COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Amended 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
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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.11.2017  SWD(2017) 428 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Amended 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 {COM(2017) 706 final} - {SWD(2017) 429 final}  
 
 
TABLE OF CONTENTS 

1. INTRODUCTION AND POLICY CONTEXT ............................................................................................... 5 

1.1. COMMON SYSTEM OF VALUE ADDED TAX (VAT) ...................................................................................................... 5 
1.2. COUNCIL REGULATION (EU) 904/2010 ON ADMINISTRATIVE COOPERATION AND COMBATING FRAUD IN THE FIELD OF VALUE 
ADDED TAX ............................................................................................................................................................. 6 

2. WHAT IS THE PROBLEM AND WHY IT IS A PROBLEM ...................................................................... 7 

2.1. THE VAT GAP – OVERALL FRAUD ASSESSMENT ........................................................................................................ 7 
2.2. PROBLEM TREE ............................................................................................................................................... 10 
2.3. MISSING TRADER INTRA-COMMUNITY FRAUD (MTIC) ............................................................................................ 11 
2.3.1. Magnitude of the problem ................................................................................................................. 13 
2.3.2. Problem drivers................................................................................................................................... 13 
2.3.2.1. Weaknesses in the access and analysis of information mechanisms ............................................................ 13 
2.3.2.2. A current framework that makes it difficult to carry-out coordinated actions at EU level against fraudsters
 ................................................................................................................................................................................... 15 
2.3.2.3. Insufficient multidisciplinary approach ......................................................................................................... 16 
2.4. FRAUD IN RELATION TO THE DUAL VAT REGIME APPLICABLE TO CARS ........................................................................ 18 
2.4.1. Magnitude of the problem ................................................................................................................. 20 
2.4.2. Problem drivers................................................................................................................................... 21 
2.4.2.1. Impaired access and mechanisms for information exchange and analysis ................................................... 21 
2.5. FRAUD IN RELATION TO THE CUSTOMS PROCEDURES NO 42 AND 63 ......................................................................... 22 
2.5.1. Magnitude of the problem ................................................................................................................. 24 
2.5.2. Problem drivers................................................................................................................................... 25 
2.5.2.1. VAT exemption is granted by customs authorities without proper checks of VAT numbers ........................ 26 
2.5.2.2. 
Information collated by customs authorities on exempted importations is not shared with tax 
administrations and these transactions are not properly checked............................................................................ 26 
2.6. EVOLUTION OF THE PROBLEM WITHOUT ACTION AT EU LEVEL .................................................................................. 29 

3. WHY SHOULD THE EU ACT? .................................................................................................................... 30 

4. WHAT SHOULD BE ACHIEVED? .............................................................................................................. 31 

4.1. GENERAL OBJECTIVES ....................................................................................................................................... 31 
4.2. SPECIFIC OBJECTIVES ........................................................................................................................................ 31 
4.3. OPERATIONAL ................................................................................................................................................ 31 
4.4. CONSISTENCY WITH OTHER EU POLICIES AND WITH THE CHARTER FOR FUNDAMENTAL RIGHTS ....................................... 32 

5. WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES? ...................................... 33 

5.1. LINKS BETWEEN PROBLEMS/DRIVERS/OPTIONS/SUB-OPTIONS ................................................................................ 33 
5.2. BASELINE SCENARIO ......................................................................................................................................... 35 
5.2.1. Legislative proposals with likely positive impacts on fight against VAT fraud ................................... 35 
5.2.2. Implementation of TNA on a voluntary basis ..................................................................................... 37 
5.3. OPTION 1: IMPLEMENTATION OF TRANSACTION NETWORK ANALYSIS ....................................................................... 38 
5.3.1. Option 1.a: TNA without mandatory provision of data by all Member States ................................... 38 
5.3.2. Option 1.b: TNA with mandatory provision of data by all Member States ........................................ 38 

5.4. OPTION2: IMPROVING THE OPERATIONAL FRAMEWORK WITH REGARD TO COORDINATED ACTIONS OF CONTROL BETWEEN 
MEMBER STATES ................................................................................................................................................... 38 
5.4.1. Option 2.a: implementing joint audits ................................................................................................ 39 
5.4.2. Option 2.b: coordination of Member States' multilateral actions by Eurofisc.................................... 39 

5.5. OPTION 3: DEVELOPING EXCHANGE OF DATA BETWEEN MEMBER STATES' TAX ADMINISTRATIONS AND LAW ENFORCEMENT 
AUTHORITIES AT EU LEVEL ....................................................................................................................................... 40 

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5.5.1. Option 3.a: automated access to VIES data by Europol and OLAF ..................................................... 40 
5.5.2. Option 3b: Spontaneous transmission of VAT fraud cases involving at least two Member States by 
Member States' tax administrations to OLAF ............................................................................................... 41 
5.5.3. Option 3.c: access to Eurofisc data granted to Europol and OLAF ..................................................... 41 
5.5.4. Option 3.d: enrichment by and sharing with Europol of Eurofisc data ............................................... 42 

5.6. OPTION 4: TACKLING FRAUD IN RELATION TO THE DUAL VAT REGIME APPLICABLE TO CARS BY IMPROVING ACCESS TO CAR 
REGISTRATION DATA ............................................................................................................................................... 42 
5.6.1. Discarded option: improving automatic exchange of information between Member States ............ 42 
5.6.2. Discarded option: access to the EUCARIS network without specific provisions in Regulation (EU) 
904/2010 ...................................................................................................................................................... 43 
5.6.3. Option 4.a: Access to car registration data by use of the EUCARIS network ...................................... 43 

5.7. OPTION 5: FIGHTING FRAUD IN RELATION TO THE CUSTOMS PROCEDURES NO 42 AND 63 BY REMOVING THE SHORTCOMINGS 
IN THE IMPLEMENTATION OF CP42/CP63 PROCEDURES ............................................................................................... 43 

5.7.1. Option 5.a: making compulsory granting an access to the register of VAT numbers to customs 
authorities .................................................................................................................................................... 44 
5.7.2. Option 5.b: sharing CP42/CP63 data with tax authorities by way of VIES ......................................... 44 

6. WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE 
AFFECTED .......................................................................................................................................................... 45 

6.1. METHODOLOGY .............................................................................................................................................. 45 
6.2. ANALYSIS OF THE IMPACTS OF THE VARIOUS MEASURES .......................................................................................... 45 
6.2.1. Baseline scenario: Status Quo with implementation of TNA on a voluntary basis ............................. 47 
6.2.2. Option 1: Implementation of a joint and automatic risk analysis system .......................................... 50 
6.2.2.1. Common impacts .......................................................................................................................................... 50 
6.2.2.2. Option 1.a. TNA without mandatory provision of data by all Member States .............................................. 50 
6.2.2.3. Option 1.b. TNA with mandatory provision of data by all Member States ................................................... 51 

6.2.3. Option 2: Improving the legal framework with regard to coordinated actions of control between 
Member States ............................................................................................................................................. 51 
6.2.3.1. Option 2.a. Implementing joint audits .......................................................................................................... 51 
6.2.3.2. Option 2.b. Coordination of multilateral actions by Eurofisc ........................................................................ 53 

6.2.4. Option 3: developing exchange of data between Member States tax administrations and EU law 
enforcement authorities ............................................................................................................................... 54 
6.2.4.1. Common impacts .......................................................................................................................................... 54 
6.2.4.2. Option 3.a. Automated access to VIES by Europol and OLAF ....................................................................... 55 
6.2.4.3. Option 3.b. Spontaneous transmission of VAT fraud cases involving at least two Member States by 
Member States' tax administrations to OLAF ............................................................................................................ 56 
6.2.4.4. Option 3.c. Access to Eurofisc data granted to Europol and Olaf ................................................................. 56 
6.2.4.5. Option 3.d. Enrichment of Eurofisc with Europol data ................................................................................. 56 
6.2.5. Option 4: Improved access to car registration data ........................................................................... 56 
6.2.5.1. Option 4.a. Access to Eucaris database ......................................................................................................... 56 
6.2.6. Option 5: Removing existing shortcomings in the functioning of CP42/CP63 procedures ................. 58 
6.2.6.1. Common impacts .......................................................................................................................................... 58 
6.2.6.2. Option 5.a. Granting an access to the register of VAT numbers to customs authorities .............................. 59 
6.2.6.3. Option 5.b. Sharing CP42/CP63 information with tax authorities through VIES ........................................... 60 

7. HOW DO THE OPTIONS COMPARE?....................................................................................................... 61 

7.1. SUMMARY ASSESSMENT OF THE IMPACTS ............................................................................................................ 61 
7.2. IDENTIFICATION OF THE PREFERRED OPTIONS ........................................................................................................ 67 
7.3. SUBSIDIARITY OF THE DIFFERENT OPTIONS ............................................................................................................ 68 
7.4. PROPORTIONALITY OF THE DIFFERENT OPTIONS ..................................................................................................... 68 
7.5. IMPACT ON SMES ........................................................................................................................................... 68 

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8. HOW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED? ...................................... 68 

8.1. INDICATORS FOR MONITORING AND EVALUATION .................................................................................................. 68 
8.2 MONITORING STRUCTURES ................................................................................................................................ 69 

9. ANNEXES ........................................................................................................................................................ 70 

9.1. ANNEX 1: PROCEDURAL INFORMATION CONCERNING THE PROCESS TO PREPARE THE IMPACT ASSESSMENT REPORT AND THE 
RELATED INITIATIVE ................................................................................................................................................ 71 
9.2. ANNEX 2: CONSULTATIONS SYNOPSIS REPORT ....................................................................................................... 73 
9.3. ANNEX 3: EVALUATION OF REGULATION (EU) 904/2010 ...................................................................................... 82 
9.4. ANNEX 4: CONSULTATION OF MEMBERS STATES ................................................................................................. 150 
9.5. ANNEX 5: CONSULTATION OF STAKEHOLDERS OTHER THAN MEMBER STATES ........................................................... 173 
9.6. ANNEX 6: WHO IS AFFECTED BY THE INITIATIVE AND HOW? ................................................................................... 184 
9.7. ANNEX 7: METHODOLOGY .............................................................................................................................. 185 
9.8. ANNEX 8: ADDITIONAL INFORMATION ABOUT THE FUNCTIONING OF ADMINISTRATIVE COOPERATION IN THE FIELD OF VAT 186 
9.9. ANNEX 9: TRANSITIONAL AND DEFINITIVE VAT SYSTEM – ORIGIN-BASED AND DESTINATION-BASED VAT SYSTEM ............ 188 
9.10. ANNEX 10: TECHNICAL FICHE ON CONCRETE EXAMPLES OF VAT FRAUD ................................................................. 189 
9.11. ANNEX 11: FINDINGS AND RECOMMENDATIONS OF THE 2015 EUROPEAN COURT OF AUDITORS REPORT: TACKLING VAT 
FRAUD: MORE ACTION NEEDED ............................................................................................................................... 202 

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LIST OF FIGURES AND BOXES 

Figure 1: functioning of administrative cooperation in the field of VAT (source: ECA) 

Figure 2: functioning of VIES (source: ECA) 

Figure  3:  VAT  Gap  as  a  percent  of  the VAT  Total  Tax  Liability  (VTTL)  in  EU-27  Member  States, 
2014 and 2013 (source CASE, 2016) 

Figure 4: Problem tree: links between Drivers/Problems/Effect 

Figure 5: Share of carousel fraud in VAT gap 

Figure 6: Flowchart of a compliant import under CP42 (ECA, 2011, Special report no 2011/13) 

Figure 7: Flowchart showing implementation flaws that may take place in a CP42 transaction chain of 
control 

Figure 8: Links between Problems / Drivers / Solutions and Options 

Box 1: MTIC fraud/carousel fraud 

Box 2: Role of Europol and OLAF in fighting the most serious VAT fraud threats 

Box 3: Presentation of the MTIC fraud on CO2 quotas 

Box 4: New means of transport/second hand cars fraud schemes 

Box 5: Presentation of a significant fraud case in relation to sale of cars 

Box 6: Customs procedure 42 

Box 7: Customs procedure 63 

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Abbreviations 

B2B 
B2C 
CJEU 
CP42/CP63 
DG TAXUD 
ECA 
ELO 
EMPACT 
EU 
EUCARIS 
EUR 
EY 
MLC 
MS 
MTIC fraud 
OCG 
OLAF 
SME 
SOCTA 
TFEU 
TNA 
VAT 
VIES 
VoW 

GLOSSARY 

Business to Business 
Business to Consumer (not VAT registered) 
Court of Justice of the European Union 
Customs procedure No 42/Customs procedure No 63 
Directorate General for Taxation and Customs Union 
European Court of Auditors 
Eurofisc Liaison Official 
European Multidisciplinary Platform Against Criminal Threats 
European Union 
European Vehicle and Driving Licence Information System 
Euro 
Ernst &Young 
Multilateral control 
Member State 
Missing Trader Intra-Community (MTIC) fraud 
Organised crime group 
European Anti-Fraud Office 
Small and Medium-sized Enterprises 
Serious and Organised Crime Threat Assessment 
Treaty on the Functioning of the European Union 
Transaction Network Analysis 
Value Added Tax 
VAT Information Exchange system 
VIES on the WEB 

Glossary of terms in their meaning within this document and for its specific purpose  

Administrative 
cooperation 

All rules under which Member States do provide assistance to each 
other  to  correctly  assess,  control  and  collect  VAT.  In  the  field  of 
VAT,  these  rules  are  provided  for  by  Council  Regulation  (EU) 
904/2010 of 7 October 2010.  

Administrative costs 

Costs  for  tax  administrations  in  particular  to  provide  assistance  to 
other tax authorities. 

Administrative enquiry 

Automated access 

Automatic exchange 

Compliance costs 

Cross-border trade  

Controls,  checks  and  other  actions  taken  by  Member  States  in  the 
performance  of  their  duties  with  a  view  to  ensuring  proper 
application of VAT legislation. 

Access  without  delay  to  an  electronic  system  in  order  to  consult 
certain information contained therein. 

The  systematic  communication  of  predefined  information  to 
another Member State, without prior request and on a regular basis. 

Costs for businesses to comply with VAT rules and obligations and 
tax administrations requests. 

Refers solely to intra-EU cross-border B2B trade. 
The terms "trading across the EU", "trading cross-border", "trading 
in another Member State", "doing business in other Member States" 

3 

 
 
 
 
 
 
 
 
 
doing  business  across  the  EU",  "intra-EU  transactions,  "intra-EU 
trade"  refer  to  any  situation  where  a  business  makes  supplies  of 
goods  or  services  taxable  in  a  Member  State  other  than  that  in 
which he is established, acquires goods or services from a business 
established in another Member State or supplies goods or services 
to a customer established in another Member State.   

VAT  system  where  intra-EU  cross-border  trade  is  based  on  the 
principle of taxation in the Member State of destination.  
The  current  VAT  system  is  named  ‘transitional  VAT  system’. 
Under  this  transitional  system,  every  cross-border  sale  of  goods 
between businesses is split into an exempted supply in the Member 
State of departure and a taxable acquisition in the Member State of 
arrival. 

EUROFISC  is  a  network  for  the  swift  multilateral  exchange  of 
targeted  information  between  Member  States.  It  is  a  Member 
States-driven network, composed of national officials. It comprises 
6  different  working  fields,  each  of  it  dedicated  to  a  specific  VAT 
fraud area. 

Action programme to improve the operation of taxation systems in 
the  European  Union  for  the  period  2014-2020  and  established  by 
Regulation (EU) No 1286/2013 of 11 December 2013.  

A Full Time Equivalent is a unit that indicates the workload of an 
employed  person  of  a  business  or  a  Member  State  Tax  Authority. 
For the purposes of this document, it is defined as forty hours per 
week. 

A large business is defined as a business with a turnover exceeding 
EUR 50 million, having more than 250 employees.  

A micro-business is a business which has fewer than ten employees 
and a turnover or balance sheet total of less than EUR 2 million. 

An SME (Small and Medium-sized Enterprises) business is defined 
as  a  business  with  a  turnover  of  less  than  EUR  50  million  and 
having less than 250 employees.  

Definitive VAT system 

EUROFISC  

FISCALIS 

Full Time Equivalent 
(FTE) 

Large business 

Micro business 

SME  

Spontaneous exchange 

The  non-systematic  communication,  at  any  moment  and  without 
prior request, of information to another Member State. 

VAT Directive 

VAT gap 

VAT number 

Council  Directive  2006/112/EC  of  28  November  2006  on  the 
common system of value added tax. 

The  VAT  gap  estimates  for  each  Member  States  the  difference 
between  the  expected  VAT  revenue  and  the  amount  actually 
collected.  The  Commission  carry  out  an  annual  study  to  measure 
the size of the VAT gap in each Member State.  

The individual identification number allocated by tax authorities as 
in  Articles  214,  215  and  216  of  Directive 
provided  for 
2006/112/EC. 

4 

 
 
 
 
 
 
 
1. INTRODUCTION AND POLICY CONTEXT 

1.1. Common system of value added tax (VAT) 

Value Added Tax  (VAT)  is a general tax on consumption  applied  to supplies of goods and services 
along the whole production and distribution process. It is a major and growing source of tax revenue in 
the European Union (EU). VAT raised slightly more than EUR 1 trillion in 2015, which corresponds 
to  7%  of  EU  GDP  or  17.6%  of  total  national  tax  revenues1.  One  of  the  EU's  own  resources  is  also 
based on VAT (12.4% of the EU budget in 2015)2. As a broad-based consumption tax, it is considered 
to be one of the most growth-friendly forms of taxation. 

One  of  the key  strengths of  VAT  is  that,  by  allowing  taxpayers  to  exactly  offset  the  tax  incurred  in 
previous stages of the production chain, it is much better suited than other types of indirect taxes to 
operate an single market free of tax distortions. This was the main reason for its early adoption by the 
EU.  It  is  governed  by  the  VAT  Directive3 which  aims  at  ensuring  that  the  principles  underlying  the 
functioning of this tax apply consistently in all Member States.  

In  recent  years,  however,  the  VAT  system  has  been  unable  to  keep  pace  with  the  challenges  of  the 
global  economy  and  the  opportunities  offered  by  new  technologies.  Therefore,  the  Commission 
adopted  on  7 April  2016  an  Action  Plan  on  VAT4 (hereinafter  "Action  Plan")  setting  out  ways  to 
modernise the VAT system so as to make it simpler, more fraud-proof and business-friendly. In this 
context, the Commission announced its intention to adopt in 2017 four VAT-related proposals: 

 

 

 

 

a definitive VAT system for intra-EU cross-border trade based on the principle of taxation in 
the Member  State of destination  in order to create a robust single European  VAT area (first 
step); 

a modernised VAT rates policy so as to allow Member States greater autonomy on setting the 
VAT rates; 

a comprehensive simplification VAT package for SMEs; 

a proposal to enhance VAT administrative cooperation and Eurofisc. 

As agreed by the European Parliament and the Council, the definitive VAT system will be based on 
the principle of taxation in the Member State of destination. In order to allow for a soft transition for 
tax administrations and businesses, this change will be implemented through a gradual approach5.The 
Commission envisages three successive legislative steps to implement it fully. Each step will require 
an  unanimous  agreement  in  Council.  Therefore  the  final  features  of  the  definitive  VAT  system  are 
unknown at this stage and it is a long term project.  

1

Eurostat, 

Tax 

revenue 

statistics, 

Eurostat 

(gov_10a_taxag) 

EU 

European 

Commission, 

http://ec.europa.eu/eurostat/statistics-explained/index.php/Tax_revenue_statistics 
2
2015, 
http://ec.europa.eu/budget/financialreport/2015/lib/financial_report_2015_en.pdf 
3 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax – as amended 
(OJ L 347, 11.12.2006, p. 1) 
4  See  Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide 
(COM(2016) 148 final) 
5 See Section 4 of the VAT Action Plan. 

Financial 

Budget 

Report 

5 

 
 
 
                                                            
As indicated in the Action Plan and as required by the Member States and the European Parliament, in 
the  meantime,  Member  States  need  to  adopt  urgent  conventional  measures  to  contain  the  scale  of 
cross-border fraud. This impact assessment relates to the possible measures that the Commission has 
examined with the stakeholders to enhance VAT administrative cooperation and  Eurofisc in order to 
meet this requirement. 

1.2.  Council  Regulation  (EU)  904/2010  on  administrative  cooperation  and  combating  fraud  in 
the field of value added tax 

Along  with  the  abolition  of  the  physical  borders  within  the  EU  and  the  implementation  of  the 
‘transitional arrangements’ for intra-EU trade6, a framework allowing Member States to cooperate to 
better manage and control VAT was put in place by the end of 19927. With the introduction of Council 
Regulation (EU) No 904/20108 of 7 October 2010 (hereinafter ‘Regulation (EU) 904/2010’), the first 
objective  was  to  gather,  in  a  single  piece  of  legislation,  all  provisions  in  relation  to  administrative 
cooperation  in  the  field  of  VAT.  On  top  of  that,  and  in  response  to  the  most  severe  and  always 
sophisticated  VAT  frauds,  improving  this  administrative  cooperation  framework  overall  was  also 
viewed as a necessity.  

The current functioning of administrative cooperation in the field of VAT, as provided by Regulation 
(EU) 904/2010 can be summarised as showed below: 

Figure 1: functioning of administrative cooperation in the field of VAT (source: ECA) 

6 SWD(2014) 338, 29.10.2014, on the implementation of the definitive VAT regime for intra-EU trade. 
7 Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of indirect 
taxation (VAT). 
8 Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud 
in the field of value added tax (recast). 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
The first purpose of Regulation (EU) 904/2010 currently in force remains the exchange of information 
between Member States tax authorities with three different and complementary types of programmes: 
on  request,  spontaneous  and  automatic.  To  get  information  on  businesses  involved  in  intra-EU 
transactions, tax authorities can also rely on VIES9, an IT tool developed as of 1992.  

Figure 2: functioning of VIES (source: ECA) 

Certain information has also been made available to private stakeholders through ‘VIES on the web’ 
where  VAT  identification  numbers  delivered  by  Member  States'  tax  administrations  can  be  checked 
on-line. 

Tax  administrations  are  now  well  experienced  in  processing  these  different  categories  of  exchanges 
and using VIES. Regulation (EU) 904/2010 also provides for other cooperation tools i.e. simultaneous 
controls  and  presence  in  administrative  offices  and  during  administrative  enquiries.  This  Regulation 
has also introduced a new means for an enhanced cooperation, namely Eurofisc whose characteristics 
are presented in annex 8, where the functioning of administrative cooperation provided by Regulation 
(EU)  904/2010  through  the  different  instruments  made  available  to  tax  administrations  is  also 
summarised.  Statistics  in  relation  to  the  use  of  Regulation  (EU)  904/2010  are  presented  in  the 
Evaluation  Report  drafted  to  feed  into the  work on the  possible measures  to  amend  this  Regulation. 
This Evaluation Report is presented in annex 3 to this Impact Assessment.  

2. WHAT IS THE PROBLEM AND WHY IT IS A PROBLEM 

2.1. The VAT gap – overall fraud assessment 

The  size  of  the  VAT  fraud  is  difficult  to  measure  in  itself.  One  of  the  most  commonly  accepted 
indicators  used  pointing  to  the  scale  of  the  problem  is  the  ‘VAT  gap’.  It  estimates  the  overall 

9 VIES  (VAT  Information  Exchange  system)  is  an  electronic  system  under  which,  Member  States  exchange 
information  on  traders  registered  for  VAT  purposes  and  on  intra-EU  supplies.  VIES  is  hosted  by  the 
Commission and financed by the European FISCALIS 2020 Programme. 

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
difference between the expected VAT revenue and the amount actually collected. It should be noted 
however that the VAT gap provides an estimate of revenue loss due not only to fraud and evasion, but 
also  weaknesses  in  national  tax  collection  systems,  lack  of  compliance10 of  taxpayers  leading  to  a 
shadow  economy,  impediments  in  the  enforcement  of  the  tax  obligations  by  tax  authorities,  for 
instance a lack of tax audits carried out by tax administration, insolvencies as well as miscalculations 
and other irregularities. Despite its imperfections, the VAT gap offers a useful indicator to assess the 
size of VAT that is not collected by Member States.  

According  to  the  latest  Commission's  report  on  the  VAT  gap11 which  refers  to  data  from  2014,  the 
overall EU VAT gap is estimated at almost EUR 160 billion revenue losses each year The VAT gap 
varies  considerably  across  Member  States.  The  smallest  gaps  are  observed  in  Sweden  (1.24%), 
Luxembourg  (3.80%),  and  Finland  (6.92%).  The  largest  gaps  are  registered  in  Romania  (37.89%), 
Lithuania  (36.84%)  and  Malta  (35.32%).  Overall,  half  of  the  EU-27  Member  States  represented  in 
Figure 1 below12 record a gap below 10.4% while the EU average registered in 2014 reached 14%.  

Figure  3:  VAT  Gap  as  a  percent  of  the  VAT  Total  Tax  Liability  (VTTL)  in  EU-27  Member 
States, 2014 and 2013 (source CASE, 2016) 

When analysing the phenomena contributing to the VAT gap, it can be observed that some of them – 
notably the weaknesses in national tax collection systems, impediments in the enforcement, or lack of 
compliance  –  fall  under  the  direct  responsibility  of  the  Member  States  that  must  design  their  own 
legislation  and  enforce  it  at  national  level.  The  Commission  can  however  play  a  role  by  supporting 
Members States in their continuous efforts to improve the situation at national level or by providing 
platforms where dialogues between tax administrations and exchange of good practices can take place. 
Enhancing  the  administrative  capacity  of  tax  authorities  is  for  example  one  of  the  objectives  and 

10 Compliance  of  taxpayers  covers  4  different  aspects:  registration,  filing  obligation,  payment  of  taxes  and 
bookkeeping. 
11 CASE, 2016, Study and Reports on the VAT Gap in the EU-28 Member States 
https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-report_final.pdf 
12 All EU member States but Cyprus because of incomplete national accounts.  

