SECOND MEETING OF THE OECD GLOBAL FORUM ON VAT 17-18 April / Tokyo, Japan Session 5 - Tackling VAT fraud Alma Olofsdottir Swedish Tax Agency
• VAT represents a major source of revenue for the EU (European Union) member States. • As the VAT system is vulnerable to fraud it is crucial that VAT fraud is prevented, detected and combated as soon as possible. • A multilateral and decentralized cooperation between the member states is therefore essential to fight this specific this type of fraud more effectively • A recent study showed that the so-called VAT gap in the EU is on average 17 %, amounting up to 193 billion euros. The reasons are multiple, but fraud is an important aspect of the VAT gap. 2
• EUROFISC is a mechanism provided for the member States to enhance their administrative cooperation in combating organised VAT fraud, and especially carousel fraud. (EU Council Regulation 904/2010) • A network for the swift exchange of targeted information between member States : – A multilateral early warning system – All 28 EU member states participate in the network – Member states can choose in which working field they take part • Eurofisc liaison officials are designated by the competent authority in their member state to participate in the working fields and they are experts in the field of VAT fraud 3
• Currently, EUROFISC consists of four working fields. • Each working field has a coordinator, chosen from the participating Eurofisc liaison officials in the working fields 4
• Three operational working fields exchange operative data in specific fraud areas – Each working field swiftly exchanges electronically targeted information on specific types of fraud between participating members resulting in rapid actions taken by the member states. • The fourth working field Observatory collects intelligence about new trends and developments in fraud patterns as well as techniques and approaches in the fight against VAT fraud. 5
• Cross border VAT fraud, especially involving services, is not only limited to EU countries. • VAT fraud schemes have been more complex and are continually involving new markets, e.g. – Consumer electronics – Metals – Emission allowances, CO2 – The energy market – E-commerce – Alternative banking platforms 6
• Tools to tackle organised VAT fraud Risk analysis in the member states Eurofisc – early detection, prevention and methods to tackle VAT fraud Multilateral controls Deregister fraudulent companies from VAT European court of justice (ECJ) decisions e.g. • ECJ 439/04 Kittel - Knew or should have known • Reverse charge on specific goods and services Bilateral agreements, non-EU countries Cooperation with externals 7
Two new directives were adopted by the EU Council on 22 July 2013 . Temporary reverse charge mechanism on certain goods and services . The quick reaction mechanism provides the legal basis to Member States to implement an emergency measure in case they are faced with a serious case of sudden and massive VAT fraud. Directive 2013/42/EU The second directive provides for an optional and temporary application of the reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud. Directive 2013/43/EU − The list of sectors where this mechanism can be applied was extended and it includes now also mobile phones, integrated circuit devices, supply of gas and electricity, telecom services, game consoles, tablet PCs and laptops, cereals and industrial crops and raw and semi-finished metals. 8
Apart from massive tax losses, organised VAT fraud can also affect the credibility of the market. • The EU emission allowances market suffered heavily by VAT fraud schemes. • Cooperation with market players, e.g. trade organisations, regulators etc. to prevent the fraudsters to enter new markets • The European energy regulators, exchanges, brokers, clearing houses, gas and electricity transmission system operators and energy trading firms have jointly taken action to prevent VAT fraudsters’ to penetrate the energy market. 9
To effectively fight and prevent organised cross border VAT fraud also calls for enhanced cooperation with non EU countries and market players/business sector • Sharing information about organised VAT fraud – New markets and schemes – Learn from earlier experiences – Identify new markets at risk – Warning signs – Know your customer – Prevent the fraudsters to enter new markets ! 10
Thank you for your attention Alma Olofsdottir Coordinator Eurofisc WF4 Observatory alma.olofsdottir@skatteverket.se Swedish Tax Agency 11
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