Value added tax carousel fraud

A data system aimed at enabling the successful clamp-down in the Netherlands on value added tax carousel fraud is currently being tested by the Benelux troika (which alongside the Netherlands consists of Belgium and Luxembourg). The Netherlands’ temporary presidency of the EU has been a welcome opportunity for the Dutch State Secretary for Finance, Eric Wiebes, to promote the roll-out of the proposed scheme – which has met with unanimous acclaim, not a single Member State having dismissed it according to Mr Wiebes – across the entire Union.

Large-scale organised value added tax carousel fraud has been estimated at resulting in the EU Member States collectively missing out on some 50 billion euros annually, with multiple players being involved in what more often than not are cross-border operations. According to Mr Wiebes, automatic data exchange could enable a major step to be made in the right direction. In the current situation the authorities tend not to exchange information unless there is a tangible suspicion of shifty business being carried on, at which point it is often too late to do anything about it.

The proposed ICT application would enable shady set-ups to be exposed within a matter of days, without drastic changes having to be made to the existing systems. 

The approval of the full complement of EU Member States would enable the scheme to be launched within a year. Member States that decided to opt out could well could come to regret their decision not to join forces with the rest of the EU, as according to Mr Wiebes the fraudulent practices would be likely to be redirected in their entirety to such non-participant territories.

The European Commission is currently developing a feasibility study and at its next meeting intends to continue discussing the proposed scheme.

Dutch version: BTW-carrouselfraude