8 

 
 
 
                                                            
priorities  of  Regulation  (EU)  1286/201313.  The  Action  Plan  adopted  by  the  Commission  on  7  April 
201614 also includes actions with respect to tax administration or compliance.  

There are however other areas – notably with respect to cross-border transactions and, linked to them, 
different types of fraud – where, in addition to measures taken at national level, it is necessary to put 
in place cooperation mechanisms at the EU level as fighting cross-border fraud requires coordinated 
actions within and between Member States. This has been recognised in particular in the VAT Action 
Plan  which  set  out  enhancing  administrative  cooperation  between  Member  States  by  supporting  the 
sharing and joint analysis of information as one of the key objectives in the short term. 

There  are  three  main  types  of  cross-border  fraud  which  are  most  widespread  and  most  significant 
across the EU:  

 

 

 

carousel fraud (or missing trader intra-community fraud – MTIC fraud);  

fraud related to trading of second hand cars; and 

fraud related to the customs procedures 42 and 63.  

As  these  types  of  fraud  are  distinct,  exhibit  different  characteristics  and  are  driven  by  -  mostly  - 
different factors, they are analysed individually as three main problems this initiative aims to tackle, 
followed subsequently by distinct sets of options addressing each of them.  

Over the course of this review of the current administrative cooperation instruments , an evaluation of 
Regulation (EU) 904/2010 was undertaken. Its comprehensive results are presented in annex 3. This 
evaluation  shows  that  beyond  the  question  of  VAT  fraud  and  the  availability  of  appropriate 
instruments  to  combat  it,  other  problems  also  take  place  in  the  application  of  Regulation  (EU) 
904/2010. Amongst other things, the following shortcomings were highlighted by the Member States: 

- high number of late replies from other Member States to requests for information; 

- difficulties in using e-forms to exchange information; 

- perceived administrative burden; and 

- relative accuracy of VIES data.  

All these shortcomings are well-known and documented. The Commission has been working with the 
Member  States  to  improve  the  situation.  However,  amending  Regulation  (EU)  904/2010  would  not 
bring  any  added-value  in  this  respect  as  the  instruments  themselves  are  appropriate.  It  is  their 
implementation in certain Member States that needs to be addressed. This explains why these issues 
are not taken into account in this impact assessment. 

13 Regulation  (EU)  No  1286/2013  of  11  December  2013  establishing  an  action  programme  to  improve  the 
operation of taxation systems in the European Union for the period 2014-2020 (Fiscalis 2020). 
14 Communication from the Commission to the European Parliament, the Council and the European Economic 
and  Social  Committee  on  an  action  plan  on  VAT-  Towards  a  single  EU  VAT  area  –  Time  to  decide 
https://ec.europa.eu/taxation_customs/sites/taxation/files/com_2016_148_en.pdf 

9 

 
 
 
 
                                                            
2.2. Problem tree 

Figure 4: Problem tree: links between Drivers/Problems/Effects 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.3. Missing trader intra-community fraud (MTIC)  

VAT fraud is a phenomenon which is targeting inherent shortcomings of the EU VAT system and, in 
general,  involves  a  non-payment  of  output  VAT  or  an  overstatement  of  input  VAT.  There  are  a 
number of different kinds of VAT fraud. One of the most known types of fraud in B2B15 transactions 
is the Missing Trader Intra-Community (MTIC) fraud or 'the carousel fraud'.  

MTIC  fraud  occurs  in  many  different  ways  and  the  schemes  become  more  difficult  every  time  and 
include both goods and services. What they have in common is that they exploit situations in which 
goods  and/or  services  can  be  bought  free  of  VAT.  MTIC  fraud  systematically  involves  a  defaulting 
trader, literally a trader that does not submit its VAT returns and does not pay the VAT due to the tax 
authorities. The major characteristics of an MTIC fraud are described in box 1 below.  

Box 1: MTIC fraud/carousel fraud 

The basic and simplified mechanism usually contains the following transactions (see scheme below; VAT rate 
is 20%): 

-  company A (so-called “conduit" company), registered in Member State 1, makes an exempted intra-EU 
supply to company B (so-called “missing trader”) registered and located in Member State 2. VAT is 
accounted for on the acquisition but deducted in the same VAT return so that no actual payment of VAT 
has to be made to the tax authorities; 

-  company B subsequently makes a domestic supply to company C (so-called “buffer”). Company B charges 
VAT on the invoice sent to company C, collects it but does not pay the VAT to the Treasury of Member 
State 2. Company B will rapidly go missing; 

-  company C is usually used as an intermediary company to distort VAT investigations (in a three-companies 

carousel there is no buffer company); 

-  company C resells on the domestic market the goods to company D (broker) which will deduct the VAT 
charged on its purchases. D will eventually make an intra-EU supply to company A in Member State 1 in 
order to ask for the refund of the VAT charged on its purchases. 

In most cases there are more than one company in this position of the carousel. 

Following the scheme, the missing trader B will not declare and/or pay the charged VAT to the treasury. 

15 Business to business. 

11 

 
 
 
 
                                                            
At the end of the chain, the broker company D will claim a refund because he makes an intra-EU supply to 
another  Member  State.  At  this  moment  money  leaves  the  treasury  that  was  not  received  from  the  missing 
trader earlier in the chain. 

The loss of VAT receipts can be unlimited, and the profit of the fraudulent chain can be easily shared between 
all the participants even if the real VAT loss does not occur where the conduit company is located. 

In practice this simplified scheme can be combined with all possible MTIC mechanisms and developed over 
the borders of several Member States and eventually third countries. 

Carousel fraud first finds its roots in the endemic weakness of the current VAT system that allows for 
situations to occur in which goods and services can to be bought cross-border VAT-free.  

The  current  functioning  of  the  so-called  "transitional  VAT  system"  is  described  in  annex  9.  It  splits 
every cross-border sale of goods between businesses into an exempted supply in the Member State of 
departure and a taxable acquisition in the Member State of arrival. As to B2B cross-border services, 
the  customer  is  liable  for  the  payment  of  VAT  (so-called  ‘reverse  charge’  mechanism)  and  VAT  is 
therefore not charged by the supplier. 

Fraud can occur when a supplier pretends to have transported the goods to another Member State but 
the goods are in fact consumed VAT-free locally. Carousel or MTIC fraud occur when a client of a 
cross-border transaction purchases goods or services VAT-free and charges VAT without remitting it 
to tax authorities while his/her customer can deduct it (as described above in Box 2 on MTIC/Carousel 
fraud).  What  is  important  to  mention  is  that  money  is  made  quickly,  transmitted  quickly  and  the 
fraudulent company disappears quickly before any VAT due is paid and in most instances before tax 
administrations are able to detect the irregularity. Once the money has disappeared into the complex 
web  of  transactions,  tracing  and  recovering  unjustified  VAT  refunded  or  not  paid  becomes  time-
consuming, costly and often impossible. Different illustrative examples of MTIC fraud that have taken 
place within the EU are presented in annex 10. 

VAT fraud does not affect all EU Member States equally. As already mentioned before, the VAT gap 
varies from 1.24% to 37.89%. The difference in the VAT gap between Member States finds its roots in 
very diverse collection and control capacities of the tax administrations, which falls under the national 
competence  of  the  Member  States.  Within  the  European  Semester  framework 16 ,  in  which  the 
Commission  undertakes  a  detailed  analysis  of  EU  Member  States’  economies  and  provides  tailored 
advice  to  them,  special  attention  is  paid  to  the  fight  against  tax  evasion  and  avoidance  and  to 
improving tax administration. Some Member States (Bulgaria, Poland and Romania) were specifically 
recommended  in  201617 to  improve  their  tax  collection  by  fighting  against  tax  fraud  and  evasion 
(notably  in  VAT)  and  the  shadow  economy  but  also  by  improving  tax  compliance.  Although  some 
progress has  been  made in some Member States, high  tax  evasion and low levels of tax  compliance 
remain a challenge for several other Member States (amongst others the Czech Republic, Italy, Latvia, 
Romania and Slovakia)18.  

Although MTIC fraud is first driven by the endemic weaknesses of the EU VAT system and weak tax 
administrations capacities in some Member States, these two specific drivers will not be addressed by 

16 http://ec.europa.eu/europe2020/making-it-happen/index_en.htm 
17  See  Country-specific  Recommendations  on  http://ec.europa.eu/Europe2020/making-it-happen/country-
specific-recommendations/index_en.htm  
18

reports  2016  on  http://ec.europa.eu/Europe2020/making-it-happen/country-specific-

 See  Country 

recommendations/index_en.htm  

12 

 
 
 
 
                                                            
the  present  initiative  as  they  are  out  of  the  scope  of  Regulation  (EU)  904/2010.  It  is  nevertheless 
worthwhile to mention them for the sake of the analysis comprehensiveness.  

2.3.1. Magnitude of the problem 

Out  of  the  EU  VAT  gap  estimated  at  almost  EUR  160  billion  revenue  losses  each  year,  EUR  50 
billion19 would be due to carousel fraud alone. In a 2013 report Europol estimated the MTIC losses at 
EUR 100 billion.20 Although it is difficult to precisely assess the weight of this phenomenon because it 
corresponds by essence to tax revenue not collected by Member States tax authorities, studies trying to 
tentatively assess its magnitude conclude that it is significant.  

According  to  a  study  carried-out  by  EY  in  2015,  the  carousel  fraud  portion  of  the  VAT  gap  ranges 
from 12% in Bulgaria to 39% in France (see figure 3 below on share of carousel fraud in VAT gap).  

Figure  5:  Share  of  carousel  fraud  in  VAT  gap  (source  "Own  calculations"  based  on  EY,  2015 
study)21 

2.3.2. Problem drivers 

2.3.2.1. Weaknesses in the access and analysis of information mechanisms 

Each Member State collects and stores information on its own trader population. MTIC fraud is by its 
nature cross-border. Relying exclusively on national information does not allow tax administrations to 
efficiently detect and investigate such type of fraud. Therefore cross-border information exchange is 
crucial to monitoring the correct application of VAT on cross-border transactions and effective fight 

19 EY, 2015, Implementing the ‘destination principle’ to intra-EU B2B supplies of goods. 
https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/ey_study_destination_principle.pdf  
20 Europol, 2013 
21 According  to  the  latest  estimation  of  VAT  Gap  we  assume  that  2/3  accounts  for  carousel  frauds  and  1/3  of 
VAT Gap accounts for other VAT frauds (unreported sales, fictitious invoices). This estimation is based on the 
data of Czech Statistical Office about unreported sales in the Czech Republic. 

13 

 
 
 
 
 
                                                            
against fraud. Regulation (EU) 904/2010 sets out a specific framework for administrative cooperation 
and combating fraud in the field of VAT as described in section 1.2. and in Annex 8. 

The  VIES  databases,  requests  for  information  and  multilateral  controls  do  not  constitute  the  best 
instruments  to  combat  MTIC/carousel  fraud  in  the  field  of  VAT:  this  fraud  needs  to  be  quickly 
detected  and  these  communication  channels  do  not  allow  Member  States  to  get  all  necessary 
information to be able to prevent or put an end to VAT fraud. This is precisely why Eurofisc, designed 
as  a  multilateral  early  warning  mechanism  to  improve  their  administrative  capacity  in  combating 
organised VAT fraud and especially MTIC/carousel fraud, was set up in 2010 under Regulation (EU) 
904/2010.  Thanks  to  Eurofisc  and  by  way  of  risk  analysis  tools,  Member  States  can  exchange 
multilaterally early warnings on businesses suspected to be involved in MTIC/carousel fraud. Eurofisc 
is a Member State-driven network, composed of national risks analysts working in different Working 
Fields  per  fraud  risk  area.  The  network  is  financed  under  the  European  Fiscalis  2020  Programme22. 
The Commission provides administrative and logistical support to Eurofisc and does not have access 
to operational data. Nevertheless, after 7 years of practice, it appears that Eurofisc has not so far met 
all expectations because of:  

a- a cumbersome and lengthy process of information exchange, which can be described as follows:  

  As a result of domestic risk analysis Member State 1 selects a potentially risky trader and 
puts  it  under  monitoring.  Member  State  1  uploads  on  CIRCABC23 a  spreadsheet  which 
includes intra-EU deliveries / invoices issued / Vies-on-the-WEB24 data of the potentially 
risky trader; 

  Member State 2 – a Member State where the potentially risky trader is registered – checks 
on him. Based on the results of the checks, Member State 2 provides a qualification25 on 
the potentially risky trader and uploads a spreadsheet on CIRCABC to this end; 

  Member State 1 checks CIRCABC if the potentially risky trader was qualified. If so, then 

this qualification can be used for domestic risk analysis and follow-up. 

b-  instruments  that  are  not  adequate  as  they  do  not  permit  to  exchange  vital  information  on  risky 
traders or transactions immediately. The current set-up of Eurofisc is challenged by the following: 

 

limited  scope  of  exchanged  data,  largely  attributed  to  the  limitations  arising  from  the 
manual work that needs to be carried out for data sharing; 

 

slow processes to request and retrieve targeted data; 

  poor targeting of traders to be put under monitoring; 

22 Regulation (EU) 1286/2013 of 11 December 2013 establishing an action programme to improve the operation 
of taxation systems States in the European Union for the period 2014-2020 (Fiscalis 2020). 
23 CIRCABC is a Commission services online platform designed to share and distribute meeting documents. 
24 VIES on the web (VoW) is the tool developed by the Commission with which it is possible, for non-public 
stakeholders, to check the validity of a VAT number issued by any Member State.  
25 In the context of this impact assessment, this term illustrates the process of providing feedback by an Eurofisc 
Liaison Official (ELO). When a suspicious trader is reported to Eurofisc, the ELO of the MS where the trader is 
registered  for  VAT  is  expected  to  qualify  this  trader  in  accordance  to  qualifications  agreed  upon  by  Eurofisc. 
The  main  qualifications  are:  missing  trader,  defaulter,  cross-invoicer,  dubious,  buffer,  conduit  company  and 
broker. 

14 

 
 
 
                                                            
 

lack of prioritization of suspicious cases based on risk assessment; 

  no common risk analysis standard or common EU framework for risk analysis; 

 

 

issues of data quality and accuracy; 

risks of data losses.  

All these problems were emphasised by the European Court of Auditors (hereinafter "ECA")26 in its 
2015 Report, which concluded that Eurofisc is a mechanism that is time consuming, labour intensive, 
with slow and not always well targeted exchanges made with non-user friendly instruments. All this 
significantly decrease the value of information exchanges while swiftness is key to fight MTIC fraud.  

These  shortcomings  were  also  highlighted  by  the  Member  States  in  the  course  of  Regulation  (EU) 
904/2010  evaluation.  Member  States  recognise  that  Eurofisc  has  had  positive  effects  on  the  fight 
against  VAT  fraud  and  the  collection  of  VAT  on  intra-EU  transactions  and  report  a  high  level  of 
satisfaction.  Nevertheless,  they  also  mention  the  same  drawbacks  in  its  functioning  as  the  ECA  did 
and indicate that, due to them, Eurofisc has certainly not reached its full potential yet.  

2.3.2.2.  A  current  framework  that  makes  it  difficult  to  carry-out  coordinated  actions  at  EU  level 
against fraudsters 

Regulation  (EU)  904/2010  provides  Member  States  with  the  possibility  to  agree  to  conduct 
simultaneous  controls  or  so-called  ‘multilateral  controls’  (MLCs)  of  the  tax  liability  of  one  or  more 
related traders, if they consider such controls to be more effective than controls carried out by only one 
Member  State.  In  addition,  the  Member  States  can  agree  that  foreign  tax  auditors  be  present  during 
administrative enquiries. 

These  instruments  are  considered  useful  by  Member  States  and  can  be  used  as  flexible  means  to 
exchange targeted information in a swifter and more coordinated fashion than exchanging information 
on  request.  Nevertheless,  these  tools  are  first  of  all  designed  to  exchange  information  but  cannot  be 
considered as instruments allowing tax administrations to coordinate their audits: 

  although presence of foreign officials in administrative enquiries (be it in the framework of a 
MLC  or  not)  is  possible,  this  does  not  enable  them  to  actively  participate  in  enquiries 
carriedout in other Member States; 

  MLCs are carried out by separate audit teams in each country. Results are shared thereafter by 
way of spontaneous exchanges of information. This makes it difficult to have a single strategy 
and  to  correctly  coordinate  actions  of  all  national  authorities  involved  in  such  simultaneous 
controls and operating according to their national guidelines. 

The ECA 2015 Report as well as the Commission Report to the Council and the European Parliament 
on  the  application  of  Regulation  (EU)  904/201027 both  reported  that  all  Member  States  considered 
MLCs  as  a  useful  tool  for  combating  fraud,  including  VAT  fraud.  Some  evidence  from  the  case 

26 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf. 
27  Com(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 

15 

 
 
 
                                                            
studies  conducted  under  the  final  evaluation  of  the  Fiscalis  2013  programme28 and  the  MLC  reports 
also  proved  its  effectiveness  in  actually  helping  to  identify  fraud.  According  to  data  collected  from 
closed MLCs for which a report was provided (85%), these led to the identification of additional tax 
revenue with a value of approximately EUR 3.26 billion. 

Nevertheless,  the  number  of  multilateral  controls  initiated  annually  is  stable,  at  around  40.  While 
searching for possible causes, some were offered by the Member States and included aspects such as: 
overall  (very)  slow  character  of  the  instrument;  long  duration  of  the  MLCs  (most  lasting  more  than 
one  year,  making  it  difficult  to  be  used  to  tackle  the  most  serious  fraud  in  an  efficient  fashion); 
difficulties  with  inserting  MLCs  initiatives  in  established  annual  audit  planning  programmes;  extra 
workload  for  local  officers  combined  with  lack  of  experiences;  or  difficulty  in  convincing 
management  that  it  was  worthwhile  investing  in  audits  that  may  only  show  a  benefit  for  the  other 
Member States. All this was highlighted again by Member States over the course of Regulation (EU) 
904/2010 evaluation (see annexes 3 and 4). 

The  Commission  Report  to  the  Council  and  the  European  Parliament 29 also  mentioned  that  better 
coordination  at  both  national  and  EU  levels  would  be  valuable,  in  particular  by  reinforcing  ties 
between national anti-fraud units and Eurofisc. National anti-fraud units are at the forefront in fighting 
VAT  fraud  and  are  equipped  with  -  often  unique  -  legal  measures  to  do  so  (e.g.  right  to  search  or 
seize). Despite a strong expertise and the fact that Eurofisc liaison officials are the first to be aware of 
new  fraud  schemes  and  would  consequently  be  in  the  best  position  to  dismantle  these  fraudulent 
networks by joining their efforts, Eurofisc does not play any role in coordinating multilateral controls 
at EU level.  

2.3.2.3. Insufficient multidisciplinary approach 

According to the ECA and Europol, the most damaging VAT frauds are committed by organised crime 
groups (OCGs) through MTIC schemes. They benefit from their international criminal structures and 
connections to establish efficient MTIC schemes to extort money from national budgets. The ECA and 
Europol estimate that EUR 40-60 billion of the annual VAT revenue losses are caused by organised 
crime groups and that 2 % of those groups are behind 80 % of the MTIC fraud.  

The proceeds of MTIC fraud are usually reinvested in new criminal activities30 or laundered. This is 
corroborated  by  the  real  examples  of  MTIC  fraud  presented  in  annex  10.  The  figures  provided  by 
Europol during  the  public  hearing  before  the  PANA  Committee  on  14  November  2016  confirmed  a 
link between companies appearing in the Panama Papers and ongoing investigations for MTIC fraud31. 
In  the  same  hearing  Eurojust  mentioned  that  many  of  its  proceedings  on  money  laundering  were 
connected with VAT fraud.  

28 https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/fiscalis2013_final_evaluation.pdf  
29  Com(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 
30 See  also  Strategic  Meeting  on  VAT  Fraud  organised  of  28  March  2011  by  Europol  under  Coordinating 
Committee 
(CATS) 
judicial 
(http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2011570%202011%20INIT)  and  2013  EU  Serious 
and Organised Crime Threat Assessment (SOCTA) where MTIC has been identified as one of the top priority for 
the fight against organised crime groups (https://www.europol.europa.eu/content/eu-serious-and-organisedcrime-
threat-assessment-socta ) and was followed in the EMPACT initiative. 
31 http://www.emeeting.europarl.europa.eu/committees/archives/201609/PANA 

criminal  matters 

area  of  police 

cooperation 

and 

the 

in 

in 

16 

 
 
 
                                                            
Tax authorities are not equipped to identify these criminal organisations and administrative measures 
against  such  serious  VAT  fraud  cannot  be  effective.  A  multidisciplinary  approach  involving  law 
enforcement and judicial bodies is more effective to:  

 

 

identify OCGs behind VAT fraud; 

investigate; and 

  prosecute. 

Such were also the conclusions of the ECA 2015 Report. Most Member States are already taking this 
approach to a certain extent at national level. Tax authorities involve law enforcement bodies to stop 
criminals behind VAT frauds. In some Member States, tax authorities even received law enforcement 
powers which simplified the process. 

However, according to the 2017 SOCTA report made by Europol32 70% of OCGs are active in more 
than 3 countries and 45% of them are involved in more than one type of criminal activity. Therefore, 
the  multidisciplinary  approach  should  become  international  as  well.  Most  of  Member  States  are 
already  taking  actions  in  this  field.  27 Member  States  participated  in  the  EMPACT  MTIC  priority33 
that was created after the SOCTA 2013 report34. The temporary activity was driven by Member States 
with a support from Europol. It allowed launching several operations during the period 2013 – 2017 
against criminal organisations active in MTIC fraud.  

Despite  national  initiatives  towards  a  multidisciplinary  approach,  there  are  still  fields  that  could  be 
improved.  In  particular,  and  as  confirmed  by  the  Member  States  in  their  replies  to  the  targeted 
consultation made in the course of the Evaluation Report (see annexes 3 and 4), there is no exchange 
of VAT information and of intelligence on organised crime structures involved in serious VAT fraud 
and  coordination  of  actions  between,  on  the  one  hand,  tax  administrations  and  Eurofisc  and,  on  the 
other  hand,  other  law  enforcement  authorities  at  EU  level  such  a  Europol  and  OLAF  –  see  box  2 
below. A systematic cross-checking of information on missing traders between Eurofisc and Europol 
databases on OCGs is also absent.  

Box 2: role of Europol and OLAF in fighting the most serious VAT fraud threats  

Europol and OLAF are the two bodies that are at the forefront of the fight against frauds at EU level 

- Europol, headquartered in The Hague, the Netherlands, assists the 28 EU Member States in the fight against 
serious  international  crime  and  terrorism  since  these  activities  pose  a  significant  threat  to  the  international 
security  of  the  EU.  It  is  now  recognised  that  VAT  fraud,  in  particular  MTIC  fraud,  is  reinvested  by  criminal 
organisations to finance their activities 

-  OLAF  investigates  fraud  against  the  EU  budget,  corruptions  and  serious  misconduct  within  the  European 
institutions  and  develops  anti-fraud  policy  for  the  European  Commission.  Although  VAT  is  not  a  matter  that 
OLAF is allowed to directly investigate, OLAF can investigate cases involving customs duties and may have an 
interest in receiving information about VAT fraud cases. 

32 https://www.europol.europa.eu/activities-services/main-reports/european-union-serious-and-organised-crime-
threat-assessment-2017  
33

 European  Multidisciplinary 

Platform 

Against 

Criminal 

Threats 

(EMPACT). 

See: 

https://www.europol.europa.eu/crime-areas-and-trends/eu-policy-cycle-empact 
34

https://www.europol.europa.eu/activities-services/main-reports/eu-serious-and-organised-crime-threat-

assessment-socta-2013  

17 

 
 
 
                                                            
The  VAT  fraud  on  CO2  quotas,  as  detailed  below  in  box  3,  that  caused  EUR  5  billion  of  revenue 
losses, can be cited as an example illustrating MTIC fraud in the light of a lack of multidisciplinary 
approach. Although Eurofisc could now help to avoid such frauds to happen, this case demonstrates a 
lack  of  cooperation  and  connections  between  all  authorities  in  charge  of  fighting  VAT  fraud.  This 
shortcoming  was  also  stressed  in  the  ECA  report  where  it  was  recommended  to  improve  the 
cooperation  and  remedy  overlapping  competences  of  administrative,  judicial  and  law  enforcement 
bodies.  

Box 3: presentation of the MTIC fraud on CO2 quotas 

The European Union Emissions Trading Scheme (EU-ETS) aims at reducing carbon dioxide (CO2) pollution in 
a cost effective way by allowing companies to trade emission allowances (commonly known as carbon credits) 
and thereby determine how and where they reduce the pollution. Under the EU ETS Directive35, each Member 
State  must  establish  and  operate  a  national  registry  for  the  registration  of  emission  allowances  transactions 
within  the  EU  ETS.  One  allowance  represents  one  tonne  of  CO2.  The  total  amount  of  CO2  emissions  from 
industry  is  determined  by  EU  Governments  and  distributed  to  operators  to  their  account  in  the  electronic 
registries set up by the Member States.  

