COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Amended proposal for a Council Regulation amending Regulation (EU) No 904/2010 as regards mesures to strengthen administrative cooperation in the field of value added tax
Date: 2017-11-30
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, VAT, administrative cooperation, exchange of information, fraud, intra-EU trade, tax authorities, tax harmonisation, tax law, tax offence

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   EUROPEAN COMMISSION  Brussels, 30.11.2017  SWD(2017) 429 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Amended proposal for a Council Regulation  amending Regulation (EU) No 904/2010 as regards mesures to strengthen administrative cooperation in the field of value added tax {COM(2017) 706 final} - {SWD(2017) 428 final}  
 
 
Executive Summary Sheet 

Impact assessment of the proposal for a Council Regulation amending Regulation (EU) No 904/2010 as regards 
measures to strengthen administrative cooperation in the field of value added tax 

Why? What is the problem being addressed?  

A. Need for action 

VAT fraud is a constant concern at EU level with a gap estimated at EUR 160 billion of which 40 to 60 billion 
would  be  due  to  cross-border  VAT  fraud.  The  situation  finds  its  roots  in  the  endemic  weaknesses  of  the 
‘transitional arrangements’ provided for in the VAT Directive which allow goods and services to be sold VAT-free 
in intra-EU trade. Three main problems are addressed by the proposal: 

 

 

 

‘missing  trader  intra-community  fraud’  (MTIC  also  known  as  ‘carousel  fraud’)  that  occurs  when  a 
customer  of  a  cross-border  supply  purchases  goods  or  services  VAT-free  and  charges  VAT  without 
remitting it to tax authorities while his customer can deduct it; 
fraud on sale of second-hand cars where only the margin is taxed instead of the whole amount of sale; 
and 
fraud in relation to customs procedures No 42/63 under which VAT is not due in the country of import as 
this  is  the  case  under  normal  VAT  arrangements  as  the  goods  are  delivered  to  a  business  in  another 
Member States  

What is this initiative expected to achieve?  

The objectives of the initiatives are to provide tax administrations with more efficient and effective instruments to 
fight  the  three  main  sources  of  VAT  fraud  taking  place  in  cross-border  situations.  A  better  use  and  sharing  of 
information between authorities and the reinforcement of Eurofisc will enable Member States' tax administrations 
to better identify fraudsters, to put an end to fraud and ultimately to ensure a level playing field for businesses.  

What is the value added of action at the EU level?   

Although  the  management,  collection  and  control  of  VAT  are  first  and  foremost  a  national  competence  of  the 
Member States, VAT fraud is often linked to cross-border transactions within the single market. It has negative 
impact on the functioning of the single market and cause serious losses to the EU budget. Therefore, the EU has 
implemented  cooperation  instruments  organising  exchanges  of  information  between  tax  administrations  and 
supporting common audit activities and Eurofisc. Improving the efficiency of these tools at EU level in particular 
by strengthening Eurofisc would offer value over and above what could be achieved at Member State level. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
5 main options with sub-options have been identified. All options, taken together as a package, would improve 
the current situation with regard to cross-border VAT fraud: 

 
 

Implementing a joint processing and analysis of data in Eurofisc; 
Implementing  new  joint  actions  in  audit  for  tax  administrations  and  improving  their  coordination  by 
Eurofisc; 

  Developing the exchange of information and intelligence between Member States tax administrations in 

Eurofisc and law enforcement authorities at EU level; 
Improving access to vehicle registration data; 

 
  Sharing VAT registration and customs information in relation to the CP42/63 between customs and tax 

authorities. 

Who supports which option?   

2 

 
 
 
 
The Member States support the implementation of a joint processing of data and the introduction of measures to 
fight  fraud  in  relation  to  CP42/CP63  frauds.  Access  to  car  registration  data  also  received  support  from  the 
Member States but to a lesser extent.  
Other  stakeholders  are  in  favour  of  implementing  new  automated  exchanges  of  information  and  new  ways  of 
collaboration between tax and law enforcement authorities. They support a greater role for Eurofisc. They also 
expressed an overall positive opinion on joint audits.  

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?                                      

It is not possible per se to precisely assess and quantify the benefits of the main preferred options.  
Member  States:  the  main  options  covered  by  the  initiative  are  expected  to  swiftly  and  efficiently  improve  the 
situation when it relates to cross-border VAT fraud and therefore should increase VAT revenues.  
Business:  a  better  targeting  of  fraudsters  could  reduce  compliance  costs  of  businesses  involved  in  intra-EU 
trade.  
Single  market:  it  is  expected  a  positive  impact  on  its  functioning  as  fighting  VAT  fraud  would  ensuring  a  level 
playing field for compliant businesses across the EU.  
Environmental and social impacts are not significant.  

What are the costs of the preferred option (if any, otherwise main ones)?                                       

Business: no additional costs. The proposal will provide the conditions for a better use and analysis of already 
available information. 
Member States: the implementation of the joint process of data will not trigger any additional costs as they are 
borne by the Fiscalis programme. Vehicle registration data and customs data are already available. Granting tax 
administration an automated access to the information would require IT developments  albeit limited. However, 
costs could not be estimated as no recent comparable could be found out or provided by the Member States. 

How will businesses, SMEs and micro-enterprises be affected?  

Businesses,  SMEs  and  micro-enterprises  should  not  be  negatively  affected  by  the  initiative  as  it  should  not 
trigger any additional administrative burdens and compliance costs.  
They should benefit from a better level playing field and a better functioning of the single market.  

Will there be significant impacts on national budgets and administrations?  
Although  some  options  entail  development  costs,  Member  States'  budgets  will  derive  benefits  from  the  new 
instruments  put  in  place  to  fight  VAT  fraud.  It  is  not  possible  to  precisely  quantify  these  gains  although  net 
benefits are envisaged.  

Will there be other significant impacts?  
This proposal will trigger new exchange and joint processing of VAT information, which could include personal 
data.  That  may  have  an  impact  on  fundamental  rights.  However,  the  new  exchanges  of  information  and  data 
processing  envisaged  by  the  initiative  will  be  strictly  targeted  and  restricted  to  what  is  needed  to  achieve  the 
objectives of the initiative i.e. combat cross-border VAT fraud in an effective way.  

D. Follow up 

When will the policy be reviewed?   
Pursuant  to  Article  59  of  Regulation  (EU)  904/2010,  its  application  is  reviewed  every  five  years.  In  addition, 
Member  States  must  communicate  to  the  Commission  any  available  information  relevant  to  the  application  of 
the Regulation (Article 49) and inter alia annual statistics. 

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