion. A new web portal allows tax officials, and businesses involved in cross-border transactions, to check the structure of unique taxpayer identification numbers (TINs). These are tax identification numbers that EU countries allocate to their own taxpayers. The portal also provides useful samples of official identity documents containing national TINs. The Commission consulted on whether to move towards creating a single, unique EU-wide TIN.
European Taxpayers’ Code
Improving relations between taxpayers and tax administrations, and increasing the transparency of tax rules can help to significantly reduce the incentive for fraud and evasion. The Commission is consulting on developing an EU-wide European Taxpayers’ Code, drawing on existing best-practice in EU countries to create a blueprint for taxpayer-tax administration relations.
Civil Society Organisations against tax avoidance, tax evasion and tax fraud
European civil society makes a valuable contribution to the fight against tax avoidance, tax evasion and tax fraud. That is why the European Commission is working to expand civil society's involvement in the campaign for fairer taxation. We are encouraging more organisations that have an interest in tackling tax abuse, but may lack the capacity or resources, to become more active!
Read more about how Civil Society can play an important role in this.