Individuals and organisations can also open accounts in any EU ETS registry and trade in emissions allowances. 
However the registry is not a trading platform. Companies and other participants in the carbon credit market can 
trade directly with each other or buy and sell CO2 emissions through one of the several organised exchanges in 
Europe, via intermediaries or bilateral contracts. The price of allowances is determined by supply and demand. 
Tradable  CO2  emissions  are  considered  as  services  for  VAT  purpose  and  the  place  of  taxation  of  their  sale 
between businesses is located in the Member State of the customer. If the supplier and customer are established 
in different Member States, the customer is liable for VAT (reverse charge) so VAT is not charged like for B2B 
cross-border supplies of goods. 

Indications of suspicious trading activities were first noted in late 2008, when several market platforms saw an 
unprecedented  increase  in  the  trade  volume  of  EUAs  (European  Unit  Allowances).  Market  volume  peaked  in 
May 2009, with several hundred million EUAs traded in e.g. France and Denmark. At that time the market price 
of 1 EUA, which equals 1 ton of carbon dioxide, was around EUR 12,5. 

The  activity  of  fraudulent  traders  in  years  2008/2009  resulted  in  losses  of  approximately  EUR  5  billion  for 
several national tax revenues. It is estimated that in some countries, up to 90% of the whole market volume was 
caused by fraudulent activities.  

The VAT fraud scheme in this case required a defaulter that would buy the carbon credit from another Member 
State  without  paying  VAT  (reverse  charge),  sell  them  nationally  with  the  application  of  VAT  and  go  missing 
without  paying  VAT  to  the Treasury.  The fraud was  facilitated by  the high volume  of transactions  that  it  was 
possible to perform within a short period of time. 

2.4. Fraud in relation to the dual VAT regime applicable to cars  

The  sale  of  cars  is  also  an  economic  sector  recognised  as  heavily  affected  by  VAT  fraud.  This 
situation is mainly the result of two set of rules provided for in the VAT Directive.  

35 Directive 2003/87/EC of the European Parliament and of the Council 13 October 2003 establishing a scheme 
for  greenhouse  gas  emission  allowance  trading  within  the  Community  and  amending  Council  Directive 
96/61/EC. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02003L0087-20140430&from=EN  

18 

 
 
 
                                                            
In relation to new means of transport36, including cars, and unlike the general rule for the cross-border 
delivery of goods between businesses and consumers37, new means of transport acquired by non-VAT 
liable persons, are subject to VAT in the country where goods are delivered38.  

The rationale of this rule is that the car industry is not equally widespread across Member States, while 
consumers  are  located  throughout  the  entire  EU  territory.  The  taxation  of  purchases  of  cars  in  the 
country of the supplier as it is the case in B2C transactions would attract VAT revenue in countries 
where cars are produced or with low standard rates and, reciprocally, result in significant VAT losses 
in the country of their use i.e. where consumers live. The high value of these goods and VAT revenues 
associated made it even more difficult for Member States to accept taxation in the Member State of the 
supplier.  

In relation to second-hand means of transport as defined in Article 327 (1) of the VAT Directive, two 
different VAT regimes exist: 

  on the one hand, transactions on second-hand means of transport are not subject to VAT in the 
country where goods are delivered. Instead, VAT is calculated on the margin realised by the 
supplier and must be paid in the country where this supplier is located;  

  on the other hand, sales of second-hand cars for which the right to deduct the input VAT has 
been exercised by the owner are subject to VAT on the full transaction amount. In that case, 
VAT must be paid in the country where goods are delivered, as it is the case for new means of 
transport39.  

It results from this that trading in cars is often used to commit VAT fraud, the easiest way being to sell 
recent  or  new  means  of  transport  taxable  on  the  whole  amount  as  if  they  were  second-hand  goods, 
taxable on the margin only. The modus operandi on car fraud is illustrated in Box 4 below. A typical 
example of this kind of fraud is also detailed in annex 10.  

Box 4: new means of transport/second-hand cars fraud schemes  

VAT Principle in relation to second hand means of transport 

The selling of second-hand goods, including second-hand cars, made by an enterprise liable to VAT and acting 
as such, is subject to VAT on the margin except when the means of transport is considered as a new means of 
transport  that  is,  it  has  been  in  use  for  no  more  than  6  months  or  has  been  driven  for  no  more  than  6.000 
kilometres or the owner has deducted the input VAT.  

Fraudulent scheme in relation to new means of transport/second-hand cars  

To  develop  a  fraudulent  scheme  in  relation  to  new  means  of  transport,  three  different  enterprises  are  usually 
involved.  

36 The  VAT  Directive  deals  with  new  means  of  transport  which  includes  cars  but  also  boats  or  airplanes  for 
example. Under Article 2(2)(b) of the VAT Directive, a new means of transport is defined as a car that: has been 
in use for no more than 6 months; or has been driven for no more than 6.000 kilometres. 
37 Cross-border B2C transactions on goods are, under the normal rules, taxable in the country of the supplier. 
38 Article 138(2) of the VAT Directive in conjunction with Article 2(1) (b). 
39 Where the threshold of distance selling set by the Member States of delivery has been exceeded by the seller. 
Normal arrangements apply to B2B trade of these goods. 

19 

 
 
 
                                                            
– the supplier (C) located in the origin country declares that it has made a VAT-free intra-EU delivery of new 
means of transport to the intermediate company (B); 

- the intermediate company (B), located in another Member State invoices these deliveries as second-hand cars 
under the margin regime to the private individual (A) – the beneficiary of the fraud; 

-  the  private  individual (A)  pretends  to  acquire  second-hand  cars  for  which  VAT  is due  on  the  margin  by  the 
intermediate company (B). 

2.4.1. Magnitude of the problem 

There is no study specifically targeting the fraud of new and second-hand means of transport so the 
hard data to assess the weight of this fraud in the overall VAT gap is scarce. However, the amount of 
data  referring  to  cars  supplies  exchanged  under  Eurofisc  Working  Field 2 40  is  significant:  the 
monitored transactions that is, the total amount of transactions that were suspected by Member States 
to  be  fraudulent  and  needing  further  checks  by  tax  authorities,  amounted  to  EUR  5  billion  in  2013, 
EUR 3 billion in 2014 and EUR 1.5 billion in 2015. Although the trend shows a decrease in the total 
amount of transactions under monitoring due to better targeting methodologies, this amount remains 
high and demonstrates that the selling of cars is a sector subject to predominant concerns at EU level. 

Box 5: Presentation of a significant fraud case in relation to sale of cars 

In  June  2016  the  French  authorities  dismantled  a  network  of  French  merchants,  linked  to  50  shell  companies 
scattered  in  a  dozen  of  Member  States,  involved  in  fraudulent  trading  in  luxury  cars.  Under  this  investigation 
about fifteen luxury cars, valued at nearly EUR 500.000 were seized. The authorities estimated that over a period 
of five years the network sold over a thousand of vehicles using the VAT fraud scheme, generating more than 
EUR 51 million in turnover and evading EUR 11 million of due VAT that has never been paid to the treasury. 

According  to  the  Committee  of  French  Automobile  Manufacturers,  the  affected  market  was  worth  EUR  
1,1 billion in 2012, with the fraud rate estimated at between 20% and 40%, or between EUR 45 and 90 million. 41 

Fraudulent trade into cars causing significant VAT losses and distortion of competition have also been 
reported  by  compliant  car  resellers.  The  high-value  of  recent  cars  gives  a  major  advantage  to 
fraudulent actors that sell these vehicles without collecting VAT on the total amount of transactions. 
Compliant businesses have no other appropriate means to combat these distortions than decrease their 
mark-ups,  when  possible,  or  to  sell  goods  at  prices  not  reflecting  the  real  costs.  This  significantly 
hampers  the  proper  functioning  of  the  single  market  and  does  not  place  all  economic  actors  on  an 
equal footing.  

40 There are 6 working field in Eurofisc of which, working field 2 specifically deals with frauds on cars, boats, 
and planes. 
41 See: CCFA, le Comité des Constructeurs Français d’Automobiles, http://www.ccfa.fr/Une-vaste-escroquerie-
a-la-TVA 

20 

 
 
 
 
 
                                                            
For example, according to the Fédération Nationale des Artisans de l’Automobile (FNAA) in France 
which  bases  its  estimations  on  customs  data,  the  damage  caused  by  the  fraudulent  trade  to  cars 
retailers represents a loss of EUR 5 billion annually, while EUR 1 billion is lost in VAT by the French 
Treasury, for a total of 160 000 cars sold on the French market.  

This  situation  directly  results  from  the  VAT  regime  in  relation  to  means  of  transport  which  was 
described above, and some loopholes in the exchange of information under Regulation (EU) 904/2010.  

21 

 
 
 
 
 
2.4.2. Problem drivers 

2.4.2.1. Impaired access and mechanisms for information exchange and analysis 

Due to the free movement of persons and goods within the EU, international cooperation is crucial to 
efficiently  monitor  the  VAT  regimes  that  apply  to  transactions  on  cars.  A  prerequisite  to  exchange 
information on suspicious trade of cars is to know the Member State that must receive the information, 
leading to a two-step exchange: in first instance, an exchange of information to determine the Member 
State  where  the  car,  the  sale  of  which  is  under  monitoring,  was  registered  and,  thereafter,  a  second 
exchange of information allowing the relevant Member State to check the correct application of VAT.  

One  shortcoming  reported  by  Member  States  is  that  there  are,  to  date,  no  suitable  administrative 
cooperation  instruments  to  collect  identification  or  registration  records  on  vehicles  in  an  efficient 
fashion. The main inefficiencies that occur are: 

 

 

in relation to exchange of information on request, requests are handled manually on a case-by-
case  basis,  without  the  possibility  to  receive  a  swift  answer  because  of  not  well  targeted 
procedures; 

in relation to automatic exchanges, these exchanges provided for in Article 13 of Regulation 
(EU) 904/2010 in conjunction with Article 2 of Commission Implementing Regulation (EU) 
No 79/201242 are not mandatory43 and when they occur, the information provided is difficult 
to process quickly and efficiently; 

 

in relation to Eurofisc, it is not possible in all instances to quickly determine the Member State 
to whom crucial information must be directed.  

Outside the legal framework of Regulation (EU) 904/2010, dedicated public or business organisations 
do  keep  information  in  relation  to  car  registration  in  each  Member  State.  Information  maintained  in 
these  registers  is  already  exchanged  between  Member  States  for  purposes  specifically  defined  in 
several pieces of legislation44 by way of a European platform named EUCARIS.  

EUCARIS  started  in  1994  as  a  co-operation  among  national  registration  authorities  from  five 
European  countries  to  fight  international  vehicle  crime  and  driving  licence  tourism  by  means  of 
exchanging vehicle and driving licence information between its members. All EU Member States are 
now EUCARIS members, as well as Iceland, Norway, Switzerland, Jersey, Isle of Man and Gibraltar.  

42 Commission  Implementing  Regulation  (EU) No 79/2012  of  31  January 2012  laying  down  detailed rules  for 
implementing  certain  provisions  of  Council  Regulation  (EU)  No  904/2010  concerning  administration 
cooperation and combating fraud in the field of value added tax. 
43 Based  on  notifications  received  from  Member  States,  ten  of  them  abstain  from  participating  in  automatic 
exchange  of  information  on  new  means  of  transport  (in  particular  cars),  because  they  consider  that  this 
information  is  neither  available  nor  collected  or  that  the  collection  of  such  information  would  lead  to  the 
introduction of new obligations for taxpayers or lead to an unacceptable increase in administrative and financial 
burdens. 
44 Treaty concerning a European Vehicle and Driving Licence information system of 29 June 2000 as amended; 
Council  Decision  208/615/JHA  on  the  stepping  up  of  cross-border  cooperation  particularly  in  combating 
terrorism  and  cross-border  crime;  Council  Decision  208/616/JHA  on  the  implementation  of  Decision 
2008/615/JHA  on  the  stepping  up  of  cross-border  cooperation  particularly  in  combating  terrorism  and  cross-
border crime; Directive (EU) 2015/413 of 11 March 2015 facilitating cross-border exchange of information on 
road-safety-related traffic offences. 

22 

 
 
 
                                                            
The  organisation  of  EUCARIS  is  based  on  the  EUCARIS  Treaty  and  its  underlying  Rules  of 
Procedure. The General Assembly appoints the EUCARIS Secretariat and the responsible party for the 
execution of the operational system management, which are chosen from among the Member States. 
At  the  moment  the  Netherlands  Vehicle  Authority  (RDW)  is  responsible  for  both  the  EUCARIS 
Secretariat and EUCARIS Operations. 

EUCARIS is an information exchange system that provides an infrastructure and software to countries 
to share, among others, their car and driving licence registration information helping fight car theft and 
registration fraud. EUCARIS is developed by and for governmental authorities and is able to support 
all  kinds  of  transport  related  information  exchange  based  on  treaties,  directives,  bi-  and  multilateral 
agreements. 

This platform allows Member States to: 

  have  an  automated  access  on  real  time  to  information  kept  in  the  national  repository  of  the 

requested authority; 

 

send out bulk requests to identify where a specific means of transport has been registered. 

To this end, a client application which has been developed by the EUCARIS Secretariat, is distributed 
in each Member State and can be used for specific purposes such as enforcement of road offences. 

2.5. Fraud in relation to the customs procedures No 42 and 63 

The customs procedures No 42 and 63 (CP42 and CP63) are two VAT regimes provided for by Article 
143(1) of the VAT Directive that allow for a VAT-free importation of goods in a Member State if it is 
followed  by  an  exempted  B2B  supply  or  transfer  to  another  Member  State.  This  simplification  has 
been  implemented  to  allow  for  transit  of  Community  goods  without  imposing  on  traders  an 
unnecessary VAT burden.  

In principle, an import of goods should be subject to VAT and this input VAT reported and offset in 
the  VAT  return  of  the  importer.  In  normal  scenario  the  importer  will  sell  the  goods  in  the  same 
country  enabling  a  compensation  of  import  VAT  (input  VAT)  with  the  VAT  on  the  sales  (output 
VAT).  However,  in  case  the  importer  does  not  have  VAT  taxable  transactions  in  the  country  of 
importation compensation of input VAT with output VAT is not possible. The importer will need to 
request  a  reimbursement  of  the  VAT  to  the  tax  authorities  and  is  then  supporting  the  burden  of 
financing VAT while in the end no VAT is due in the Member State of importation. To compensate 
this situation, a VAT exemption on importation of goods that are transiting to other Member States has 
been  introduced.  It  improves  the  cash  flow  situation  of  businesses  and  reduces  their  administrative 
burdens.  

The functioning of these procedures is shown in the flowchart below.  

23 

 
 
 
Figure 6: Flowchart of a compliant import under CP42 (ECA, 2011, Special report no 2011/13)45 

To differentiate such VAT exempt importation from others, customs authorities have established two 
specific customs procedures namely CP42 and CP 6346: 

Box 6: Customs Procedure 42 (CP42):  

The CP42 applies when there is simultaneous release for free circulation and home use of goods which are 
the  subject  of  a  VAT-exempt  supply  to  another  Member  State  and,  when  applicable,  an  excise  duty 
suspension. 

Explanation:  Exemption  from  payment  of  VAT  and,  where  applicable,  the  excise  duty  suspension,  is 
granted because the import is followed by an intra-EU supply, or transfer, of the goods to another Member 
State. In that case, the VAT and, where applicable, the excise duty, will be due in the Member State of 
final  destination.  In  order  to  use  this  procedure,  the  persons  must  meet  the  conditions  listed  in  Article 
143(2) of the VAT Directive and, where applicable, the conditions listed in Article 17(1)(b) of Directive 
2008/118/EC47. 

Box 7: Customs 63 (CP63):  

The CP63 applies when there is a reimportation with simultaneous release for free circulation and home 
use  of  goods  which  are  the  subject  of  a  VAT-exempt  supply  to  another  Member  State  and,  when 
applicable, an excise duty suspension. 

Explanation:  Exemption  from  payment  of  VAT  and,  where  applicable,  the  excise  duty  suspension,  is 
granted because  the  reimportation  is  followed by  an intra-EU  supply or transfer of  the  goods  to  another 
Member State. In such a case, the VAT and, where applicable, the excise duty, will be due in the Member 

45  With  cooperation  arrangements  between  the  tax  and  the  customs  authorities  in  the  Member  State  of 
importation. 
46 http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32012R0756&from=EN  
47 Council  Directive  2008/118/EC  of  16  December  2008  concerning  the  general  arrangements  for  excise  duty 
and repealing Directive 92/12/EEC 

24 

 
 
 
 
 
                                                            
State  of  final  destination.  In  order  to  use  this  procedure,  the  persons  must  meet  the  conditions  listed  in 
Article  143(2)  of  the  VAT  Directive  and,  where  applicable,  the  conditions  listed  in  Article  17(1)(b)  of 
Directive 2008/118/EC. 

These two procedures are widely used. There were 8.5 million importations under VAT exemption in 
2015, representing a total value of EUR 74 billion. In terms of value, 60% of these importations were 
concentrated in Belgium (EUR 33.1 billion for 570 000 transactions) and Germany (EUR 17.3 billion 
for  707 000  transactions),  followed  far  behind  by  France,  Austria,  the  UK  and  Sweden.  17 Member 
States  did  not  exceed  12 000  of  such  customs  procedures  in  2015.  In  some  Member  States,  like  the 
Netherlands, they are not used at all as the importers make use of the possibility to defer the payment 
of the import VAT until the submission of their VAT return48.  With respect to the countries of origin, 
the top of the list is dominated by China, Switzerland, the USA and Japan. If one looks at the Member 
States  of  destination  to  where  the  goods  imported  under  CP  42  are  subsequently  transported, 
depending  on  the  criteria  (value  or  number  of  items)  one  can  find  France,  Germany,  the  UK,  the 
Netherlands and Italy. 

If the benefit for legitimate business to use CP42 and CP63 cannot be denied, the risk of VAT fraud 
linked to these importations cannot be ignored as well. Based on the information available, it would 
appear  that  the  main  VAT  fraud  linked  to  CP42  and  CP63  is  avoiding  paying  VAT  and  selling  the 
goods  in  the  shadow  economy.  Fraudsters  selling  goods  on  the  black  market  in  the  EU  would  be 
looking for any ways to bring goods into the single market at the lowest possible costs. This includes 
reducing the customs duties by under valuating and avoiding VAT at importation with the use of CP42 
and CP63. The last OLAF investigation (see below section 2.5.1.) and ECA reports confirm that these 
two phenomena are closely connected.  

2.5.1. Magnitude of the problem 

No precise assessment of the level of fraud committed by misuse of the CP42 and CP63 is available. 
In its report published in 2011 on the control of CP4249 in seven Member States50, the ECA mentioned 
that for year 2009 and by extrapolation, the level of VAT losses in relation to the CP42 only would 
approximately  reach  EUR  2.2  billion.  For  this  specific  year,  this  represented  29%  of  the  VAT 
theoretically applicable on the taxable amount of all the imports made under the CP42. This estimation 
was made before the EU legislation in relation to this procedure was amended, providing for stricter 
application  conditions,  although  these  new  rules  do  not  seem  to  always  be  consistently  applied  (see 
below, section 2.5.2.1). In its report released in 201551, the ECA did not further estimate the level of 
this  fraud.  Nevertheless,  several  recommendations  were  made,  demonstrating  that  defects  in  the 
application of this procedure still remain.  

Recently, in March 2017, OLAF imposed a fine of EUR 2 billion on the UK for uncollected customs 
duties  on  under-evaluated  imports  of  footwear  and  textiles  through  the  UK  during  the  period  2013-
2016. Imports were done mainly with CP42 and under VAT exemption. According to OLAF, goods 
were  sold  by  criminal  organisations  on  the  black  market  in  several  Member  States.  If  this  were  the 

48 Article 211 of the VAT Directive. 
49 European  Court  of  Auditors,  2011,  Special  report  no  13/2011,  Does  the  control  of  customs  procedure  42 
prevent and detect VAT evasion? 
 http://www.eca.europa.eu/Lists/News/NEWS1112_13/NEWS1112_13_EN.PDF 
50 Austria, Belgium, Denmark, France, Slovenia, Spain, and Sweden. 
51 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf  

25 

 
 
 
 
                                                            
case,  VAT  losses  for  these  transactions  would  amount  to  several  billion  of  Euro,  the  estimation  of 
VAT  losses  being  at  that  early  stage,  only  an  extrapolation  based  on  the  findings  of  customs 
operations52. Another concrete example of CP 42 fraud involving traders in China, the UK and France 
is also presented in annex 10.  

It  is  also  possible  that  exempted  imports,  instead  of  being  dispatched  to  the  supposed  country  of 
destination, are in fact locally sold free of VAT. It is also possible for these goods to be involved in a 
carousel fraud with a supposed recipient in the country of destination that is, in fact, a missing trader. 

This  fraud,  like  carousel  and  fraud  on  cars,  heavily  distorts  competition  within  the  single  market  as 
goods  can  be  introduced  VAT  free  and  sold  at  underestimated  prices.  VAT  fraud  can  then  be 
combined with customs duties fraud as the goods are also often strongly under-evaluated. Some EU 
producers  and  retailers  in  certain  economic  sectors53 are  more  heavily  affected  and  could  not  face 
competition with non-EU operators in a position to sell under-priced goods in the single market. 

2.5.2. Problem drivers 

Already in 2011, the ECA report on the control of CP42/CP6354 in seven Member States55 pointed out 
that  the  control  process  of  the  CP42/CP63  was  deficient  and  recommended  improving  the 
communication of key data within and between Member States, encouraging the automatic verification 
of VAT identification numbers, creating a common EU risk profile for imports under CP42/CP63 and 
encouraging  action  on  a  proposed  amendment  to  the  VAT  Directive.  Answering  this  last 
recommendation, the general conditions for the exemption were added to the VAT Directive in 2009 
under  Article  143(2)  (see  below).  Goods  that  are  imported  onto  the  EU  territory  under  CP42/CP63 
should at least be subject to the following checks: 

  VAT numbers of the importer and customers;  

  evidence that goods are intended to be transported to another Member State. 

In practice, as showed in flowchart 5 below, several implementation flows in the CP42/CP63 chain of 
customs controls and in the exchange of information were identified at national level: 

 

 

 

these  preliminary  checks  are  not  in  all  instances  carried  out  by  customs  authorities  upon 
import, as detailed under 2.5.2.1; 

tax authorities in the Member State of import are not always notified that goods have entered 
the  EU  territory  VAT  free,  preventing  them  to  further  check  whether  information  reported 
upon import, on the one hand, and information reported by the importer to tax authorities upon 
submission  of  its  recapitulative  statement,  on  the  other  hand  are  consistent  and  if  the  goods 
have actually been dispatched to another Member State (see 2.5.2.2); 

information  on  CP42/CP63  stays  in  the country of  importation.  Only  the  information  on  the 
subsequent intra-EU supply is shared with the second Member State (if the importer reports it 
correctly in the recapitulative statements); However, the link with the importation is lost. This 

52 For instance JCO Discount, JCO Orion or Octopus. 
53 http://www.ravas.org.uk/ 
54 European Court of Auditors, 2011, Special report no 2011/13, Does the control of customs procedure 42 pre-
vent and detect VAT evasion, http://www.eca.europa.eu/Lists/News/NEWS1112_13/NEWS1112_13_EN.PDF  
55 Austria, Belgium, Denmark, France, Slovenia, Spain, and Sweden. 

26 

 
 
 
                                                            
prevents  tax  authorities  in  the  Member  State  of  destination  to  properly  cross-check  this 
information with that provided by the recipient of the goods (see 2.5.2.2).  

2.5.2.1. VAT exemption is granted by customs authorities without proper checks of VAT numbers  

As mentioned above, CP42 and CP63 can be granted upon provision of the valid VAT numbers of the 
importer and customers. Registers of VAT numbers are usually maintained and kept up-to-date by tax 
authorities. Access to all VAT identification numbers delivered by Member States tax authorities and 
registration  data  concerning  enterprises  to  which  these  VAT  identification  numbers  have  been 
allocated  is  granted  to  all  Member  States  through  VIES56 (see  annex  8).  It  appears  that,  in  practice, 
national databases as well as access to VIES are not made available to customs authorities in certain 
Member States. As a result, customs authorities are not, in all instances, in a position to check on the 
spot if VAT numbers declared by the importer are valid. 

It can therefore well be the case that the recipient of goods does not have any valid VAT number. In 
such  instance,  there  is  high  risk  that  goods  will  be  sold  on  the  black  market  in  the  country  of 
importation or any other Member States without VAT being paid in both cases.  

This problem was stressed by the Commission in its 2014 report57. It results from this assessment that 
a  significant  number  of  Member  States  failed  to  check  systematically  the  validity  of  VAT 
identification numbers (BE, BG, FR58, HU, IE, LU, NL, PT, and UK) at the moment of importation. 
This was reported again by the ECA in its more recent report dated 2015.  

2.5.2.2. Information collated by customs authorities on exempted importations is not shared with tax 
administrations and these transactions are not properly checked 

Once  CP42/CP63  is  approved  by  the  customs  authorities,  tax  administrations  should  take  over  the 
responsibility for following up the physical flow of goods: onward supply to and acquisition in another 
Member State. To this end, cross-checks between customs data on imports under CP 42/CP63, VAT 
recapitulative statements and return submitted by the importer, and the VAT return of the recipient are 
key for ensuring that onward supplies of goods do not remain untaxed in the territory of the Member 
State of consumption of the goods or in another Member State.  

However,  both  tax  administrations  of  the  Member  States  of  importation  and  of  destination  do  not 
systematically receive from customs authorities, information on imports made under CP42 and CP63 
despite the risks inherent to these procedures. In addition, traders are not obliged to flag separately or 
identify the intra-EU supplies following these imports in their VAT recapitulative statements as it is 
the case for triangular transactions.  

As  a  result,  tax  authorities  can  only  rely  on  the  compliance  of  the  importer  to  be  informed.  In  any 
event, if reported, the information is transmitted at the earliest one month after the importation and the 
tax  administration  cannot  see  that  the  reported  intra-EU  supply  was  preceded  by  a  risky  exempt 
importation. Therefore, tax administrations are not aware that such risky transactions have taken place 
and  cannot  check  if  goods  have  been  actually  dispatched  to  another  Member  State  and  if  VAT  has 
been paid by the recipient.  

56 Whilst Vies on the WEB can freely be consulted, this database only allows the validity of VAT numbers to be 
checked 
57 COM(2014)  69  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament.  Seventh 
report under Article 12 of Regulation (EEC, Euratom), no 1553/89 on VAT collection and control procedures.  
58 A systematic and automatic control system was introduced in France as of 1 June 2013. 

27 

 
 
 
                                                            
Recommendations  in  relation  to  these  procedures  were  made  again  by  the  ECA  in  its  more  recent 
report released in 2015 where it is stressed that there are no effective cross-checks between customs 
and tax data in most of the Member States visited during the course of the audit. It is then very easy 
for fraudulent stakeholders to use the weaknesses of the system to introduce VAT free goods onto the 
market.  In  addition,  lengthy  procedures  to  carry-out  all  necessary  checks  in  all  Member  States 
concerned once the fraud took place allow the fraudster to be active for a long time before it can be 
identified and deregistered by tax authorities. And even in that case, the fact that customs authorities 
will not, in all instances, check VAT numbers upon importation will not make sure that fraudsters will 
be eliminated.  

28 

 
 
 
Figure 7: Flowchart showing implementation flaws     that may take place in a CP42 transaction chain of control 

29 

 
 
 
  
 
 
 
 
 
2.6. Evolution of the problem without action at EU level 

As mentioned in this report, the level of VAT fraud remains significant within the EU59. The recent 
legislative  proposal  submitted  by  the  Commission  to  the  Council60,  which  echoes  the  request  from 
certain Member States to be allowed to apply a generalised reverse charge mechanism (GRCM) as an 
urgent  measure  to  combat  MTIC  and  carrousel  fraud,  reveals  how  the  shortcomings  of  the  current 
transitional  VAT  system  can  severely  affect  certain  Member  States.  It  also  reveals  the  limits  of 
conventional measures to combat such fraud. This is corroborated by recent reforms implemented in 
several  Member  States  (e.g.  split  payment 61 introduced  in  Italy  in  respect  of  certain  transactions, 
compulsory  electronic  invoicing  transiting  via  the  tax  administration  in  Portugal)  with  a  view  to 
improving VAT collection. 

In  the  longer  term,  it  is  expected  that  the  definitive  VAT  system  based  on  the  taxation  of  intra-EU 
transactions will efficiently curb MTIC and carousel fraud across the EU by addressing the root of the 
problem.  Such  a  reform  has  the  potential  according  to  a  recent  study62 to  increase  tax  revenues  by 
about EUR 40 billion per year. This proposal is being tabled in 2017 but will take several years to be 
agreed upon and fully implemented.  

Without  immediate  action  at  EU  level,  the  weakness  of  the  current  transitional  VAT  system  will 
continue  to  be  exploited  by  fraudsters  to  commit  MTIC  and  carousel  fraud.  Fraud  levels  might  be 
stable but this will be to the detriment of compliant businesses that will pay the price either through 
stable compliance costs (compliance costs associated with cross-border VAT obligations are already 
11%  higher  than  for  domestic  trade)  or  even  extra  compliance  costs  (with  additional  reporting 
obligations or audits or the management of a dual VAT system with the introduction of the generalised 
reverse charge in certain Member States).  

The  complexity  of  the  current  transitional  VAT  system  without  physical  borders  will  continue  to 
negatively impact the functioning of the single market by failing to capture new business models, new 
markets and technologies and by translating into losses of competitiveness for honest EU businesses 
and efficiency losses for Member State tax administrations. 

At  the  same  time,  with  a  VAT  system  organised  at  EU  level,  administrative  cooperation  between 
Member  States  remains  necessary  to  ensure  that  VAT  legislation  can  correctly  be  implemented  and 
enforced in each Member State. It is also important to make sure that unreliable stakeholders do not 
take advantage of cross-border situations and do not gain from the fact that weaknesses in streams of 
information  between  Member  States  create  risks  in  domestic  situations.  Only  administrative 
cooperation  between  Member  States  organised  at  EU  level  can  establish  the  necessary  conditions  to 
make the VAT system robust and efficient. 

59 https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-report_final.pdf;  
60 See Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added 
tax  as  regards  the  temporary  application  of  a  generalised  reverse  charge  mechanism  in  relation  to  supplies  of 
goods and services above a certain threshold (COM/2016/811)  
Impact assessment for the Proposal (SWD/2016/457) and its Executive summary (SWD/2016/458) 
61 A  split  payment  mechanism  is  an  alternative  VAT  collection  system.  While  under  a  standard  procedure  a 
business  collects  from  his  customer  the  taxable  base  and  the  corresponding  VAT  altogether,  under  a  split 
payment  model  a  split  is  made  between  the  payment  of  the  taxable  base  (payment  received  by  the  business 
directly from his customer) and the VAT amount due (payment made by the customer does not go directly to the 
business  but  to  a  particular  entity  (for  instance  a  blocked  VAT  bank  account  of  the  business  or  of  the  tax 
administration).  
62 EY, 2015 

30 

 
 
 
 
                                                            
3. WHY SHOULD THE EU ACT? 

As demonstrated under the problem analysis, the root causes behind the three types of fraud partly lie 
within  the  VAT  framework.  It  explains  why  the  Commission  has  tabled  proposals  to  change  the 
system  itself.  Instruments  already  available  to  Member  States  to  resolve  or  at  least  overcome 
weaknesses inherent to the VAT system  – amongst others through administrative cooperation within 
and between tax administrations – are not powerful enough to prevent the EU-wide fraud.  

However as mentioned earlier on, to prepare the implementation of the definitive regime and, pending 
its  implementation,  to  contain  cross-border  fraud,  in  the  VAT  Action  Plan  of  April  2016  the 
Commission  proposed  actions  on  three  fronts,  one  of  them  being  achieving  better  administrative 
cooperation.  Already  the  ECA  in  its  2015  report  on  the  VAT  fraud  recognised  that  tools  for 
administrative  cooperation  available  to  tax  administrations  were  not  being  sufficiently  exploited,  or 
ambitious enough.  

Views from the Member States, expressed over the course of the evaluation report presented in annex 
3 have confirmed the need to improve the current administrative cooperation instruments by removing 
their  shortcomings,  but  also  to  reinforce  them  by  making  for  instance  a  better  access  and  use  of 
already existing information.  

It all led the Commission to commit to endeavour shifting from the existing cooperation models based 
on  Member  States  exchanging  information,  to  new  models  of  sharing  and  jointly  analysing 
information and acting together, allowing Member States benefiting from a risk management capacity 
at EU level, as well as enabling them to rapidly and more effectively identify and dismantle fraudulent 
networks. In addition, new and always more sophisticated fraud schemes require innovative solutions. 
In the field of VAT, with fraud being cross-border in the most severe instances, it tends to belong to 
no-one  while  affecting  everybody.  Having  this  in  mind  and  recalling  the  earlier  described  swiftness 
with  which  fraud  takes  place,  any  solution  can  be  better  implemented,  effective  and  efficient  when 
done jointly at EU level.  

The Commission identified altogether 20 measures to tackle the VAT gap63. The present initiative will 
fit under a considerable number of them, including: 

 

 

 

the possibility of extending the use of automated access to data and exploring with Member 
States the possibility to develop an automated mechanism that would allow a cross-matching 
between  the  data  reported  by  each  party  of  every  single  transaction.  That  would  allow 
detecting fraud in early stages and ultimately prevent a missing trader fraud, be it domestic or 
intra-EU;  

reinforcing the role and impact of Eurofisc on tackling intra-EU VAT fraud, including making 
better use of the information available within the network; 

evaluating Regulation (EU) 904/2010 and proposing legal and operational solutions to address 
the weaknesses of the current legislation, including by introducing joint audits; 

 

supporting deeper cooperation between different authorities.  

The management, collection and control of VAT are first and foremost a national competence of the 
Member  States.  However,  VAT  fraud  is  often  linked  to  cross-border  transactions  within  the  single 

63 See https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/2016-03_20_measures_en.pdf  

31 

 
 
 
  
 
  
 
                                                            
market  or  involves  traders  established  in  other  Member  States  than  the  one  where  the  tax  is  due. 
Moreover, VAT fraud has a negative impact on the functioning of the single market and causes serious 
losses to Member States’ revenues and consequently to the EU budget.  

Therefore pursuant to Article 113 of the TFEU64 the EU has implemented cooperation tools organising 
in  particular  an  exchange  of  information  between  tax  administrations  and  supporting  common  audit 
activities and the Eurofisc network. 

Improving  the  efficiency  of  these  tools,  in  particular  strengthening  Eurofisc,  would  offer  value  over 
and above what could be achieved at Member State level. 

4. WHAT SHOULD BE ACHIEVED? 

The objective of the initiative is to reduce the level of cross-border VAT fraud that takes place within 
the  EU.  To  this  end,  the  initiative  will  provide  tax  administrations  with  more  efficient  and  effective 
instruments to  fight the three  main sources of VAT  fraud taking place in cross-border situations i.e. 
MTIC fraud, fraud on sale of second-hand cars and fraud in relation to Customs procedures No 42/63. 
A  better  use  and  sharing  of  information  between  authorities  and  the  reinforcement  of  Eurofisc  will 
enable  Member  States'  tax  administrations  to  better  target  fraudsters,  to  put  an  end  to  fraudulent 
schemes at an earlier stage and ultimately to ensure a level playing field for businesses. 

4.1. General objectives 

The general objectives of the initiative are: 

 

 

 

to contribute to fiscal consolidation within the EU by ensuring that taxes due are collected to 
feed national and EU budgets ; 

to contribute to fighting organised crime; and 

to  contribute  to  a  closer  cooperation  between  Member  States  in  the  EU  VAT  area,  moving 
away from exchange of information only to a model based on data sharing and joint actions. 

4.2. Specific objectives 

The specific objectives of the initiative are: 

 

 

 

to  better  exploit  the  existing  administrative  cooperation  instruments  in  the  field  of  fighting 
VAT-related fraud;  

to contribute to fighting organised crime through rapid and more effective identification and 
dismantling of fraudulent networks related to VAT; and  

to  improve  the  multidisciplinary  approach  to  fighting  and  preventing  VAT-related  fraud 
through swifter and more coordinated reaction capacity. 

4.3. Operational  

  Faster information exchange and joint processing of data related to VAT by Eurofisc officials; 

64 Treaty on the Functioning of the European Union. 

32 

 
 
 
                                                            
 

Improve identification and targeting of potential fraudsters;  

  Provide  for  new/improved  channels  for  access  to  and  sharing  of  VAT–related  information 

between tax administrations and other authorities or institutions;  

 

Improve effectiveness of checks and the sharing of VAT-related information in the context of 
imports; and 

  To facilitate joint audits. 

Linking the objectives to the problems 

Specific objectives 

General objectives 

Link to the problem 

the 

exploit 

existing 
to  better 
administrative 
cooperation 
instruments  in  the  field  of  fighting 
VAT-related fraud; 

improve 

to 
the  multidisciplinary 
approach  to  fighting  and  preventing 
VAT-related  fraud  through  swifter 
and  more 
reaction 
capacity. 

coordinated 

through 

to  contribute  to  fighting  organised 
rapid  and  more 
crime 
and 
effective 
dismantling  of  fraudulent  networks 
related to VAT 

identification 

to  contribute  to  the  creation  of 
single EU VAT area supporting a 
deeper and fairer single market 

to 

contribute 

to 
fiscal 
consolidation  within  the  EU  by 
taxes  due  are 
ensuring 
collected to feed national and EU 
budgets 

that 

to contribute to fighting organised 
crime 

a 

in 

to 

contribute 

to 
closer 
cooperation  between  Member 
States 
the  EU  VAT  area, 
moving  away  from  exchange  of 
information  only 
to  a  model 
based  on  data  sharing  and  joint 
actions 

Help  Member  States  more  heavily 
affected by carousel fraud to be in a 
position to quickly react 

New  and  improved  administrative 
are 
cooperation 
needed  to  better  target  fraudsters 
and fraudulent schemes 

relationships 

Help Member States to react in the 
most  efficient  manner  before  fraud 
is perpetrated 

4.4. Consistency with other EU policies and with the Charter for fundamental rights 

The objective of fighting tax fraud and evasion to help secure national and EU revenues and prevent 
distortion  of  competition  has  been  amongst  top  Commission  priorities  for  the  last  few  years.  The 
political  guidelines 65 of  the  present  Commission  called  for  stepping  up  the  efforts  to  combat  tax 
evasion and tax fraud, including through improved administrative cooperation between tax authorities. 
These  priorities  were  directly  reflected  in  the  already  mentioned  2016  VAT  Action  Plan.  More 
recently, the creation of a simple, modern and fraud-proof VAT system was one of the fiscal priorities 
set out by the Commission for 2017 (Annual Growth Survey 201766). 

This initiative goes hand in hand with other initiatives in the VAT area and plays an important role in 
securing the success of the most ambitious proposals, which is the introduction of the definitive VAT 
regime.  These  several  initiatives  were  already  discussed  before  in  this  impact  assessment. 

65 https://ec.europa.eu/commission/sites/beta-political/files/juncker-political-guidelines-speech_en_0.pdf  
66 https://ec.europa.eu/info/publications/2017-european-semester-annual-growth-survey_en 

33 

 
 
 
 
                                                            
Additionally, MTIC fraud is also one of the nine EMPACT priorities67, the European Union’s priority 
crime areas, under the 2014-2017 EU Policy Cycle of Europol. The same approach has been followed 
for the next policy cycle.  

The  impacts  on  fundamental  rights  of  the  different  options  that  are  considered  in  this  impact 
assessment are further detailed under Chapter 6. In short, it is expected that this proposal will trigger 
new  exchange  and  joint  processing  of  VAT  information  which  could  include  personal  data. 
Nevertheless,  these  new  developments  will  ultimately  be  subject  to  Article  8  of  the  Charter  for 
Fundamental Rights and, once introduced in Regulation (EU) 904/2010, Paragraph 5 of Article 55 of 
that  Regulation  that  mirrors  Directive  95/46/EC68 on the  protection  of  individuals  with  regard  to the 
processing of personal data and on the free movement of such data69. 

5. WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES? 

5.1. Links between Problems/Drivers/Options/Sub-options 

As detailed under section 2 of this impact assessment, there are three main areas where cross-border 
VAT fraud schemes are developed. These three distinct problems, and their underlying factors, need to 
be addressed in different ways. Improving the instruments of Regulation (EU) 904/2010 may be the 
solution to resolve some of them. For others, the solution may be found in pieces of legislation that are 
out  of  the  scope  of  the  proposal  this  impact  assessment  relates  to.  They  nevertheless  needed  to  be 
mentioned to give a precise overview of the problems and provide better understanding of the issue at 
stake. 

When  designing  the  different  options  presented  in  this  impact  assessment,  diverse  views  were 
gathered.  Most  of  them  result  from  discussions  between  the  Commission  and  tax  administrations  in 
fora where VAT fraud issues and administrative cooperation matters are regularly discussed, such as 
the  Eurofisc  network  meetings,  the  Anti-Tax  Fraud  Strategy  Group,  the  Standing  Committee  on 
Administrative  cooperation  or  Fiscalis  2020  activities.  The  ECA  2015  report  on  VAT  fraud70 also 
suggested  different  ways  to  improve  administrative  cooperation,  in  particular  by  involving  law 
enforcement authorities to better combat the most severe types of fraud. Finally, over the course of the 
evaluation of Regulation (EU) 904/2010, opinions of the Member States and of other stakeholders on 
these options were also sought71. All this is further detailed below.  

The links between the problems and their drivers previously described, on the one hand, the solutions 
and options that could be developed to address them, on the other hand, are detailed in figure 6 below. 
The baseline scenario has not been reported in this figure although it is further described under section 
5.2 and constitutes the framework against which all options will be assessed.   

67

 European  Multidisciplinary 

Platform 

Against 

Criminal 

Threats 

(EMPACT). 

See: 

https://www.europol.europa.eu/crime-areas-and-trends/eu-policy-cycle-empact 
68 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection 
of natural  persons with regard  to  the processing of personal  data  and on  the  free  movement  of  such  data,  and 
repealing Directive 95/46/EC (General Data Protection Regulation) (Text with EEA relevance) will apply from 
25 May 2016. 
69 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31995L0046&from=EN 
70 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 
71 Considering the very limited number of replies received to the public consultation, 58 for the whole European 
Union, these results should be considered with caution. They are nevertheless presented for the completeness of 
the analysis. 

34 

 
 
 
                                                            
Figure 6: links between Problems / Drivers / Options/ and Sub-options 

Problems 

MTIC Fraud 

Drivers 

Weaknesses in the access 
and analysis of information 
mechanisms 

A legal framework that 
make it difficult to carry 
out coordinated actions at 
EU level 

Insufficient multidisciplinary approach 

Options 

Option 1: implementation 
of a joint and automatic 
risk analysis system 

Option 2 : improving 
framework w/r to 
coordinated actions of 
control between Member 
States 

Option 3: developing exchange of data between MS tax 
administrations and law enforcement authorities at EU 
level 

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5.2. Baseline scenario 

The  baseline  reflects  the  current  legal  framework  inclunding  all  ongoing  initiatives  which  have  a 
sufficient degree of certainty to be in a position to weight and assess them against all options that will 
be developed in this impact assessment.  

There are on the current agenda of the Commission several legislative proposals whose objectives are 
to  improve  the  functioning  of  the  EU  VAT  system,  to  make  it  stronger  and  remove  some  of  the 
weaknesses described in this impact assessment. 

However,  the  precise  characteristics  of  some  proposals  are  yet  unknown,  some  others  envisage  a 
progressive  implementation  and  all  of  them  would  need  to  be  agreed  upon  unanimously  by  all 
Member  States  after  including  possible  far-reaching  amendments.  Hence,  the  baseline  scenario  that 
will  serve  as  the  benchmark  against  which  the  other  options  will  be  assessed  will  not  include  these 
legislative  initiatives.  They  are  nevertheless  presented  to  give  a  complete  overview  of  the  current 
situation (section 5.2.1. of this impact assessment). In parallel, the Member States and the Commission 
have been working on the implementation of the Transaction Network Analysis on a voluntary basis. 
Since  this  instrument  will  be  implemented  whichever  the  results  of  the  Council  discussions  on 
amending Regulation (EU) 904/2010,  it has been considered as part of the baseline scenario.  

5.2.1. Legislative proposals with likely positive impacts on fight against VAT fraud 

The  Action  Plan  adopted  in  April  2016  by  the  Commission  sets  out  the  objectives  and  measures 
envisaged  by  the  Commission  to  modernise  the  EU  VAT  system.  The  creation  of  a  robust  single 
European VAT area is one of the key actions announced in the Action Plan. It will require the setting 
up  of  the  definitive  VAT  system  for  B2B  cross-border  trade,  moving  away  from  the  origin-based 
system  towards  a  destination-based  system  with  the  taxation  of  intra-EU  trade  in  the  country  of 
destination (please see Annex 9 for better understanding of the transitional system). The 'destination 
principle' has been agreed by the European Parliament72 and the Council73.  

After  having  examined  in  detail  the  possible  options  for  implementing  the  destination  principle,  the 
Commission  announced  its  intention  (see  Action  plan),  and  the  Council  took  note  of  it,  to  present  a 
proposal  for  the  definitive  VAT  system  that  consists  in  taxing  all  intra-EU  transactions  (while  still 
tracking the flow of the goods), just like it would be the case for domestic transactions. This option 
was  assessed  as  the  best  solution  to  tackle  MTIC  fraud  as  well  as  decrease  the  complexity  of  the 
system and thus the compliance costs for all stakeholders.  

Although  the  preliminary  results  on  the  above-mentioned  taxation  option  are  very  promising, 
preparing  and  adopting  such  a  major  change  is  likely  to  take  some  time.    Indeed,  the  Commission 
envisages three successive legislative steps to implement it fully. Each step will require an unanimous 
agreement in Council. Therefore the final features of the definitive system are unknown at this stage 
and it is a long-term project.   

In  addition,  the  definitive  regime  will  not  completely  address  frauds  in  relation  to  second-hand  cars 
and customs procedures 42 and 63. Actually, transactions taking place under these regimes will still be 
subject to specific VAT regimes that could be exploited by fraudsters to evade VAT. In this context, 

72 See Resolution on http://eur-lex.europa.eu/procedure/EN/199945  
73
plan 
on 

fraud 
http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-vat-action-plan/ 

conclusions 

the  VAT 

on  VAT 

 Council 

action 

and 

(25/05/2016) 

36 

 
 
 
                                                            
administrative cooperation measures to combat these frauds will still be needed whether the definitive 
regime is implemented or not. 

New  types  of  frauds  could  also  take  place  once  the  definitive  VAT  regime  is  implemented.  For 
instance,  fraudsters  could  exploit  differences  in  VAT  rates  between  Member  States  to  create  new 
forms  of  missing  trader  frauds.  If  this  were  the  case,  Member  States  could  use  the  cooperation 
instruments which are considered here to combat these new fraud schemes. 

Considering  the  urgency  to  take  robust  measures  to  improve  the  current  situation  when  it  relates  to 
VAT fraud, the Commission has tabled four proposals that are currently being discussed at the Council 
level:  

  a  proposal  for  a  temporary  Generalised  Reverse  Charge  Mechanism 74.  The  current  VAT 
system is based on fractioned payment ensuring that the VAT is collected at each stage of the 
production  and  distribution  chain.  Under  this  system,  the  supplier  is  the  person  liable  for 
payment of VAT to the tax authorities. Under a reverse charge mechanism, the person liable 
for payment of the VAT to the tax authority is the acquirer. The proposal under consideration 
aims at, under certain conditions, extending the reverse charge mechanism to all B2B supplies 
of  goods  and  services  above  a  certain  threshold  that  take  place  on  a  domestic  market  to 
prevent missing trader VAT fraud to take place;  

 

 

 

a  proposal  for  a  Directive  modernising  VAT  for  cross-border  B2C 75  e-commerce 76 .  
E-commerce  has  become  a  key  part  of  the  economy  and  an  important  driver  of  economic 
growth. The proposal aims at solving several concerns in relation to e-commerce, in particular 
losses  in  VAT  revenues  for  Member  States.  It  is  expected  that  a  change  in  the  small 
consignments  exception  rule  for  imports  and  the  distance  sales  thresholds,  along  with  an 
extension of the Mini One Stop Shop, may be solutions to tackle these increasing VAT losses; 

the future entry into force of the Directive on the fight against fraud to the Union's financial 
interests by means of criminal law which will cover serious EU-wide VAT fraud77; and 

the new legislation establishing the European Public Prosecutor's Office. On 8 June 2017, 20 
Member States reached a political agreement on its establishment under enhanced cooperation. 
It  will  be  an  independent  and  decentralised  prosecution  office  of  the  European  Union  with 
competence  for  investigating,  prosecuting  and  bringing  to  justice  crimes  against  the  EU 
budget, such as fraud, corruption, or cross-border VAT fraud above EUR 10 million damage. 

All  these  initiatives  along  with  the  new  instruments  that  could  be  implemented  by  amending 
Regulation (EU) 904/2010 would constitute ways to immediately improve the situation with regard to 
VAT fraud. It would also bring tools that could be further used and reinforced to combat new fraud 
schemes.  Nevertheless,  even  though  all  these  initiatives  are  successfully  implemented,  the  defintive 
regime  will  remain  necessary  to  put  an  end  to  the  current  endemic  weaknesses  of  the  transitional 

74 http://data.consilium.europa.eu/doc/document/ST-15817-2016-ADD-1/en/pdf  
75 Business to consumer. 
76 https://ec.europa.eu/taxation_customs/sites/taxation/files/com_2016_757_en.pdf 
77 On 25 April 2017, the Council adopted its Position at first reading which is fully in line with the compromise 
text on  the Directive  agreed in  the  informal  negotiations between  the  Council  and European Parliament.  Once 
voted by the Parliament, the Directive will be published in the Official Journal and Member States will have 24 
months 
level  (http://www.consilium.europa.eu/en/press/press-
the  provisions  at  national 
releases/2017/04/25-new-rules-to-protect-eu-finances/). 

implement 

to 

37 

 
 
 
                                                            
arrangements and reduce compliance costs for businesses engaged in intra-EU trade within the single 
market. 

5.2.2. Implementation of TNA on a voluntary basis 

Member  States,  on  a  voluntary  basis,on  the  basis  of  the  positive  outcomes  of  a  pilot  project  led  by 
Benelux  countries,  have  decided  to  develop  a  tool  for  information  exchange  and  joint  processing  of 
VAT  data  for  Eurofisc  officials  called  Transaction  Network  Analysis  (hereinafter  ‘TNA’)78.  TNA  is 
being implemented so it is considered as part of the baseline scenario.  

TNA  is  highly  targeted  to  how  Eurofisc  officials  already  exchange  information.  It  will  not 
substantially change the "what", but improve the "how" by addressing the following points: 

 

 

automating the collection of targeted information, e.g. VIES; 

improving the detection by introducing advanced data analytics; 

  being able to visualize suspicious networks without manual intervention. In the future Member 
States  will  be  monitoring  the  whole  chains  with  the  same  information  being  available  to  all 
participating Member States; 

 

 

improving  Member  States  ability  to  share  data  and  qualify  traders  identified  by  Eurofisc  by 
making  them  less  dependent  upon  manual  uploads  of  spreadsheets,  resulting  in  a  more 
structured and fluid way of information exchange; 

improving  the  quality  of  information  shared  by  enhancing  IT  facilities  for  collecting  and 
sharing  the  information.  That  would  allow  Member  States  to  better  allocate  resources  on 
which cases to investigate 

As  with  Eurofisc,  participation  in  TNA  is  voluntary  for  Member  States  as  this  is  merely  a  tool  to 
facilitate the exchange of information. Most of the Member States so far supported the development of 
TNA  and  25 countries  have  joined  the project  as  full  members,  two  countries  being  observers.  This 
means  that  TNA  will  be  able  to  access  their  data  to  identify  potential  fraudsters  and  their  Eurofisc 
officials  will  have  direct  access  to  TNA  to  investigate  identified  traders  and  provide  feedback. 
However it is envisaged that Member States not joining TNA will also benefit from the development 
as they will receive an extract of the results of TNA analysis through usual Eurofisc channels. 

It  is  expected  that  this  new  instrument  hosted  by  the  Commission  will  provide  a  new  framework 
allowing Member States to better and in a very efficient fashion target fraudsters so that tax authorities 
can quickly react to put an end to VAT fraud schemes. This voluntary TNA will be implemented in 
2018.  

In the answers to the public consultation, 47 respondents reported that a joint processing of data would 
be  helpful  to  fight  VAT  fraud  and  36  considered  that  Eurofisc  would  be  the  right  structure  to 
coordinate this new instrument.  

78 To  this  end,  and  to  prepare  the  implementation  of  the  transaction  network  analysis,  a  new  working  field 
(working  field  6)  has  been  created  within  Eurofisc.  All  Member  States  but  the  United  Kingdom  (not 
participating), Germany and Slovenia (observer status) have joined this new working field. 

38 

 
 
 
                                                            
In order for TNA to reach its full potential and bring all its positive effects, all Member States should 
join the project and grant TNA access to their VIES data. Nevertheless, one Member State requires a 
clearer legal framework in order to participate.  

5.3. Option 1: Implementation of Transaction Network Analysis  

Two  alternative  options  can  be  drawn  up.  The  introduction  of  an  explicit  legal  base  for  TNA  is 
envisaged under each of them. The only difference between them relates to the access by TNA to the 
VIES data which is necessary to identify potential fraudsters. 

5.3.1. Option 1.a: TNA without mandatory provision of data by all Member States 

In  contrast  with  the  baseline  scenario  this  option  would  introduce  an  explicit  legal  base  for  TNA  in 
Regulation  (EU)  904/2010.  However,  this  option  would  not  require  that  the  Member  States  which 
would not participate in TNA would have to grant it access to their VIES data.  

5.3.2. Option 1.b: TNA with mandatory provision of data by all Member States 

Under the baseline scenario and option 1.a, non-participating Member States would not be required to 
grant  TNA  access  to  their  VIES  databases.  As  a  consequence,  TNA  would  not  be  able  to  track 
network ramifications and relationships in all Member States. This would hamper the performance of 
the tool.  

Under option 1.b, as under option 1.a, an explicit legal base would be introduced in Regulation (EU) 
904/2010. However, all Member States, regardless of their participation in TNA, would be required to 
grant TNA access to their VIES data on intra-EU transactions in order for the application to identify 
potential fraudsters established in all Member States. 

5.4.  Option2:  Improving  the  operational  framework  with  regard  to  coordinated  actions  of 
control between Member States 

Two  sub-options  or  variants  that  can  be  implemented  separately  or  combined  with  each  other  have 
been identified: the implementation of joint audits and the coordination of Member States' multilateral 
actions  by  Eurofisc.  When  asked  about  the  usefulness  of  joint  audits,  Member  States  reported  that 
there would be an added value in implementing this new instrument: 15 strongly agree or agree that it 
would  be  a  useful  means  to  audit  cross-border  activities,  14  that  it  would  be  cost  effective  for  tax 
administrations and 15 for businesses, and 15 that it would provide legal certainty to businesses. At the 
same  time,  their  replies  also  showed  that  at  the  moment,  the  administrative  cooperation  instruments 
that  score  the  best  are  coordinated  actions  of  control  under  the  form  of  simultaneous  controls  or 
presence during administrative enquiries.  

Stakeholders other than Member States are balanced when it comes to the added-value of joint audits 
with 19 agreeing that an active participation of foreign tax officials would be valuable, 17 disagreeing 
and  19  without  any  position.  At  the  same  time,  40  of  them  recognise  the  added  value  of  having  a 
single report audit to provide taxpayers with more legal certainty. In addition, 43 respondents reported 
a benefit from having cross-border administrative enquiries of fraudulent network being coordinated at 
Eurofisc level.  

39 

 
 
 
 
 
5.4.1. Option 2.a: implementing joint audits 

Today, to coordinate their actions, Member States can engage in: 

 

 

simultaneous controls, where the tax authorities of several Member States carry out audits in 
their  respective  country  and  thereafter  exchange  the  information  collected  by  way  of 
spontaneous exchange of information; or  

administrative enquiries where foreign tax auditors can be present in other tax administration's 
offices and taxpayers' premises during national audit activities. However, foreign auditors are 
not allowed to directly carry out these activities.  

The  joint  audit  is  an  instrument  whereby  a  taxable  person  is  subject  to  a  coordinated  audit  with  the 
following features: 

 

 

 

 

two  or  more  countries  join  together  to  form  a  single  audit  team  to  examine  issue(s)  / 
transaction(s) of one or more related taxable persons (both legal entities and individuals) with 
cross-border  activities,  including  cross-border  transactions  involving  related  affiliated 
companies established in the participating countries; 

in which participating countries have a common or complementary interest; 

the  taxpayer  shares  information  with  the  single  audit  team  and  all  participating  countries  at 
once; and 

the  team  includes  competent  officials79 from  each  country.  No  individual  (bilateral)  requests 
for information between the auditors are needed because the information is shared within the 
mandate for the joint audit between all members of the single audit team. 

Introducing the concept of joint audit would be a step forward in achieving closer cooperation between 
tax  administrations  in  controlling  cross-border  supplies,  by  removing  legal  obstacles  taking  place  in 
simultaneous audits and presence of foreign auditors during administrative enquiries. In a joint audit, 
with two or more countries joining together to form a single audit team, the joint audit team carries out 
a  single  audit  i.e.  the  examination  of  books  and  records.  To  this  end,  tax  auditors  are  allowed  to 
actively  participate  in  the  audit  (with  powers  of  inspection)  held  in  the  jurisdiction  of  another 
participating Member State. 

5.4.2. Option 2.b: coordination of Member States' multilateral actions by Eurofisc 

Antifraud  units  are  at  the  forefront  in  fighting  serious  VAT  fraud  and  within  these  units,  the 
information gathered and analysed by Eurofisc officials is used by auditors carrying out cross-border 
audits  (currently  under  'simultaneous  controls'  and  'presence  in  the  office/participation  in  the 
administrative  enquiries').  Eurofisc  officials  have  to  transfer  the  relevant  information  to  national 
auditors, within their tax administration. It is then up to these auditors to consider if the information is 
relevant  enough  to  propose  the  initiation  of  a  simultaneous  control  following  the  procedures  of  the 
MLC-platform.  The  audit  units  in  the  tax  administrations  coordinate  the  cross-border  administrative 
enquiries/controls. 

Another domain in which Eurofisc could take a  more active role  is the coordination of cross-border 
administrative  enquiries  (simultaneous  controls  or  joint  audits)  of  possible  fraudsters  identified  by 

79 Who as competent authorities can directly exchange information on the basis of Regulation (EU) 904/2010. 

40 

 
 
 
                                                            
Eurofisc officials. Taking into account that Eurofisc officials are often the first to be warned about new 
fraudulent  networks  and  they  have  a  strong  expertise  in  serious  VAT  fraud,  they  would  be  the  best 
placed  to  coordinate  the  corresponding  necessary  investigations  and  administrative  enquiries  in  the 
Member  States  involved.  This  would  also  allow  better  utilising  the  result  of  the  TNA  and  the 
information from the audits could be immediately processed with TNA.  

Such coordination would be targeted to fraudulent networks identified within Eurofisc and requiring 
quick reaction. That means that only a fraction of MLCs would be covered. In practice, coordination 
would  be  carried  out  in  the  working  field  having  the  relevant  expertise  by  one  or  several  Eurofisc 
officials of the Member States involved in the audits.  

5.5. Option 3: Developing exchange of data between Member States' tax administrations and law 
enforcement authorities at EU level 

Member  States  use  more  and  more  multidisciplinary  approaches  against  serious  VAT  fraudsters  by 
involving national law enforcement bodies or participating in EMPACT80. This national effort could 
be enhanced at EU level by involving Europol and OLAF in this multidisciplinary approach. To date, 
no formal exchanges of information are organised between Member States' tax authorities and  these 
two  organisations.  As  reported  by  the  ECA  in  its  2015  report,  this  "reduces  Europol  and  OLAF's 
ability to tackle VAT fraud through the identification and disruption of organised crime groups behind 
the carousels and even their ability to assess the real impact of intra-EU VAT fraud".  

The targeted consultation whose results are presented in annex 4 shows that Member States exchange 
information with law enforcement authorities in a rather limited number of instances and that the vast 
majority of them have no experience at all in exchanging information with Europol and OLAF (19 out 
of  the  27  replying  Member  States  seem  to  have  no  exchange  of  information  with  these  two 
enforcement authorities at EU level). The vast majority of them also demonstrate a limited appetite to 
develop such exchanges in particular in the light of the pending questions regarding the powers of law 
enforcement authorities to investigate VAT fraud . 

Stakeholders  other  than  Member  States  see  more  interest  in  these  sharing  of  information  with  34 
respondents  being  of  the  view  that  cooperation  between  tax  authorities  and  law  enforcement  bodies 
should be changed.  

Four sub-options or variants which can be combined with each other have been identified.  

5.5.1. Option 3.a: automated access to VIES data by Europol and OLAF 

As recommended by the ECA81, the first option would be to grant an automated access to VIES data to 
Europol and OLAF. The information that would be made available covers: 

 

recapitulative statements from businesses making intra-EU supplies. These statements list the 
aggregate  value  of  supplies  of  goods  and  services  made  to  VAT  registered  customers 
elsewhere in the EU; 

  VAT numbers and details of enterprises registered for VAT purposes within the EU. 

80

 European  Multidisciplinary 

Platform 

Against 

Criminal 

Threats 

(EMPACT). 

See: 

https://www.europol.europa.eu/crime-areas-and-trends/eu-policy-cycle-empact 
81 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 

41 

 
 
 
                                                            
This option should be analysed in conjunction with Recommendation 14 of the ECA Report 24/2015 
where it is mentioned that the European Parliament and the Council should: 

(a) include VAT within the scope of the proposed directive on the fight against fraud to the 
Union’s financial interests by means of criminal law (PIF directive) and the Regulation on the 
establishment of the European Public Prosecutor’s Office; and  

(b) grant OLAF clear competences and tools to investigate intra-EU VAT fraud. 

Currently,  VAT-based  revenue  is  part  of  the  EU’s  own  resources.  However,  the  definition  of  the 
notion  of  ‘irregularity’  provided  for  by  Council  Regulation  (EC,  Euratom)  No  2988/95  on  the 
protection  of  the  European  Communities  financial  interests  only  applies  to  infringements  affecting 
own  resources  collected  directly  on  behalf  of  the  Communities.  Therefore,  there  are  still  pending 
questions regarding the possibility for OLAF to conduct on-the-spot checks in the field of VAT.  

5.5.2.  Option  3b:  Spontaneous  transmission  of  VAT  fraud  cases  involving  at  least  two  Member 
States by Member States' tax administrations to OLAF 

Under  the  second  option  tax  authorities  would  spontaneously  provide  OLAF  with  information  on 
serious VAT fraud cases involving at least two Member States.  

As reported under section 5.5.1., OLAF does not have the tools to conduct investigations in the field 
of  VAT  successfully  on  its  own.  However,  OLAF  has,  in  the  past,  when  information  was  shared, 
supported  multilateral  investigations  of  serious  VAT  fraud  by  offering  coordination  and  facilitation. 
The  opening  of  such  coordination  cases  became  rare  when  the  sharing  of  information  was  framed 
legally  in  Regulation  (EU)  904/2010  and  access  to  Eurofisc  was  limited  to  Member  States 
administrations.  

5.5.3. Option 3.c: access to Eurofisc data granted to Europol and OLAF  

Under  this  option  an  access  to  data  held  by  tax  authorities  within  Eurofisc  would  be  granted  to 
Europol and OLAF. Having regard to the remit of these two bodies, links with Eurofisc can be made 
since  they  are  all  involved  in  the  fight  against  the  most  severe  tax  fraud  threats.  Hence,  access  to 
targeted Eurofisc data could be considered when it relates to organised criminality, including: 

 

 

 

information  on  carousel  fraud, 
qualifications, feedbacks etc.) and TNA results; 

including  Eurofisc  data  (traders  under  monitoring, 

information on CP 42 & CP 63 fraud schemes; and 

information on VAT fraud trends. 

Considering  their  scopes  of  intervention,  it  seems  that  Europol  is  more  likely  to  be  interested  by 
information on organised crime, in particular, carousel fraud, while OLAF has probably an interest in 
receiving information at a broader spectrum. Nevertheless, the intention, here, is not to segregate the 
information  that  could be accessed  by  the  two  bodies  based  on  their  activities,  but  to  allow  them  to 
receive the same level of information.  

In  practice,  this  information  is  today  exchanged  by  way  of  CIRCABC.  An  access  to  the  restricted 
CIRCABC  fields  where  this  information  is  made  available  to  Eurofisc  officials  could  be  granted  to 
new Eurofisc officials designated at Europol's and OLAFs levels.  

42 

 
 
 
 
 
5.5.4. Option 3.d: enrichment by and sharing with Europol of Eurofisc data 

Considering its scope of activities, Europol holds information on criminal organisations that could be 
useful to fight serious VAT fraud in particular to Eurofisc liaison officials.  

Another option would be to allow Eurofisc officials to provide Europol with information so Europol 
could  enrich  Eurofisc  data  pieces  with  its  own  information  and  facilitate  the  analysis  carried  out  by 
Eurofisc  liaison  officials  and  the  administrative  enquiries  they  could  coordinate.  Europol  could  also 
share  the  information  from  Eurofisc  with  Member  States  law  enforcement  authorities.  According  to 
Europol  rules,  it  would  be  up  to  Eurofisc  officials  to  decide  whether  the  information  can  be  shared 
within Europol and with whom.  

5.6. Option 4: tackling fraud in relation to the dual VAT regime applicable to cars by improving 
access to car registration data 

Enhancing the exchange of information on car registrations between Member States would constitute a 
useful  means  to  help  national  tax  administrations.  This  was  in  particular  reported  by  the  Member 
States over the course of the targeted consultation with 20 Member States being of the view that car 
registration data should be added to the list of categories for automatic exchange of information and 19 
that data on car owners should be exchanged over VIES. With regard to other stakeholders, out of the 
49 respondents, 29 consider that tax authorities should exchange data on car registration. To this end, 
three alternative options/variants have been identified.  

5.6.1. Discarded option: improving automatic exchange of information between Member States 

As  detailed  above  under  section  2.4.2.1.,  automatic  exchange  of  information  on  new  means  of 
transport already exists between Member States. Improving these exchanges could also be considered 
as a means to answer tax administrations' needs. In this case, different shortcomings that exist today in 
the automatic exchange of information would be addressed: 

 

automatic exchange of information on new means of transport would become mandatory 
for  all  Member  States,  which  is  not  the  case  so  far  as  seven  Member  States  do  not 
exchange such information82; 

  more frequent exchange of information would be introduced, since information exchanged 
within three months after the quarter when it has become available, as it is currently the 
case, does not permit to have information on real time.  

However, this option is unlikely to suit needs expressed by Member States in relation to access to car 
registration  data.  The  objective,  here,  is  to  be  able  in  a  very  efficient  fashion  to  query  all  Member 
States  about  where  a  specific  vehicle  is  registered  to  further  direct  fraud  signals  or  information. 
Improving  automatic  exchange  of  information  would,  on  the  one  hand,  improve  the  availability  of 
information  in  relation  to  cars.  On  the  other  hand,  it  would  not  allow  Member  States  to  be  able  to 
know  where  a  car  is  registered,  except  if  all  Member  States  forwarded  all  their  car  registration  data 
and  if  at  national  level  each  Member  State  put  in  place  necessary  development  to  implement  this 

82 No  obligation  set  out  by  Regulation  (EU)  904/2010.  Article  4  of  the  Commission  Implementing  Regulation 
(EU) 79/2012 as amended, provides that each Member State shall notify the Commission in writing if it intends 
to  abstain  from  taking  part  in  the  automatic  exchange  of  one  or  more  categories  of  information  referred  to  in 
Articles 2 or 3 of the Regulation. 

43 

 
 
 
                                                            
function.  This  is  clearly  not  proportionate  to  Member  States'  needs  and  this  option  must  then  be 
discarded.  

5.6.2. Discarded option: access to the EUCARIS network without specific provisions in Regulation 
(EU) 904/2010 

As detailed under section 2.4.2.1., dedicated public or business organisations do hold information in 
relation to car registration in each Member State and exchange such information through  EUCARIS. 
An  option  would  be  to  allow  tax  authorities  to  have  a  direct  access  to  the  EUCARIS  Web  Client 
Application.  

Nevertheless, in this situation, legal issues would be raised as, under the current legal framework, tax 
administrations  are  excluded  from  the  possibility  to  directly  use  the  EUCARIS  network  or  to  have 
access to its data, even indirectly83.  

A new EUCARIS Treaty providing for exchanges of information for purposes other than  preventing, 
investigating and prosecuting offences in relation to cars with other administrative bodies was signed 
on 8 June 2017. Once this treaty is in force, exchange of information for tax purposes will be possible. 
However,  a  2-3  years  of  ratification  process  can  be  expected  and  only  8  EU  Member  States  are 
signatories to this Treaty. This means that under such scenario these specific tax administrations may 
only have access to the EUCARIS data of Member States participating in that multilateral agreement 
(all  data  of  other  EUCARIS  countries  would  be  excluded  from  the  access).  This  would  constitute  a 
significant loophole and would definitely not answer Member States' needs.  

5.6.3. Option 4.a: Access to car registration data by use of the EUCARIS network 

To solve the above-mentioned legal issue, the automated access to relevant data stored in the national 
repositories  of  vehicle  registration  authorities  could  be  provided  by  a  specific  provision  added  to 
Regulation (EU) 904/2010.  

In practice, the EUCARIS network would be accessible by way of a client application to be developed 
to suit Member States' needs and either provided at EU level or distributed in each tax administration. 
Under this alternative, functionalities would be the same as under section 5.6.2. 

As variant, as it is already the case as regards certain existing VIES data, it could be envisaged that 
only Eurofisc officials could be granted automated access to the information. 

5.7. Option 5: fighting fraud in relation to the customs procedures No 42 and 63 by removing the 
shortcomings in the implementation of CP42/CP63 procedures 

Improving  exchanges  of  information  between  tax  and  customs  authorities  is  seen  by  the  Member 
States  as  a  suitable  means  to  be  more  efficient  in  tackling  VAT  fraud  in  relation  to  CP42/CP63 
procedures. In their answers to the targeted consultation – see annex 4 – 19 Member States reported 
that it would be useful to exchange data on imports made under CP42/CP63 procedures over VIES.  
24 out of 27 also mentioned that customs authorities should have an access to VIES data, which was 
reported  as  being  already  the  case  in  23  Member  States.  These  views  were  also  for  a  large  extent 

83 See  Article  8(1)  of  the  Treaty  concerning  a  European  Vehicle  and  Driving  Licence  Information  System  of  
29 June 2000 as amended. 

44 

 
 
 
                                                            
reiterated by the Member States during the Anti-tax Fraud Strategy meeting that took place on 10 July 
2017.  

Stakeholders  other  than  the  Member  States  also  demonstrated  an  interest  in  these  sharing  of 
information  since  41  out  of  the  58  respondents  to  the  public  consultation  consider  that  tax 
administrations  should  have  automated  access  to  information  on  exempt  importations  from  customs 
authorities.  The  following  options  can  be  considered  when  it  comes  to  fighting  fraud  in  relation  to 
CP42/CP63 procedures.  

5.7.1. Option 5.a: making compulsory granting an access to the register of VAT numbers to customs 
authorities 

Checking  the  validity  of  the  VAT  numbers  of  the  importer  and  the  final  customer  by  customs 
authorities  before  approving  the  customs  declaration  under  CP42/63  is  necessary  to  check  the 
application of the exemption and to prevent VAT fraud. Accessing VIES data is key to carry out these 
checks. 

Under this option, access to VIES data, in particular VAT registration information would be granted to 
customs authorities in all Member States. Granting access to customs authorities would not be decided 
at national level in each Member State.  

5.7.2. Option 5.b: sharing CP42/CP63 data with tax authorities 

As described before, one weakness of CP42/CP63 procedures is the slowness and complexity of the 
verification of the entire process despite the risk of fraud occurring quickly. The tax authorities in the 
Member  States  of  import  and  of  destination  have  to  wait  for  the  recapitulative  statement  of  the 
importer, which is often not submitted, to carry out these checks. The tax authorities in the Member 
States of the final customer are not informed that there is an additional risk in relation to specific intra-
EU supplies as such transactions are not flagged in the recapitulative statement. 

To  remedy  this  implementation  flaw,  the  relevant  information  on  CP42/CP63  (i.e.  VAT  numbers, 
value of the imported goods, type of commodities) which is submitted electronically with the customs 
declaration  would  be  shared  either  immediately  or  on  a  regular  basis  by  the  Member  State  of 
importation with the tax authorities of the Member States of destination (determined on the basis of 
the  VAT  number  of  the  customer  reported  on  the  customs  declaration).  This  sharing  of  information 
could be done via a new database accessible through CCN/CSI. 

Such a measure would allow the Member States of importation and of destination to detect suspicious 
transactions much faster and stop the fraudsters much sooner. Tax authorities of both countries would 
be  able  to  cross-check  this  information  with  that  reported  by  the  importer  in  its  recapitulative 
statement  and  VAT  return  and  with  that  declared  by  the  recipient  of  goods  in  its  VAT  return.  In 
addition, if the Member State of destination detects that the VAT number of the customer declared to 
the  customs  authorities,  albeit  valid,  has  been  hijacked  (i.e.  the  identified  business  is  not  the  real 
customer  –  that  can  hardly be  detected  by  the  customs  authorities),  it  could  immediately  inform  the 
Member State of importation so it can control the importer.  

In addition to this measure, as it is already the case as regards existing VIES data, all Eurofisc officials 
could  be  granted  automated  access  to  the  whole  database  to  detect  fraudulent  chains  operating  in 
several Member States in particular by using TNA (Transaction Network Analysis). 

45 

 
 
 
6. WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL 
BE AFFECTED 

6.1. Methodology 

The revision of Regulation (EU) 904/2010 takes place in the context of the Action Plan84 presented by 
the EU Commission in April 2016 and further endorsed by the EU Council in May 201685 and the EU 
Parliament in November 201686. No specific tools or methodology were developed for the assessment 
of  the  options.  No  independent  study  could  be  launched  either.  An  evaluation  of  Regulation  (EU) 
904/2010 has been undertaken on the basis of, amongst other things, a consultation of Member States, 
an  open  public  consultation  of  private  stakeholders  in  the  first  half  of  2017,  statistics  provided  by 
Member  States  and  other  evidences  available  to  the  Commission.  This  evaluation  is  presented  in 
annex 3.  

In addition, several reports on the implementation of the current VAT administrative framework were 
presented  and  have  been  used  when  designing  the  different  options  and  comparing  them  :  see 
Commission report on  the functioning of Regulation (EU) 904/2010 made in accordance with Article 
59  of  the  Regulation87,  the  Commission  report  underArticle  12  of  Regulation  (EC)  No 1556/199988, 
the March 2015 ECA special report on the effectiveness of the EU in tackling intra-EU VAT Fraud89 
and an upcoming report in accordance with Article 12 of Regulation (EC) No 1556/1999. 

All other evaluations, studies and consultations that have been used to assess the different options are 
further described in Annex 7. 

6.2. Analysis of the impacts of the various measures 

The different options that have been presented under section 5 of this impact assessment are expected 
to swiftly and efficiently improve the situation when it relates to VAT fraud. In most instances, these 
new  instruments  will  improve  the  use  and  dissemination  of  already  existing  information  on  the  one 
hand,  and  relationships  between  administrations  and  authorities  involved  in  the  fight  against  VAT 
fraud on the other hand. Additional burdens that may be imposed either on national administrations or 
other stakeholders are rather limited or non-existent as regards the latter, while positive effects on the 
level  of  VAT  fraud  and  the  functioning  of  the  single  market  can  be  expected.  All  this  is  further 
detailed below.  

Social  impacts  are  difficult  to  assess.  It  could  be  argued  that,  indirectly,  eliminating  fraudulent 
businesses  from  the  market  will  level  out  the  playing  field  for  legitimate  businesses,  improve  their 
competitiveness  and  promote  their  growth,  which  in  turn  may  shift  employment  upwards.  It  is 
nevertheless impossible to assess with any level of credibility the extent of such an impact.  

Similarly, one could expect elimination of fraud to improve the health, safety and security of products. 
Goods in the fraudulent circulation  are more likely  to  be of unknown provenance and thus escaping 
standards, norms and procedures they should normally meet. Therefore, reducing their presence in the 

84 http://ec.Europa.eu/taxation_custoMember States/business/vat/action-plan-vat_en  
85 http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-vat-action-plan/  
86 http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0453  
87 COM(2014) 71, 12.2.2014 
88 COM (2014) 69, 12.2.2014 
89 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 

46 

 
 
 
                                                            
market by dismantling some of the fraudulent schemes could indirectly improve the real or perceived 
uncertainty as to products' quality and reduce the risks involved.  

Consumer prices may be somewhat affected by these measures. The fight against fraud will eliminate 
businesses  that  abuse  the  VAT  system  and  can,  consequently,  propose  under-priced  goods  to 
consumers. Although prices may be negatively impacted, this is the result of a correct application of 
the  rules  currently  framing  the  intra-EU  VAT  system  and  this  will  be  to  the  profit  of  the  correct 
functioning of the single market and contribute to tax fairness that is in the interest of all citizens.  

Indirectly,  a  well-functioning  taxation  system  has  a  stronger  distributive  role;  taxes  evaded  by  a 
business or an individual benefit only to them directly whereas overall fair taxation system, with high 
compliance and low level of irregularities, converts the revenues into (quality) public goods of benefit 
to  all  citizens.  Conversely,  a  tax  system  where  VAT  can  be  avoided  incentivises  businesses  and 
individuals to follow suit into the 'profiteering' approach, which ultimately erodes the market equality 
and the citizens' trust in the system as a whole.  

Finally, as fraudulent VAT schemes are often linked to organised crime with the proceeds of MTIC 
fraud usually reinvested in other criminal activities, the adoption of a common and multidisciplinary 
approach to tackle intra-EU VAT fraud and a better targeting of MTIC fraud will help eradicating the 
roots of these criminal networks. 

In terms of economic impacts, only indirect consequences could be mentioned here but neither their 
extent nor the causality relationship with the initiative can be credibly assessed. At the micro-level, as 
already  mentioned  above,  eliminating  fraudulent  businesses  from  the  market  would  improve  the 
economic  and  competitive  standing  of  legitimate  businesses,  prompting  them  to  grow,  invest  and 
employ. Overall, impacts on legitimate businesses are considered overly positive with no significant 
additional  costs  of  adjustment,  compliance  or  any  other  administrative  burden.  The  conduct  of  the 
legitimate  businesses  is  neither  targeted  nor  expected  to  change,  if  excluding  reduced  mitigating 
measures  to  counter  fight  VAT  fraud  in  any  given  business,  which  may  potentially  reduce  some 
operational costs and smoothen the operations.   

Where  pertinent,  alongside  these  general  impacts,  some  more  specific  effects  on  businesses  coming 
from  the  individual  policy  options,  including  on  administrative  burdens,  are  described  further  on  in 
greater detail, although no quantitative data are available to specifically support the analysis.  

At the macro-level, similar growth-inducing effects are normally expected from the well-functioning 
taxation  system,  which  generates  resources  being  partially  and  indirectly  returned  to  the  economic 
sectors  through  infrastructure  and  services,  legal  certainty  of  the  enforceability  of  the  tax  rules  and 
ultimately mutual trust. There exists unfortunately little research material on the causal links between 
the  level  of  fraud  and  its  impact  on  the  economic  growth  in  general.  Malfunctioning  tax  system 
however, is by all considered as eroding the basic market principles and further dis-incentivising any 
compliance.    

Positive impacts on the functioning of the single market are expected from the different options that 
are  considered  in  this  impact  assessment.  Cross-border  VAT  fraud  cannot  be  tackled  by  a  single 
administrative cooperation measure and all options will help national tax administrations to eradicate 
VAT fraud schemes roots, prevent the fraud to happen  and rebuild  the conditions of a level playing 
field  for  compliant  enterprises  across  the  EU.  Negative  effects  of  these  schemes  that  have  been 
described under Chapter 2 of this impact assessment (in particular on enterprises and on prices) will be 
reduced.  These  compliant  enterprises  will  benefit  from  a  more  efficient  and  less  distorted  single 
market. 

47 

 
 
 
Ex post audit and investigation, while important, is unlikely to forestall considerable loss of revenue, 
because  the  essence  of  the  fraud  is  that  money  is  made  quickly,  in  the  time  gap  before  the  missing 
trader  is  required  to  remit  the  VAT  it  has  supposedly  charged  on  its  sales.  Once  the  money  has 
disappeared  into  the  complex  web  of  transactions,  tracing  and  recovering  unjustified  VAT  refunds 
becomes  time-consuming  and  costly.  Preventing  fraud  to  happen  by  jointly  identifying  potential 
fraudsters very early is therefore key. 

As  the  objective  of  this  initiative  is  to  reduce  VAT  fraud  through  improved  cooperation  between 
Member  States,  it  is  in  that  area  that  the  impacts  of  the  initiative  are  expected  to  be  the  most 
significant and are analysed below in detail for each policy option. Since fighting VAT through better 
cooperation across the EU necessitates some coordination, organisational and, albeit to a lesser extent, 
financial  inputs,  these  are  also  part  of  the  more  extensive  analysis  below.  Therefore,  the  detailed 
analysis of the impacts of the policy options concentrated on the following specific aspects: 

 

 

impact on compliance costs to business, in particular SMEs; 

impact on administrative costs to the tax administrations; 

 

impact on VAT fraud; 

 

impact on fundamental rights. 

No  significant  operational  and  implementation  risks  have  been  identified  in  relation  to  the  options 
described in Chapter 5 and whose impacts are detailed under this chapter. Two may potentially take 
place. It is first possible that tax administrations do not develop on time or do not update when needed 
the IT components necessary to implement certain measures. This is typically the case for options 4 
and  5  where  national  authorities  will  have  to  develop  IT  programmes  or  functions  to  provide  and 
exchange information in relation to car registration data and customs procedures 42 and 63.  

A  second  risk  that  has  been  identified  is  the  possibility  that  some  instruments  made  available  to 
national tax authorities are finally not used as much as expected or that their potentialities are not fully 
exploited.  Since  Regulation  (EU)  904/2010 proposes  a  variety  of  tools  without  -  for  the  majority of 
them - imposing to the Member States to use them, this risk may happen. This can be the case because 
of  a  lack  of  available  human  resources    or  because  Member  States  are  reluctant  to  use  some 
instruments or see them as useless (for example participation in joint audits)  

Nevertheless,  combating  VAT  fraud  is  a  constant  concern  for  all  Member  States,  meaning  that  they 
will  certainly  use  all  these  new  possibilities  if  their  impacts  on  national  revenues  are  positive  and 
quickly  felt  by  the  tax  authorities.  For  instance  some  Member  States  were  initially  reluctant  to  the 
implementation of the Transaction Network Analysis and have finally accepted to join the project. In 
sum, and even though the risk that some instruments are not used  is not negligible, it remains rather 
limited.  

6.2.1. Baseline scenario: Status Quo with implementation of TNA on a voluntary basis  

 Impact on compliance costs to business, in particular SMEs 

The baseline scenario includes the current VAT framework as well as the transaction network analysis 
since this instrument will be implemented by the Member States on a voluntary basis. 

It  is  not  expected  that  TNA,  be  it  voluntary  or  with  the  mandatory  provision  of  data,  will  result  in 

48 

 
 
 
additional  compliance  costs  or  administrative  burdens  for businesses.  As  described  in  section  5.2.3., 
the  TNA  will  process  in  a  more  efficient  fashion  information  already  available  to  Member  States 
administrations and no further obligations will be imposed on business to gather this information. 

Compliant businesses could gain from the fact that national administrations will be able to better target 
their checks and audits. That means less documents and proofs to provide to administrations and less 
administrative burden to face potential controls undertaken by tax authorities. As also detailed above, 
these compliant companies will also benefit from a better functioning of the single market. In sum, the 
implementation of TNA will have positive impacts on compliant businesses located in Member States 
participating in this risk analysis instrument.  

Impact on administrative costs to tax administrations 

On  the  one  hand  the  implementation  of  TNA  on  a  voluntary  basis  will  not  trigger  any  significant 
additional costs for tax administrations: 

  The risk analysis instrument is developed at EU level and all its related costs are borne by the 
Fiscalis  programme.  The  total  solution  implementation  costs  covering  development, 
maintenance, IT support, infrastructure and training have been estimated at EUR 1.77 million 
for years 2017-2021. Business implementation costs covering business support including the 
creation  of  a  new  Fiscalis  Project  Group  and  an  Expert  Team  which  will  assist  in  the 
application design, development, testing and integration within the Eurofisc environment, and 
coordination by the TNA management team (MT), i.e. a new Eurofisc Working Field,  amount 
to  EUR  1.3  million  for  the  same  period.  This  includes  IT  developments  and  all  meetings 
where the implementation of this instrument is discussed since these discussions take place in 
a Fiscalis Project Group specifically dedicated to this purpose; 

  A new Eurofisc working field has been set up as a new Fiscalis Project Group. This means 
that  most  of  practical  associated  costs  in  relation  to  the  running  of  TNA  (organisation  of 
meetings,  hosting  of  the  software  etc.)  will  also  be  borne  by  the  Fiscalis  programme.  The 
main  cost  that  can  be  expected  for  participating  Member  States  is  the  designation  of  a new 
Eurofisc official involved in this working field. It must however be kept in mind than in most 
instances,  this  liaison  official  will  be  the  same  as  in  the  working  field  dealing  with  MTIC 
fraud  (Working  Field  1).  To  avoid  duplicating  Member  States  efforts  there  will  be 
information  exchange  between  the  new  Working  Field  and  existing  Working  Field  1.  This 
will  ensure  that  all  in  all  there  is  no  additional  burden  for  Member  States  arising  from  the 
creation of the new Working Field. 

  With  respect  to  the  new  working  field  coordinator,  certain  tasks  that  require  access  to 
operational  information  will  have  to  be  performed  by  experts  from  Member  States.  Those 
tasks  mainly  consist  of  performing  Help  Desk  functions,  testing  of  new  functionalities  and 
business  rules  as  well  as  ensuring  information  exchange  between  TNA  and  other  Eurofisc 
Working Fields. Currently these tasks are estimated at 3 full-time equivalents (FTE) per year. 
However  already  today  most  Working  Field  coordinators  have  a  small  domestic  team  that 
supports  them.  Therefore  TNA  is  not  likely  to  have  a  substantially  different  administrative 
costs on ensuring information exchange compared to current arrangements. The Commission 
will support Member States by providing financial support through Fiscalis programme. 

On the other hand, tax administrations will benefit from new and more targeted tools to combat VAT 
fraud. Current arrangements are particularly burdensome for Eurofisc Working Field coordinators who 
are  responsible  for  compiling  signals  coming  from  different  Member  States  into  a  single  Excel 
spreadsheet.  Due  to  human  factor,  data  quality  is  not  always  optimal.  Dealing  with  those  problems 

49 

 
 
 
cost time that might have otherwise been dedicated to investigating fraudsters. 

TNA  is  expected  to  improve  Member  States'  ability  to  target  MTIC  fraud  through  an  improved 
information  exchange  and  better  usage  of  data  already  available  in  Eurofisc  and  exchanged  through 
VIES system. By automating the process of exchange of information TNA is expected to substantially 
reduce  the  workload  of  the  working  field  coordinator.  It  will  free  up  resources  in  Eurofisc  by 
automating  the  process  of  building  networks  and  identifying  potential  risky  traders.  As  a  result 
Eurofisc  liaison  officials  will  have  more  time  to  focus  on  more  meaningful  tasks  such  as  actual 
investigation of  identified  traders  and  chains.  The  information  exchange  in  Eurofisc  network  should 
become  smoother  and  the  quality  of  data  should  improve.  TNA  would  then  contribute  to  Member 
States ability to collect VAT, target fraudsters as well as fight and prevent MTIC fraud. 

In sum, most of costs in relation to the development and implementation of TNA are currently and will 
in the future be borne by the Fiscalis budget. Member States will only bear the employment costs of 
liaison officials involved in the new working field dedicated to TNA. These costs in most instances are 
already dedicated to the fight against MTIC fraud and it is not certain that ultimately, Member States' 
tax administrations will bear new costs to implement TNA. At the same time, TNA will facilitate the 
work  of  anti-fraud  units  and  enable  them  to  target  fraudsters  in  a  more  efficient  fashion.  Although 
when  it  comes  to  administrative  costs,  it  is  not  possible  to  precisely  ascertain  what  national 
administrations  will  gain  or  lose  from  the  implementation  of  TNA,  any  costs  born  should  be  set 
against  the  long  term  benefits  stemming  from  deterring  of  fraudulent  conducts,  higher  voluntary 
compliance and possibly easier monitoring of the correct application of the VAT. 

Impact on fundamental rights 

The baseline scenario takes into account the current VAT system as it is with the implementation of 
TNA on a voluntary basis. The implementation of a TNA  could have impacts on fundamental rights 
since new cross-checks of data, which could include personal data, will be put in place.  

As previously detailed, TNA comprises several functionalities including the collection of existing and 
targeted  information,  the  introduction  of  advanced  data  analytics,  the  visualization  of  suspicious 
networks without manual intervention and the ability to share data and qualify traders.  

All data that TNA will use are data already available to Member States and which is collected for the 
same purpose: to allow tax authorities to check that the recipient of the goods and services has paid the 
VAT and therefore to fight VAT fraud such as carousel or MTIC fraud. No access to data held by third 
parties will be required for TNA to operate.  

Furthermore, the collection of data will be strictly targeted and circumscribed to operators supposedly 
involved  in  fraudulent  transactions.  These  data  will  be  kept  only for  the  time  necessary  for  analysis 
and investigations by national tax authorities, which are empowered to enforce VAT obligations. They 
will be used to identify at an early stage potential fraudsters and to put an end to fraudulent networks 
whose purpose is to abuse the VAT system by perpetrating VAT fraud. Only Eurofisc liaison officials 
will be able to access TNA. 

Under the baseline scenario, Member States will not have any obligation to provide their data for the 
TNA analysis. All of this will be made on a voluntary basis.  

Impact on VAT fraud 

As  reported  under  section  2.3.1.  where  information  in  relation  to  the  magnitude  of  MTIC  fraud  is 
provided, under the current VAT legal framework a EUR 40-60 billion fraud per year is borne by the 

50 

 
 
 
Member States. 

The implementation of TNA in the baseline scenario will have positive impacts on the level of VAT 
fraud although it is not possible to precisely assess which positive effects on the VAT fraud level this 
scenario  will  have.  We  can  at  most  rely  on  Belgium's  experience  since  the  early  2000's  where 
datamining solutions were put in place to fight an always growing VAT carousel fraud. According to 
the figures publicly made available by Belgium, the early detection of fraudsters and quick reactions 
of  tax  authorities  made  it  possible  to  reduce  VAT  fraud  from  EUR  1.1  billion  in  2001  to  EUR  40 
million in 2014.  

It  is  not  possible  to  ascertain  that  TNA  implementation  will  have  similar  impacts.Nevertheless,  it  is 
possible that introducing TNA on a voluntary basis under the current legal framework will not allow it 
to  reach  its  full  potential as  it  will  remain  voluntary.  Member  States  not  participating  will not  grant 
access to their data and will not give feedback to the traders identified by TNA. As a result, in some 
cases, the analysis performed will be incomplete. This also means that fraudulent actors could still act 
from  countries  that  would  not  participate  in  TNA  and  could  still  perpetrate  VAT  frauds  therein  and 
from there in other Member States.  

It  is  not  possible,  at  this  stage,  to  evaluate  the  extent  to  which  non-participation  of  some  Member 
States in TNA, in particular major economies, will negatively affect the capability of TNA to detect 
fraudsters.  

6.2.2. Option 1: Implementation of a joint and automatic risk analysis system 

6.2.2.1. Common impacts 

Impact on compliance costs to business, in particular SMEs 

 These impacts are the same as in the baseline scenario.  

Impact on administrative costs to tax administrations 

These impacts are the same as in the baseline scenario. 

6.2.2.2. Option 1.a. TNA without mandatory provision of data by all Member States 

Impact on VAT fraud 

When compared to the baseline scenario, option 1.a., by introducing an explicit legal base for TNA in 
Regulation  (EU)  904/2010,  will  allow  all  Member  States  willing  to  join  but  needing  a  clearer  legal 
framework to do so, to engage in such cooperation.  

However, due to the voluntary nature of Eurofisc, Member States will still have an option to opt-out 
from TNA.  

Therefore as under the baseline scenario, Member States not participating will not grant access to their 
data. As a result, in some cases, the analysis performed will be incomplete and it will not be possible 
to precisely trace all fraudulent chains and all actors involved in them.  

Only Member States participating to the TNA will receive on the spot the results of the analysis. Non-
participating  Member  States  will  receive  the  results  of  the  TNA  in  the  conditions  under  which 
Member  States  do  currently  exchange  signals  on  potential  fraudsters.  In  addition,  these  non-
participating Member States will not be involved in the new TNA-dedicated working field and will not 

51 

 
 
 
be able to gain from the experience-sharing with other Member States.  

In sum, these Member States that will prefer to remain outside the TNA will not be in a position to act 
in  the  same  manner  against  enterprises  located  within  their  territory  and  actively  involved  in  fraud 
schemes. This will certainly delay their actions against fraudsters and impede their results. In addition, 
this will have a negative impact on other Member States since the analysis will be incomplete. 

Impact on fundamental rights 

 These impacts are the same as in the baseline scenario. 

6.2.2.3. Option 1.b. TNA with mandatory provision of data by all Member States 

Impact on VAT fraud 

In addition to option 1.a. this option will introduce an obligation for Member States to provide access 
to  their  VIES  data  for  TNA  regardless  their  participation  in  TNA.  Through  that,  this  option  will 
minimise the negative effect from Member States non-participation in TNA as non-participation will 
not affect TNA’s ability to access Member States data. 

This option is expected to produce better results than option 1.a. on the fight against VAT fraud. If all 
Member  States  must  provide  their  data,  a  richer  data-set  will  allow  a  better  targeting  and  an  earlier 
detection of fraudsters active across the entire EU will be possible. By removing all shortcomings that 
still exist in the detection of fraudulent enterprises in option 1.a. and baseline scenario, Member States 
will be in a better position to act against them. This will also facilitate joint and coordinated actions 
between Member States to put an end to the most severe fraud schemes.  

Hence,  this  option  will  have  stronger  impacts  on  the  fight  against  VAT  fraud,  although  it  is  not 
possible to specifically assess to which extent. 

Impact on fundamental rights 

In comparison with the baseline scenario, this option entails the provision of data necessary to perform 
the joint processing by all Member States. Although processes and analysis will not depart from what 
has been previously described, this option will trigger more intense uses of data, which could include 
personal  data,  as  all  Member  States  will  have  to  provide  the  necessary  information.  Impacts  on 
fundamental rights could then be more significant.  

However, as under the baseline scenario, all the data that TNA will use is already available to Member 
States  and  collected  for  the  same  purpose,  i.e.  fighting  VAT  fraud.  No  access  to  data  held  by  third 
parties will be required for TNA to operate. The data used will be strictly targeted and circumscribed 
to  operators  supposedly  involved  in  fraudulent  transactions.  Only  information  strictly  necessary  to 
identify VAT fraudsters will be processed. Only Eurofisc liaison officials will be able to access TNA. 

6.2.3.  Option  2:  Improving  the  legal  framework  with  regard  to  coordinated  actions  of  control 
between Member States 

6.2.3.1. Option 2.a. Implementing joint audits 

Impact on compliance costs to business, in particular SMEs 

In comparison with the baseline scenario, option 2.a. is unlikely to result in additional costs or burdens 

52 

 
 
 
for  businesses.  This  option  considers  improving  multilateral  actions  that  can  be  undertaken  by 
Member States to check enterprises tax positions.  

First, implementing this option will not require additional administrative formalities such as tax filing 
or  provision  of  information  from  enterprises.  In  this  scenario  tax  administrations  will  only  rely  on 
already existing information.  

Second,  businesses  can  expect  some  simplifications  under  option  2.a.  since  a  single  audit  team 
composed of tax officials of several Member States will conduct a single audit. A business undergoing 
this type of joint audit will actually gain from this situation since it will have a single visit leading all 
participating  countries  to  draw  their  conclusions  at  once.  Under  the  baseline  scenario,  the  same 
business could be audited by its national tax authorities without being preserved, at a later stage and 
under  request  from  foreign  authorities,  from  providing  additional  information  or  evidences  to 
substantiate its tax position. Implementing joint audit intends to solve this issue as it would allow the 
national authorities within the audit teams to jointly request data and information from the taxpayer, 
but still within their respective legal frameworks. It should be noted that it may mean that any single 
data and information collection for the purpose of such audit, would require a bigger effort in order to 
meet the needs of all auditing parties. However, it is unlikely that any possible extra efforts would be 
bigger  than  a  sum  of  individual  audits.  It  is  anyhow  difficult  to  assess  with  any  level  of  credibility 
such situations, as the costs and burdens associated will vary from case to case. 

Third, joint audits will also have positive effects for multinational companies since their tax position 
would be checked at the same time by several administrations that would be in a position to further 
have  common  overarching  conclusions  on  transactions  audited.  This  could  prevent  businesses  from 
opening dispute resolution procedures, in case tax administrations have directly been able to reach a 
common  understanding  of  audit  conclusions.  This  would  therefore  avoid  procedural/legal  as  well  as 
economic costs (e.g. in instances of double taxation).  

Overall, businesses should normally derive a benefit from the implementation of tax audits. The cost-
reducing  potential  of  joint  anti-fraud  operations  was  also  recognised  in  the  conclusions  of  the  2011 
evaluation  of  the  elements  of  the  VAT  system,  which  stated  that,  because  compliance  costs  were 
already  high  for  cross-border  trade,  distorting  trade  and  reducing  GDP,  efforts  should  be  made  to 
ensure  that  moves  to  increase  compliance  do  not  increase  these  further;  this  makes  increased 
cooperation,  data-sharing  and  joint  anti-fraud  operations  between  revenue  authorities  in  different 
Member States a first priority. 

Impact on administrative costs to tax administrations 

Only a handful of the EU Member States have had direct experience with joint audits. A pilot on joint 
audit  was  conducted  in  2014  between  the  Netherlands  and  Germany.  From  this  rather  limited 
experience  and  the  distinct  character  of  any  single  audit  case,  it  is  difficult  to  draw  any  overall 
conclusions. For tax administrations, implementing joint audit would not trigger more costs than in the 
baseline scenario. Although some resources are likely to be spent on travels, in the event joint audit 
activities takes place abroad, these activities and their related costs could be covered at EU level by the 
Fiscalis  Programme  and  would  ultimately  not  be  directly  borne  by  national  administrations.  Other 
costs such as translation costs may also have to be borne by national administrations.  

Nevertheless, if involved in such activities, national administrations will also save time on exchange of 
information. Since all information needed to audit a business tax position will be collected on the spot 
by  national  auditors,  requesting  information  and  spontaneously  exchanging  it  at  a  later  stage  of  the 
audit will no longer be necessary. Tax authorities will then be in a position to finalise their checks at 
an earlier stage than in the baseline scenario.  

53 

 
 
 
As  for  enterprises,  common  conclusions  shared  by  several  tax  authorities  will  also  prevent  some 
businesses  undergoing  joint  audits  from  opening  dispute  resolution  procedures.  Tax  administrations 
will then be preserved from engaging in lengthy and somehow costly and burdensome procedures.  

Although a Regulation has direct effects in all Member States, most Member States will need to adjust 
their national tax laws to specifically cover joint audits and the possibility for foreign officials to carry 
out  their  activities  on  the  territory  of  another  Member  State.  That  may  entail  some  implementation 
costs but they are considered to be marginal. Although no analysis of legal provisions regulating tax 
audits and administrative cooperation  measures within national law is available, the regulatory costs 
are  expected  to  be  limited  to  changing  a  few  specific  provisions  and  issuing  guidance  to  businesses 
and tax auditors. At the same time, the auditors within audit teams will continue to operate under their 
specific national provisions and joint audits do not imply harmonising these. 

Impact on fundamental rights 

Implementing joint audits will not trigger any new kind of exchange of data between Member States. 
This  is  just  a  means  to  add  a  new  possibility  of  direct  contacts  between  tax  authorities  and  their 
taxpayers by authorising foreign officials to actively participate in national audits and enquiries.  It is 
possible  that  references  to  such  new  legal  instrument  in  national  legislation  will  be  needed  and  the 
rights and safeguards protecting taxpayers in all Member States will also have to be adjusted. This can 
be done at national level only and on the basis of existing legislation and general principles of law that 
apply in each Member State. At the EU level, offering Member States to conduct voluntary joint audits 
does  not  breach  fundamental  rights  of  any  stakeholders  as  long  as  these  are  respected  within  the 
national provisions governing tax audits. 

Impact on VAT fraud 

In  principle,  positive  effects  can  be  expected  from  the  implementation  of  joint  audits  since  tax 
administrations involved in such activities will work more closely, in a more cooperative manner and 
will  get  targeted  information  quicker.  This  instrument  will  also  give  the  possibility  to  better  tackle 
frauds, including VAT fraud since all administrations will operate at the same time on a same tax case.  

Nevertheless,  if  useful to propose  this instrument,  it  must  be  kept  in  mind  that  in  similar  conditions 
multilateral controls, while having positive and recognised effects, are not widely used. The number of 
such multilateral controls launched  every year remains on average under 50 cases per year although 
this activity has been highly promoted by the Commission. It is then difficult to guess to which extent 
Member States will use the new instruments to perform joint audits. 

In sum, if positive effects are likely to take place, it is not expected, at this early stage, to see a fast 
development of this new instrument, even with strong incentives from the Commission.  

6.2.3.2. Option 2.b. Coordination of multilateral actions by Eurofisc 

Impact on compliance costs to business, in particular SMEs 

When  compared  to  the  baseline  scenario,  option  2.b.  will  not  have  any  negative  impact  on  costs  to 
businesses since the option only deals with the manner in which several Member States will altogether 
coordinate  their  actions  to  better  fight  VAT  fraud.  No  additional  formalities  and  obligations  will  be 
imposed on businesses in this scenario 

Impact on administrative costs to tax administrations 

54 

 
 
 
In comparison with the baseline scenario, option 2.b. would allow Eurofisc officials to take an active 
role  in  coordinating  cross-border  administrative  enquiries  into  serious  fraud  cases  (simultaneous 
control or joint audits). This solution is unlikely to either increase or save costs for tax administrations. 
It  will  be  a  means  to  save  time  by  launching  audits  earlier  and,  in  creating  direct  links  between 
Eurofisc  and  tax  audits  teams,  to  be  more  efficient  when  coordinating  actions  with  foreign 
counterparts.  

Impact on fundamental rights 

Compared  to  what  exists  under  the  baseline  scenario,  this  option  affects  coordination  of  audits 
between Member States without creating new processes, procedures or scope of exchanged data and 
information. Exchange of information and administrative procedures will remain the same as under the 
baseline scenario. Only internal processes of national tax administrations could be affected which does 
not impact fundamental rights.  

This new instrument is unlikely to create any new data processes affecting fundamental rights.  

Impact on VAT fraud 

In  principle,  positive  effects  can  be  expected  from  audit  coordination  at  Eurofisc  level.  As  detailed 
above, for the moment, when receiving information, Eurofisc officials have to transfer it within their 
tax administration. It is then up to auditors to consider if the information is relevant enough to propose 
the  initiation  of  a  simultaneous  control  following  the  procedures  of  the  MLC-platform.  The  lengthy 
procedure  for  launching  MLCs  is  not  appropriate  to  tackle  serious  VAT  fraud  such  as  MTIC  and 
carousel fraud cases detected by Eurofisc.  

The  latest  available  Commission  Report  to  the  Council  and  the  European  Parliament 90  on  the 
application of Regulation 904/2010 from 2014 already mentioned the merits of better coordination, in 
particular  by  reinforcing  ties  between  national  anti-fraud  units  and  Eurofisc.  As  Eurofisc  liaison 
officials  are  often  the  first  to  be  aware  of  new  fraud  schemes,  they  could  trigger  administrative  and 
audit procedures in a speedier way and would be expected to react in time to detect or prevent fraud 
and apprehend perpetrators. In sum, positive effects on VAT audits are also likely to take place with a 
better conducting of cross border actions. It is nevertheless not possible to assess to which extent.  

6.2.4. Option 3: developing exchange of data between Member States tax administrations and EU 
law enforcement authorities 

6.2.4.1. Common impacts 

Impact on compliance costs to business, in particular SMEs 

Economic  operators  are  not  directly  impacted  by  this  measure.  The  exchange  of  information  that  is 
envisaged  with  this  measure  concerns  information  that  is  already  available  to  public  authorities.  It 
does not require either collection or submission of additional data from economic operators (including 
SMEs).  

90  Com(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 

55 

 
 
 
                                                            
Impact on administrative costs to tax administrations 

In comparison with the baseline scenario there should be no additional costs for tax administrations. 
Already today in most of Member States there is a close cooperation between tax authorities and law 
enforcement  bodies  including  Europol.  Better  exchange  of  information  between  tax  administrations 
and EU law enforcement authorities may improve Member States' capacities to gather evidences or to 
be advised about fraud schemes and ultimately have a positive impact on their investigation activities. 

Impact on fundamental rights 

Regarding cooperation with Europol there should be no difference compared to the baseline scenario.  

Already  today  in  most  of  Member  States  there  is  cooperation  between  tax  authorities  and  law 
enforcement bodies including Europol. With regard to Europol, its status and competence do not grant 
it  executive  powers  and  prevent  its  officials  from  conducting  investigations  or  arresting  people. 
Therefore,  the  most  sensitive  activity  of  Europol  from  the  perspective  of  fundamental  rights  is  the 
protection  of  personal  data,  which  is  already  governed  by  strict  and  robust  data  protection  system 
composed  of  Data  Protection  Officer  and  supervision  by  the  European  Data  Protection  Supervisor. 
Closer cooperation with Europol is not expected to impact in any way this status quo. 

OLAF is vested with the mandate to protect the financial interests of the European Union, including, 
inter alia, VAT. OLAF can open coordination cases providing operational support and facilitating and 
coordinating multi-state investigations into VAT fraud on the basis of Article 1(2) of Regulation (EU, 
Euratom)  No  883/2013.  Such  operational  coordination  and  support,  which  is  based  on  a  close 
cooperation  with  Member  States  authorities,  can  include  the  sharing  of  operational  data,  including 
personal data.  

The processing of personal data in OLAF is done in full compliance with Regulation 45/2001 on the 
protection of personal data. Since OLAF was set up as an independent body, it has appointed its own 
data  protection  officer  (DPO),  who  monitors  the  compliance  with  the  Regulation.  OLAF  is  further 
supervised by the European Data Protection Supervisor.  

A closer cooperation with OLAF is not expected to impact in any way this status quo, which already 
applies  to,  inter  alia,  OLAF's  coordination  and  investigation  activities  in  the  areas  of  customs  and 
counterfeit goods and its administrative cooperation with national customs authorities in that regard.  

6.2.4.2. Option 3.a. Automated access to VIES by Europol and OLAF 

Impact on VAT fraud 

OLAF access to VIES would allow it to cross-check the names and addresses of economic operators 
with its own operational data and data reported by the Member States through IMS91. 

Access to VIES by Europol would allow to cross-check the names, addresses and business partners of 
suspects in Europol databases with VIES data.  

Both would allow for more actions by law enforcement bodies against criminal organisations behind 
VAT  fraud.  In  comparison  with  the  baseline  scenario,  the  effect  can  only  be positive.  However,  the 
proportionality  of  this  measure  should  be  compared  with  option  3.c  which  should  provide  similar 

91 Irregularity Management System: OLAF's electronic reporting and database tool by which Member States in 
shared management (of EU funds) report fraudulent and non-fraudulent irregularities (illegal activity in violation 
of EU provisions affecting EU financial interests). 

56 

 
 
 
                                                            
results. 

6.2.4.3.  Option  3.b.  Spontaneous  transmission  of  VAT  fraud  cases  involving  at  least  two  Member 
States by Member States' tax administrations to OLAF 

Impact on VAT fraud 

While  OLAF  has  a  mandate  to  protect  the  EU's  financial  interests,  including  VAT,  against  fraud, 
corruption  and  other  illegal  activity,  it  currently  lacks  the  tools  to  conduct  successful  investigations 
against  VAT  fraud.  However,  OLAF  can  facilitate  and  support  national  tax  and  customs 
administrations and law enforcement bodies and coordinate Member State level investigations across 
national borders.  

It  does  so  successfully  in  the  areas  of  customs  and  counterfeit  goods,  where  mutual  administrative 
assistance,  including  OLAF's  competencies  are  framed  by  Regulations  515/97  and  608/2014 
respectively. In comparison with the baseline scenario, the effect can only be positive. 

6.2.4.4. Option 3.c. Access to Eurofisc data granted to Europol and Olaf 

Impact on VAT fraud 

As under option 3.a., OLAF access to Eurofisc data would allow OLAF to cross-check the names and 
addresses of economic operators with its own operational data and data reported by the Member States 
through IMS. 

Similarly,  access  to  Eurofisc  data  by  Europol  would  allow  to  cross-check  the  suspects  in  Europol 
databases with suspect traders identified by Eurofisc officials and their networks.  

The information would be shared by Europol with national law enforcement authorities and could be 
used by OLAF to coordinate investigations at national level. It would allow for more actions by law 
enforcement bodies against criminal organisations behind VAT fraud. In comparison with the baseline 
scenario, the effect can only be positive.  

6.2.4.5. Option 3.d. Enrichment of Eurofisc with Europol data 

Impact on VAT fraud 

Eurofisc officials could provide Europol with information so Europol could enrich pieces of Eurofisc 
data  with  data  from  Europol  database.  That  would  facilitate  Eurofisc  analysis  in  particular  in 
identifying the real perpetrators of serious VAT fraud and their fraudulent network. Europol could also 
share  the  information  with  Member  States  law  enforcement  authorities.  In  comparison  with  the 
baseline scenario, the effect of such an option can only be positive.  

6.2.5. Option 4: Improved access to car registration data 

6.2.5.1. Option 4.a. Access to Eucaris database 

Impact on compliance costs to business, in particular SMEs 

Car registration is already an obligation in all Member States. New exchanges will then be based on 
already  existing  information,  directly  available  to  authorities  maintaining  these  records  in  each 
Member  State  and  will  not  trigger  any additional  burdens  and  costs  to  enterprises  or  individuals  for 

57 

 
 
 
that matter.  

Impact on administrative costs to tax administrations 

In several Member States tax administrations already have an access to car registration data for tax-
related purposes. This is done either by a direct access to databases where this information is stored by 
car registration authorities or by feeding databases maintained by tax authorities. However, this only 
covers  national  data.  Furthermore,  information  in  relation  to  car  registered  in  all  Member  States  is 
already exchanged between Member States under several pieces of legislation92 and an IT platform - 
Eucaris - where these exchanges take place already exist.  

Two sub-options can be confronted when it comes to access the Eucaris platform for tax purposes: 

  either a client application directly developed by the EU Commission; 

  or a direct access to these data by way of an application developed by the Eucaris Secretariat 

for this specific purpose.  

A feasibility study has been  carried out by the Commission  to get  an overview of the specifications 
needed to develop a dedicated to tax administrations application. Its results show that the development 
of a new specific application at EU level would cost EUR 400.000 with potential additional costs for 
each Member State to fit this application to its own needs and IT prerequisites. In this situation, the 
application would directly be connected to the Eucaris platform and Member States would access the 
platform through this connection.  

In parallel, the Eucaris Secretariat has reported that it would also be in a position to directly develop 
this  application  and  to  make  it  available  to  Member  States.  This  is  the  way  it  currently  works  for 
domains where exchange of car registration data is already provided by EU legislation. According to 
figures reported by Eucaris Secretariat, the development costs would amount to EUR 75.000 if only 
already existing information exchanged through the platform is needed for tax purposes. This amount 
would increase in the event Member States would have additional specific tax-related needs. On top of 
that, an annual EUR 15.000 fee would be paid by each Member State to get an access to the platform.  

Impact on fundamental rights 

As described under Chapter 2.4., administrative cooperation is crucial to efficiently monitor the VAT 
regimes that apply to transactions on cars. For Member States, a prerequisite to exchange information 
on suspicious trade of cars is to know the Member State that must receive the information, leading to a 
two  steps  exchange:  a  first  exchange  of  information  to  determine  the  Member  State  where  the 
registration of car, the sale of which is under monitoring, took place and, thereafter, a second exchange 
of information allowing the relevant Member State to check the correct application of VAT. Avoiding 
the  first  exchange  of  information  would  be  a  means  to  save  time  and  improve  the  effectiveness  and 
efficiency of the tax authorities' investigations. 

Today,  Member  States'  tax  administrations  do  not  hold  any  suitable  tool  to  answer  this  need.  The 
objective  in  granting  tax  administrations  with  access  to  car  registration  data  maintained  in  other 

92 Treaty concerning a European Vehicle and Driving Licence information system of 29 June 2000 as amended; 
Council  Decision  208/615/JHA  on  the  stepping  up  of  cross-border  cooperation  particularly  in  combating 
terrorism  and  cross-border  crime;  Council  Decision  208/616/JHA  on  the  implementation  of  Decision 
2008/615/JHA  on  the  stepping  up  of  cross-border  cooperation  particularly  in  combating  terrorism  and  cross-
border crime; Directive (EU) 2015/413 of 11 March 2015 facilitating cross-border exchange of information on 
road-safety-related traffic offences. 

58 

 
 
 
                                                            
Member States is to get this information in real time. This would speed-up exchange of information on 
dubious car sales or traders. An access to the Eucaris platform is a suitable means to answer this need 
since  this  is  the  place  where  car  registration  data  are  already  exchanged  between  Member  States,  in 
particular to enforce road offences. This access would deeply improve the timeliness of exchange of 
information  compared  to  the  baseline  scenario  with  in  a  better  mobilisation  and  dissemination  of 
information already existing and exchanged between Member States for the same purpose.  

Since  these  exchanges  would  take  place  on  the  basis  of  registers  electronically  maintained  in  each 
Member States, such an option would trigger more exchanges of  data, which could include personal 
data,  in  an  electronic  manner.  However,  the  exchanges  and  access  would  be  strictly  limited  to  the 
information necessary to carry out checks on transactions already identified by the tax authorities as 
risky and deserving further investigations. It is also envisaged that such an access could be restricted 
to Eurofisc liaison officials. 

Impact on VAT fraud 

It is not possible to properly assess the impact of an access to car registration data on VAT fraud. In 
any case, such estimates would relate directly to the cases of intercepted fraud with the total volume of 
fraud  prevented  equalling  the  sum  of  individual  cases.  If  we  were  to  follow  the  French  example 
described in the problem definition, the Treasury could be able to prevent up to EUR 1 billion VAT 
loss annually in a country such as France, with sizeable car market. 

So  far,  it  has  been  reported  by  Eurofisc  liaison  officials  that  they  face  difficulties  when  they  have 
targeted  signals  on  specific  vehicles  and  they  do  not  know  the  Member  State  these  signals  must  be 
directed  to.  This  may  delay  their  sending  and  in  return  may  hamper  the  capacities  of  receiving 
administrations to quickly react. 

In  accessing  car  registration  data  in  an  automated  manner,  this  practical  shortcoming  would  be 
resolved.  Therefore,  in  confront  with  the  baseline  scenario,  it  is  expected  that  this  new  access  to 
information instrument will increase administration capacities to react to fraud on cars with ultimate 
positive results for national treasuries. 

6.2.6. Option 5: Removing existing shortcomings in the functioning of CP42/CP63 procedures 

6.2.6.1. Common impacts 

Impact on compliance costs to businesses, in particular SMEs 

In  comparison  with  the  baseline  scenario,  the  two  options  that  are  considered  to  improve  the 
functioning of CP62/CP63 procedures will not trigger any additional compliance costs to businesses. 
The two options aim at improving the exchange of already existing information between customs and 
tax administrations, without adding administrative obligations and burdens to private stakeholders. For 
legitimate  businesses,  these  obligations,  and  in  particular  the  provision  of  information  to  national 
administrative authorities will remain exactly the same.  

Compliant  businesses  could  gain  from  the  access  to  VIES  granted  to  customs  authorities  and  the 
provision  of  CP42/CP63  information  to  tax  authorities.  They  would  face  less  enquiries  and  controls 
from tax authorities since the sharing of CP42/CP63 information with tax administrations would result 
in  a  better  targeting  of  businesses  to  be  audited.  In  sum,  as  it  is  the  case  for  other  instruments 
previously described, the sharing of CP42/CP63 information could have positive impacts on compliant 
businesses located in Member States. 

59 

 
 
 
Impact on fundamental rights 

As reported by the European Court of Auditors in two reports93 and by the Member States, the control 
process of Customs Procedures No 42 and 63 is deficient. This is mainly the results of shortcomings in 
the exchange of information between Member States' tax and customs authorities. National authorities 
do  not  have  access  to  the  necessary  information  at  the  time  they  need  it.  Option  5  envisages  new 
exchange of information between tax and customs authorities:  

  customs  authorities  would  get  an  access  to  the  register  of  VAT  numbers  maintained  by 

Member States tax authorities; 

 

tax authorities would receive information on CP42/CP63 from customs authorities. 

Both  exchanges would be strictly necessary to properly check the conditions provided for in Article 
143 of the VAT Directive and to make sure that goods are not introduced and consumed VAT free in 
the single market. They would enable customs authorities to directly know whether the VAT numbers 
declared  by  the  importer  are  valid  or  not.  The  tax  authorities  would  get  the  information  on  goods 
which are transported VAT free to their territory. They would then be able to check whether they have 
been subject to VAT in the country of their consumption.  

Both sub-options would only cover the exchange of already available information held with the same 
purpose by the tax and customs authorities.  

6.2.6.2. Option 5.a. Granting an access to the register of VAT numbers to customs authorities  

Impact on administrative costs to tax administrations 

Each Member States already has the obligation under Article 17 of Regulation (EU) 904/2010 to store 
in an electronic system data on the identity, activity, legal form and address of persons to whom it has 
issued a VAT identification number. Further, an access to this information to the competent authority 
of other Member States should be granted in an automated manner. 

Hence,  tax  administrations  will  not  have  to  develop  any  new  instruments  and  information  gathering 
processes  to  implement  option  5.a.  since  the  register  of  VAT  numbers  already  exists.  Further,  this 
information is already exchanged by all Member States in an automated manner, by means of VIES.  

In  sum,  in  comparison  with  the  baseline  scenario,  administrative  costs  to  implement  this  option  are 
rather  limited  and  can  be  neglected  since  they  only  comprise  of  any  technical  costs  allowing  (and 
potentially making it inter-operable, if  so desired, with any customs  applications)  access  to  VIES  to 
customs officials where this is not already the case.  

Impact on VAT fraud 

It  first  must  be  reminded  that  the  prior  validation  of  VAT  numbers  of  both  importer  and  final 
recipient(s) of imported goods is a formal obligation provided by Article 143 of the VAT directive to 
allow goods to be imported under CP42/CP63 regimes. Member States are tasked with enforcing this 
obligation and checking these numbers.  

93 European Court of Auditors, 2011, Special report no 2011/13, Does the control of customs procedure 42 pre-
vent  and  detect  VAT  evasion,  http://www.eca.europa.eu/Lists/News/NEWS1112_13/NEWS1112_13_EN.PDF 
and European Court of Auditors 2015, Special report no 24/2015: Tackling intra-EU VAT fraud: More action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf. 

60 

 
 
 
                                                            
 
As detailed under section 2.5.2 .of this impact assessment, it has been reported that not in all instances 
are these VAT numbers checked upon importation. This can lead to VAT fraud since it is not possible 
to ascertain at that time that all enterprises involved in the transaction have a valid VAT number.  

Option 5.a. will make sure that this prior validation for the application of CP42/CP63 is enforced and 
that  in  all  instances  are  customs  authorities  in  a  position  to  properly  perform  these  checks  upon 
importation. It is not possible to precisely evaluate the financial impact of this measure on VAT fraud, 
just  as  it  is  difficult  to  estimate  the  levels  of  fraud  coming  from  the  abuse  of  these  two  customs 
procedures.  As  it  was  described  in  the  problem  definition,  the  ECA's  report  on  the  control  of  CP42 
procedures in 2011 in only 7 Member States revealed a VAT loss of EUR 2.2 billion, be it 29% of the 
VAT  theoretically  due  on  the  taxable  amount  of  all  the  imports  made  under  the  CP42  procedure. 
Extrapolating this number to generalise the fraud levels across the EU would not be methodologically 
sound as the volume of transactions varies greatly between the Member States. This however gives an 
idea  of  the  amounts  at  stake,  all  of  which,  in  the  (very)  best  case  scenario,  could  potentially  be 
prevented  and/or  returned  to  the  EU  budget.  Therefore,  any  measure  attempting  to  curb  the  fraud 
levels will not be negative since it will not worsen the current situation but will improve the formal 
validation of these two import procedures and make the fraud more difficult to be committed.  

6.2.6.3. Option 5.b. Sharing CP42/CP63 information with tax authorities through VIES 

Impact on administrative costs to tax administrations 

Making  information  on  CP42/CP63  available  to  tax  administrations  means  new  IT  developments  at 
national and EU level. The implementation of option 5.b. will therefore entail some additional costs 
for national administrations.  

However,  it  must  be  reminded  that  information  that  would  be  exchanged  under  this  option  already 
exists since importers must lodge declarations upon import made under CP42/CP63. This information 
is currently maintained and used by customs administrations. In addition, some of these costs might be 
borne by the Fiscalis budget.  

In  contrast  with  the  question  of  access  to  Eucaris  data  where,  on  request  of  Member  States,  a 
feasibility  study  including  implementation  costs  has  been  undertaken  by  the  Commission,  the 
Commission  has  not  received  such  demand  from  the  Member  States  in  relation  to  the  sharing  of 
CP42/CP63  information.  While  the  question  of  information  sharing  between  tax  and  customs 
authorities  has  been  a  long-standing  topic,  technical  discussions  on  this  have  not  taken  place  so  far. 
Doing  comparisons  with  past  or  current  developments,  like  for  instance  the  mini  one-stop-shop94 
(MOSS), would not make sense since these developments are not comparable.  

It is therefore not possible to precisely assess the total amount of these costs and their sharing between 
EU level and national administrations at this stage.  

Impact on VAT fraud 

In  the  current  functioning  of  CP42/CP63  regimes,  VAT  exemption  is  granted  upon  conditions,  one 
being  that  goods  had  been  dispatched  to  final  recipient(s)  located  abroad.  Without  customs 
information,  tax  administrations  that  take  the  lead  to  check  if  all  conditions  have  ultimately  been 

94 The  MOSS  allow  a  supplier,  rather  than  registering  for  VAT  in  each  Member  State  in  which  he  has  a 
customer,  to  register,  declare  and  pay  the  VAT  due  on  supplies  of  telecommunications,  broadcasting  and 
electronic  services  in  other  Member  States  via  a  single  web  portal  in  one  single  Member  State  -  the  Member 
State of identification. 

61 

 
 
 
                                                            
fulfilled are not in a position to clearly assess whether this has been the case, or not.  

If  customs  information  is  made  available  to  tax  administrations,  they  will  be  able  to  quickly  know 
which information has been reported in the customs declaration upon import and to confront these data 
to those mentioned in the VAT statement filed with tax authorities.  

Hence,  this  new  obligation  will  help  tax  authority  to  check  in  a  more  efficient  fashion,  by  further 
querying taxpayers where needed, if goods have been transported as declared upon import and if so, 
for which amount. This will help these authorities to correctly assess VAT and to advise their foreign 
counterparts in the event goods would not be received by the officially declared recipient.  

In comparison with option 5.a., it is expected that better results should be achieved through this option. 
Option 5.a. deals with formal conditions that must be complied  with to get a specific tax exemption 
regime. If these formal conditions are fulfilled, the exemption in granted. In contrast, option 5.b) will 
allow  tax  authorities  to  check  at  a  later  stage  whether  formal  as  well  as  practical  conditions,  that  is 
goods  transportation,  have  been  met  and  that  the  recipient  of  the  goods  has  properly  paid the  VAT. 
Although  these  two  options  are  not  alternatives  –  they  intend  to  improve  the  situation  at  different 
stages of the exemption process – option 5.b. is likely to produce better effects than option 5.a. 

Compared  to  the  baseline  scenario,  positive  effect  on  VAT  fraud  can  be  expected  since  it  would  be 
more  difficult  for  non-compliant  enterprises  to  dissimulate  the  fact  that  goods  have  not  been 
transported  as  declared  upon  import  or  have  not  been  correctly  reported  for  VAT  purposes. 
Nevertheless,  due  to  the  lack  of  quantitative  data,  it  is  not  possible,  at  this  early  stage  to  precisely 
evaluate the quantitative effects of the implementation of this measure. 

7. HOW DO THE OPTIONS COMPARE? 

7.1. Summary assessment of the Impacts 

The tables below analyses and evaluates the various impacts of the different options.  

The main elements of each option have been weighed (0: no significant, + positive impact, - negative 
impact) according to their respective expected impacts. These elements are the following:  

 

 

impact on compliance costs of business, in particular SMEs; 

impact on administrative costs of the tax administrations; 

 

impact on VAT fraud; 

62 

 
 
 
 
 
Table 1: Summary assessment of the options 

Options 

Impact on compliance 
costs of business, in 
particular SMEs 

Impact on administrative 
costs of tax 
administrations 

Impact on VAT fraud 

Implementation of TNA 
on a voluntary basis will 
have positive effects on 
VAT fraud. 
Nevertheless, the lack of 
willingness from non-
participating Member 
States to seriously 
engage in the fight 
against VAT fraud may 
be analysed by criminal 
organisations as a signal 
to continue evading 
VAT 

Positive effects on VAT 
fraud. Better targeting 
and better 
dismantlement of fraud 
networks are expected to 
produce positive effects 
although not at their 
maximum 

Implementation of TNA 
may trigger some 
limited additional costs 
to tax administrations, 
balanced by a better 
targeting of MTIC fraud 

Implementation of TNA 
may trigger some 
limited additional costs 
to tax administrations, 
balanced by a better 
targeting of MTIC fraud 

Implementation of TNA 
may trigger some 
limited additional costs 
to tax administrations, 
balanced by a better 
targeting of MTIC fraud 

All potentialities of 
TNA would be at their 
maximum since all 
Member States will 
provide their data to 
perform the joint 
processing 

No additional costs for 
tax administrations. 
Positive effects can be 
expected on exchange of 
information and dispute 
resolutions procedures 

Positive effects can be 
expected if the 
instrument is used by tax 
administrations 

Baseline scenario 

Option 1.a: TNA 
without mandatory 
provision of VIES data 
by all Member States 

Option 1.b: TNA with 
mandatory provision of 
VIES data by all 
Member States 

Option 2.a 
implementing joint audit 

No further obligations 
for businesses and 
SMEs. 

Better targeting of 
fraudsters may have 
limited positive impacts 
on compliance costs 
with less compliance 
obligations for 
enterprises 

No further obligations 
for businesses and 
SMEs. 

Better targeting of 
fraudsters may have 
limited positive impacts 
on compliance costs 
with less compliance 
obligations for 
enterprises 

No further obligations 
for businesses and 
SMEs. 

Better targeting of 
fraudsters may have 
limited positive impacts 
on compliance costs 
with less compliance 
obligations for 
enterprises 

No further obligations 
for businesses and SMEs 

Some positive effects 
may be expected if 
businesses can avoid 
some compliance costs 
through the 
implementation of joint 

63 

 
 
 
Options 

Impact on compliance 
costs of business, in 
particular SMEs 

Impact on administrative 
costs of tax 
administrations 

Impact on VAT fraud 

audits 

No further obligations 
for businesses and SMEs 

Option 2.b: 
coordination of 
multilateral actions by 
Eurofisc 

No additional costs. This 
option will permit a 
better coordination of 
cross-border activities 

Cross-border audits will 
be launched in a swifter 
manner giving a more 
efficient effect to them.  

Option 3.a: automated 
access to VIES by 
Europol and OLAF 

No further obligations 
for businesses and SMEs 

Option 3.b: 
Spontaneous 
transmission of VAT 
fraud cases involving at 
least two Member States 
by Member States' tax 
administrations to 
OLAF 

No further obligations 
for businesses and SMEs 

Option 3.c: access to 
Eurofisc data granted to 
OLAF and Europol 

No further obligations 
for businesses and SMEs 

Option 3.d: enrichment 
of Eurofisc with Europol 
data 

No further obligations 
for businesses and SMEs 

Option 4.a: access to 
Eucaris database 

No further obligations 
for businesses and SMEs 

This information is 
already collected by 
Member States and 
made available to other 
Member States. 
Granting an access to 
other bodies does not 
entail significant 
additional costs.  

This information is 
already collected by 
Member States and 
made available to other 
Member States in 
Eurofisc.  

No further obligations 
for tax authorities. 
Eurofisc is already a 
platform to exchange 
information  

This option means new 
exchanges of 
information between 
Member States and 
Europol without creating 
any new communication 
channel to implement 
the measure 

Member States will 
either have to pay for the 
development of a 
software at the 
EUCARIS level or to 
adapt an EU-
Commission developed 

Limited effects if access 
given to OLAF and/or 
Europol since the 
information will not be 
targeted 

Positive effect can be 
expected if national tax 
administrations benefit 
from OLAF's support 
and coordination 

Sharing of information 
will enable OLAF and 
Europol to have a better 
knowledge of tax fraud 
trends and to better 
identify fraudsters 

Tax administrations will 
get additional evidences 
from Europol, enriching 
their files and enabling 
them to better target 
fraud schemes 

Exchange of information 
in relation to cars will be 
performed in a swifter 
manner leading to a 
more efficient fight 
against these frauds 

64 

 
 
 
 
 
 
 
 
Options 

Impact on compliance 
costs of business, in 
particular SMEs 

Impact on administrative 
costs of tax 
administrations 

Impact on VAT fraud 

Option 5.a: granting 
access for Customs to 
the VAT registration 
number register 

No further obligations 
for businesses and SMEs 

Option 5.b: sharing 
CP42/CP63 information 
with tax authorities 
through VIES 

No further obligations 
for businesses and SMEs 

software at national 
level 

This information is 
already collected by 
Member States and 
made available to other 
Member States. 
Granting an access to 
other organisations does 
not entail significant 
additional costs in 
particular since it is 
already done in a 
majority of Member 
States 

Making information on 
CP42/CP63 available to 
tax administrations 
means new IT 
developments to bridge 
customs systems where 
information on 
CP42/CP63 is stored 
and VIES 

This option will improve 
the formal validation of 
the two import 
procedures since all 
checks provided for by 
the VAT Directive are 
not to date correctly 
performed by all 
Member States. This 
will be a means to 
prevent some frauds 
developed by using non-
valid VAT numbers 

Positive effect on VAT 
fraud can be expected 
since it would be more 
difficult for non-
compliant enterprises to 
dissimulate the fact that 
goods have not been 
transported as declared 
upon import or have not 
been correctly reported 
for VAT purposes 

65 

 
 
 
Table 2: Comparison table 

Driver 1: Weaknesses in the 
access and analysis of 
information mechanisms 

  Driver 2: A legal framework 
that make it difficult to car-
ry out coordinated actions 

Key impacts 

Baseline 

Option 1.a. 

Option 1.b. 

  Option 2.a. 

Option 2.b. 

A- Efficiency of measures 

Additional/saved costs to Member States 

Burdens on businesses 

B- Effectiveness vs Policy objectives 

0 

0 

Better exploit the existing administrative 
cooperation instruments in the field of fighting 
VAT-related fraud  
Better exploit the existing administrative 
cooperation instruments 
to improve the multidisciplinary approach to 
fighting and preventing VAT-related fraud 
C- Coherence of options against the VAT action plan95 

+ 

+ 

+ 

New models of cooperation 

Strengthening Eurofisc 

Removing obstacles with external organisa-
tions (customs included) 

+ 

+ 

0 

0 

0 

++ 

++ 

++ 

++ 

++ 

0 

0 

0 

+++ 

+++ 

+++ 

+++ 

+++ 

0 

0 

0 

0/+ 

+ 

0 

++ 

0 

0 

0 

0 

0/+ 

+ 

++ 

++ 

+++ 

+ 

Legend 
+++ best positive impacts   
0 no difference 
- negative impacts 

++ positive impacts 

+ positive impacts expected 

95 As far as coherence is concerned, the Table assesses how the options fit with the urgent actions announced in the VAT Action Plan as regards the objective of tackling the 
VAT gap. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Key impacts 

Baseline 

Option 3.a.  Option 3.b.  Option 3.c.  Option 3.d. 

Option 4.a. 

Option 5.a.  Option 5.b. 

Driver 3 : Insufficient multidisciplinary 
approach 

Driver 4: Impaired 
access and mechanisms 
for information 
exchange and analysis 

Driver 5: Impaired 
exchanged of data between 
customs and tax authorities 

A- Efficiency of measures 

Additional/saved costs to Member States 

Burdens on businesses 

B- Effectiveness vs Policy objectives 

Better exploit the existing administrative 
cooperation instruments in the field of 
fighting VAT-related fraud  
Better exploit the existing administrative 
cooperation instruments 
to improve the multidisciplinary approach to 
fighting and preventing VAT-related fraud 

0 

0 

+ 

+ 

+ 

C- Coherence of options against the VAT action plan 

New models of cooperation 

Strengthening Eurofisc 

Removing obstacles with external organisa-
tions (customs included) 

+ 

+ 

0 

0 

0 

0/+ 

0 

0 

+ 

0 

0 

0 

0 

0/+ 

0/+ 

0/+ 

+ 

0 

+ 

0 

0 

+ 

0 

0 

+ 

+ 

++ 

0 

0 

+ 

0 

+ 

++ 

++ 

+++ 

Legend 
+++ best positive impacts   
0 no difference 
- negative impacts 

++ positive impacts 

+ positive impacts expected 

- 

0 

+ 

+ 

++ 

+ 

+ 

++ 

0 

0 

+ 

0 

++ 

0 

0 

+ 

- 

0 

+++ 

+++ 

+++ 

++ 

++ 

++ 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.2. Identification of the preferred options 

This  impact  assessment  has  presented  three  different  problems  that  amendments  to  Regulation  (EU) 
904/2010  could  address.  All  these  problems  are  driven  by  different  factors  which  would  require 
separate measures to remedy them. Therefore, it is not possible to compare the five options previously 
described against each other and to identify a best option since they do not address the same problems 
and  drivers.  All  options  are  worth  considering  and  could  have  a  positive  impact  on  VAT  fraud. 
However, some seem to be more effective for each driver. After a careful analysis, the Commission 
concluded  that  at  the  analytical  level,  none  of  the  policy  options  would  establish  a  clear  advantage 
over  the  others.  Therefore,  benefits  and  risks  have  been  outlined  for  each  of  the  options  in  order  to 
prepare the ground for a decision at the political level. The same holds true with respect to sub-options 
which  do  not  always  address  the  same  shortcomings.Nevertheless,  several  considerations  should  be 
taken into account by policy makers at the time they decide which of these options should be retained 
or not: 

  each option addresses one of the five specific drivers identified in this impact assessment. This 
means that at least one sub-option should be considered for each option and that at least five 
different measures should be retained; 

  options  1.a.  and  1b.  are  exclusive  and  one  of  these  two  sub-options  should  be  retained. 
Options 1.b scores better than option 1.a and will have a more deterrent effect on MTIC fraud. 
All  other  sub-options  address  different  shortcomings  that  have  been  identified  and  all  these 
options can be combined with each other; 

  all sub-options would be cost-effective (efficient). None of them would entail additional costs 
for businesses and only two would require specific IT developments from tax administrations 
to  create  new  access  to  already  existing  information  not  available  to  tax  authorities.  These 
developments  seem  to  be  proportionate  to  the  benefits  that  could  be  expected  from  this 
information sharing; 

 

two options would have significant positive impacts on the level of VAT fraud. Option 1.b., 
(implementation of TNA with mandatory provision of data) and 5.b. (sharing of CP42/CP63 
information  between  tax  and  customs  administration)  score  higher  than  any  other  options. 
They would best meet the Member States' needs; 

  positive  effects  of  three  other  options  could  also  be  ascertained,  with  lower  benefits  than 
option 1.b and 5.b. though. These options are option 1.a. (TNA without mandatory provision 
of  data),  option  4.a.  (access  to  Eucaris  information),  and  option  5.a.  (access  to  VAT 
registration numbers by customs authorities); 

 

in the table comparing the options, some of them score low. This is the case for all options 2 
and  3.  At  the  same  time,  these  options  would  have  positive  impacts  on  VAT  fraud.  They 
would  not  deteriorate  the  current  situation  and  would  not  entail  significant  costs  for  their 
implementation.  They  would  bring  new  administrative  cooperation  instruments  to  Member 
States  and  would  contribute  to  develop  new  working  methods  or  new  relationships  between 
authorities involved in fighting VAT fraud. Therefore, increasing positive benefits from these 
measures are expected in the long term. 

68 

 
 
 
7.3. Subsidiarity of the different options 

The management, collection and control of VAT are first and foremost a  national competence of the 
Member  States.  However  VAT  fraud  is  often  linked  to  cross-border  transactions  within  the  single 
market  or  involves  traders  established  in  other  Member  States  than  the  one  where  the  tax  is  due. 
Moreover VAT fraud has a negative impact on the functioning of the single market and causes serious 
losses to Member States’ revenues and consequently to the EU budget.  

Therefore pursuant to Article 113 of the TFEU96 the EU has implemented cooperation tools organising 
in  particular  an  exchange  of  information  between  tax  administrations  and  supporting  common  audit 
activities and the Eurofisc network. 

Improving the efficiency of these tools in particular strengthening Eurofisc and establishing new ways 
of  cooperation  and  new  exchanges  of  tax  information  between  tax  authorities  and  with  other  law 
enforcement bodies would offer value over and above what could be achieved at Member State level. 

7.4. Proportionality of the different options 

All options described in this impact assessment are considered to be consistent with the principle of 
proportionality  as  while  having  positive  effects  on  the  VAT  fraud  level,  they  would  entail  no 
additional  costs  for  business  and  for  administrations  except  for  options  4.a.  and  5.b.  where  IT 
developments would be necessary but the associated costs would remain limited. 

As  with  the  subsidiarity  test,  it  is  not  possible  for  Member  States  to  address  in  an  efficient  and 
effective  manner  the  problems  and  drivers  identified  in  this  impact  assessment  without  amending 
Regulation (EU) 904/2010.  

7.5. Impact on SMEs 

All options presented in this impact assessment have no impacts on businesses in general and SMEs in 
particular since they would not trigger any additional administrative burdens and compliance costs. As 
detailed above under Chapter 6, eliminating fraudulent businesses from the market will level out the 
playing  field for  the  legitimate  businesses,  improve  their  competitiveness  and  promote  their  growth. 
This will be the case for all enterprises, including SMEs. 

8. HOW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

8.1. Indicators for monitoring and evaluation 

The table below gives an overview of the objectives, the indicators to measure whether they will be 
achieved, the tool for measuring them and the operational objectives. 

General objectives 

Indicator 

Measurement tool 

Operational objectives 

To contribute to fiscal 
consolidation within the 
EU by ensuring that taxes 
due are collected to feed 

 Additional tax assessed 

by Member States 

 Additional taxes 

collected by Member 

Annual statistics provided 
by Member States 

Reduce the level of VAT 
fraud in cross-border 
situations 

96 Treaty on the Functioning of the European Union 

69 

 
 
 
                                                            
national and EU budgets 

States 

to  contribute  to  fighting 
organised crime 

 Number of fraudsters 

targeted by use of TNA 

 Annual report made by 
the Working Field 6 
coordinator and the 
Chair of Eurofisc on the 
use of TNA  

 Number of cooperation 

actions with law 
enforcement authorities 

 Annual statistics 

provided by Member 
States 

 Number of joint audits 
initiated by Member 
States 

 Annual statistics 

provided by Member 
States 

To contribute to a closer 
cooperation between 
Member States 

Use by Member States of 
the new instruments 
made available to them 

 Improve identification 

and targeting of 
potential fraudsters;  

 Provide for 

new/improved channels 
for access to and sharing 
of VAT–related 
information between tax 
administrations and 
other authorities or 
institutions;  

 Improve effectiveness of 
checks and the sharing 
of VAT-related 
information in the 
context of  imports; and 
 To facilitate joint audits 
 Improve identification 

 Annual statistics 

provided by Member 
States 

and targeting of 
potential fraudsters;  

 Annual report made by 
the Working Field 6 
coordinator and the 
Chair of Eurofisc on the 
use of TNA 

 Provide for 

new/improved channels 
for access to and sharing 
of VAT–related 
information between tax 
administrations and 
other authorities or 
institutions;  

 Improve effectiveness of 
checks and the sharing 
of VAT-related 
information in the 
context of  imports; and 
 To facilitate joint audits. 

8.2 Monitoring structures 

Measuring  the  effectiveness,  efficiency  relevance,  coherence  and  EU  added-value  of  these  new 
instruments  will  trigger  the  provision  of  new  statistics  and  evaluation  indicators.  The  precise  list  of 
these statistics will be adopted in accordance with Article 49 of Regulation  (EU) 904/2010 with the 
assistance of the Standing Committee on Administrative Cooperation.  

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
9. ANNEXES 

9.1. Annex 1: Procedural information concerning the process to prepare the impact assessment report 
and the related initiative 

9.2. Annex 2: Consultations synopsis report 

9.3. Annex 3: Evaluation of Regulation (EU) 904/2010 

9.4. Annex 4: Consultation of Members States 

9.5. Annex 5: Consultation of stakeholders other than Member States 

9.6. Annex 6: Who is affected by the initiative and how?  

9.7. Annex 7: Methodology 

9.8. Annex 8: Statistics and additional information about the functioning of administrative cooperation 
in the field of VAT  

9.9.  Annex  9:  Transitional  and  definitive  VAT  system  –  Origin-based  and  destination-based  VAT 
system 

9.10. Annex 10: Technical fiche on concrete examples of VAT fraud  

9.11.  Annex  11:  Findings  and  recommendations  of  the  2015  European  Court  of  Auditors  report: 
tackling VAT fraud: more action needed97 

97 European Court of Auditors 2015, Special report no 24/2015: Tackling intra-EU VAT fraud: More action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 

71 

 
 
 
 
 
 
 
 
                                                            
9.1. Annex 1: Procedural information concerning the process to prepare the impact assessment 
report and the related initiative 

9.1.1. Agenda Planning and Work Programme References 

The proposal to amend Regulation (EU) 904/2010 is linked to the VAT Action Plan98.  

TAXUD  is  the  lead  DG  for  this  Initiative.  The  Agenda  Planning  reference  is  PLAN/2017/596.  The 
inception impact assessment was published on 28 February 201799. 

9.1.2. Inter-Service Steering group (ISSG) 

The first meeting of the Inter-Service Steering Group has taken place on 25 January 2017 where the 
draft  questionnaire  for  the  Member  States  and  open-public  consultations  were  discussed.  The 
following directorates and services were present: SG, SJ, BUDG, and OLAF. The feedback received 
from  these  directorates  and  services  has  been  taken  into  account  in  the  final  public  consultation 
document. 

The  second  meeting  of  the  Inter-Service  Steering  Group  has  taken  place  on 7  April  2017  where  the 
first impact assessment draft was discussed. The following directorates and services were present: SG, 
SJ, BUDG, CNECT, and OLAF. The feedback received from these directorates and services has been 
taken into account in the report. 

The third meeting of the Inter-Service Steering Group will take place on 30 June 2017. The following 
directorates  and  services  were  present:  SG,  SJ,  BUDG,  CNECT,  and  OLAF.The  feedback  received 
from directorates and services that were present or had commented before the meeting has been taken 
into account in the report. 

9.1.3 Consultation of the Regulatory Scrutiny Board (RSB) 

The impact assessment Report was submitted to the Regulatory Scrutiny Board on 25 July 2017. On 
15 September 2017, the Regulatory Scrutiny Board gave a positive opinion with a recommendation to 
further improve the report with respect to the following key aspects: 

(1)  The  context  could  better  explain  the  interaction  with  other  recent  and  announced  VAT 
initiatives, in particular the definitive VAT system; 

(2)  The  report  needs  clearer  motivations  for  the  design  of  the  policy  options,  including  a 
description of stakeholders' support; 

(3) The uncertainties and limits regarding available data and robustness of the evidence base 
are  not  sufficiently  apparent.  It  is  not  clear  why  the  report  is  not  able  to  select  a  set  of 
preferred options. 

The report was adjusted to take into account the RSB's recommendations.  

98  See  Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide 
(COM(2016) 148 final) 
99 https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-1072511_en  

72 

 
 
 
 
 
                                                            
9.1.4. Anti-tax fraud strategy (ATFS) meeting  

An ATFS meeting involving all Member States took place in the Commission premise on 10 July 
2017.  The  outcome  of  the  open-public  and  Member  States  consultations  were  set  out  and 
discussed. All options contained in this impact assessment were presented to Member States on 
that  occasion.  Delegates  were  invited  to  comment  and  provide  their  inputs.  These  views  were 
taken into account to the largest extent possible.  

73 

 
 
 
 
9.2. Annex 2: Consultations synopsis report 

 Synopsis report 

of the consultations conducted to evaluate the functioning of and assess possible 
improvements to Regulation (EU) 904/2010 of 7 October 2010 on administrative 
cooperation and combating fraud in the field of Value Added Tax 

1. Background to the initiative 

The purpose of the evaluation of the use of Regulation (EU) 904/2010 on administrative cooperation 
and combating fraud in the field of Value Added Tax was:  

 

 

 

 

 

to  assess  whether  and  to  what  extent  Regulation  (EU)  904/2010  contributed  to  a  closer 
cooperation between Member States; 

to  assess  to  what  extent  Regulation  (EU)  904/2010  has  facilitated  cooperation  between 
Member States by making it smoother and faster and less burdensome; 

to assess to what extent Regulation (EU) 904/2010 has contributed to preventing budget losses 
stemming from tax avoidance and evasion; 

to assess whether and to what extent the provisions of Regulation (EU) 904/2010 continue to 
correspond to the needs of the Member States; and 

to  assess  to  what  extent  the  provisions  of  Regulation  (EU)  904/2010  are  in  line  with  other 
policies  and  priorities  of  the  EU  and  whether  Member  States  have  achieved  similar  results 
without acting at EU level.  

2. Summary of the consultation activities carried out 

a.  On-going discussions with Member States at EU-level 

There is a variety of fora organised at EU level where administrative cooperation and tax fraud matters 
are  discussed  amongst  Member  States  and  with  the  Commission.  The  following  can  inter  alia  be 
mentioned: 

-  the  Standing  Committee  on  Administrative  Cooperation  as  provided  for  by  Article  58  of 
Regulation (EU) 904/2010 and its Expert Group; 

- the Anti-Tax Fraud Strategy group; 

- the Eurofisc Group and its targeted working fields; 

- project groups and seminars organised under the Fiscalis 2020 programme.  

All these fora constitute platforms where issues in relation to the implementation of Regulation (EU) 
904/2010  or  the  need  to  strengthen  it  are  addressed  on  an  on-going  basis.  Moreover,  solutions 
envisaged to tackle them can be discussed at an early stage to further determine whether a need or an 
appetite  to  develop  new  instruments  emerge.  All  these  fora  have,  in  particular,  been  used  over  the 
course  of  this  policy  cycle  to  collect  inputs  from  the  Member  States  when  designing  the  targeted 

74 

 
 
 
questionnaire  and  the  different  options  on  the  table  to  improve  the  administrative  cooperation 
framework in place. 

b.  Targeted consultation  

A targeted consultation of the Member States on the functioning of the administrative cooperation and 
fight  against  fraud  in  the  field  of  VAT  was  carried  out.  This  consultation  which  was  done  via  a 
questionnaire sent out to the Member States' tax authorities responsible for administrative cooperation 
and fight against fraud in the field of VAT ran from 7 March until 14 April 2017. On 30 June 2017, 
date  on  which  the  Evaluation  Report  was  finalised,  all  Member  States  but  one  had  replied  to  this 
consultation100. 

This consultation sought to answer the following questions: 

 

to what extent current arrangements for administrative cooperation correspond to the needs of 
Member States; and 

  what can be done in addition in that field in order to improve Member States ability to collect 

VAT and fight fraud. 

For this purpose the Commission looked at the: 

  effectiveness  of  the  current  arrangements  for  administrative  cooperation  to  assess  to  what 

extent the objectives of the intervention have been achieved; 

  efficiency of the current arrangements for administrative cooperation to assess to what extent 

the costs borne are proportionate to the benefits; 

 

relevance of the current arrangements for administrative cooperation to assess to what extent 
the objectives of the intervention are still corresponding to the needs of the Member States; 

  coherence of the current arrangements for administrative cooperation to assess how its various 

internal components operate together to achieve the objectives of the intervention; and 

 

the EU added value to assess to what extent having common rules and tools at EU level makes 
the difference compared to what Member States could achieve at a national level. 

To assess possible changes to the current arrangements for administrative cooperation the Commission 
sought to gather Member States' feedback in particular on: 

 

the possibility to introduce additional instruments and enhance existing ones for cross-border 
administrative cooperation;  

 

the possibility to expand data sources available to tax administrations;  

  possible ways to ensure that law enforcement authorities have access to relevant VAT data in 
order for them to perform their tasks and in particular carry out criminal investigations when 
necessary. 

100 The missing reply was received by DG TAXUD on 3 August 2017. 

75 

 
 
 
                                                            
The  questionnaire  contained  statement  questions  allowing  respondents  to  determine  the  extent  to 
which they agreed with the statements. Most questions were followed by open text boxes where they 
could further develop their opinion.  

27  Member  States  replied  to  this  questionnaire.  A  summary  report  of  their  replies  has  been  made 
available  to  the  Member  States.  Germany  did  not  manage  to  reply  at  the  time  when  the  Evaluation 
report had to be finalised, that is on 30 June 2017101. Hence, Germany's answers to the questionnaire 
are not taken into account in this Report.  

Member  States  were  invited  to  upload  any  document  that  could  help  the  Commission  to  evaluate 
Regulation  (EU)  904/2010  and  the  current  arrangements  for  administrative  cooperation.  Three 
Member States (UK, IT, LV) provided such documents.  

The overview of Member States’ answers to the questionnaire has been presented to them during an 
Anti-Tax Fraud Strategy meeting which took place on 10 July 2017.  

Results of the the targeted consultation of Member States' tax authorities  

The  current  arrangements  for  administrative  cooperation  and  fight  against  fraud  provided  for  in 
Regulation  (EU)  904/2010  meet  the  Member  States'  needs  either  to  a  very  high  or  to  a  high  extent. 
Most  Member  States  either  strongly  agree  or  agree  that  the  new  provisions  introduced  into  the 
framework  of  administrative  cooperation  have  improved  their  ability  to  monitor  cross-border 
transactions  and  to  collect  VAT.  It  has  also  contributed  to  improve  the  quality,  reliability  and 
timeliness of information exchange as well as to increased legal certainty for traders.  

Most  Member  States  are  of  the opinion  that  the  costs  for participating  in  administrative  cooperation 
are  proportionate  to  the  benefits  achieved  although  opinions  vary  across  the  range  of  tools  offered 
under the current legal framework. However, in practice, the vast majority of Member States have not 
been able to provide data precisely detailing the costs incurred by their participation in administrative 
cooperation  and  the  balance  with  the  benefits  achieved.  It  is  therefore  not  possible  to  provide  any 
relevant  quantitative  results  in  relation  to  this  matter.  Even  more,  from  the  rather  limited  and  not 
comparable information received, it is not possible to make comparisons and to extrapolate a robust 
quantification. 

The automated access to information (VIES) is highly valued by the Member States. Ability to check 
information over VIES is considered to be very relevant and effective to control intra-EU transactions. 
This  instrument  also  offers  the  best  costs/benefits  ratio.  The  extended  rights  to  consult  VIES  for 
Eurofisc  officials  are  also  highly  valued  by  Member  States.  However  many  of  them  consider  that 
restricting these rights only to Eurofisc officials along  with additional  requirements is an ineffective 
and out of date arrangement that could hinder an efficient fight against fraud.  

Eurofisc  is  considered  by  the  majority  of  Member  States  as  an  effective  mechanism  to  fight  VAT 
fraud. However not all Eurofisc Working Fields are equally effective. While Working Field 1 and 4 
rank  high,  further  actions  are  needed  in  relation  to  Working  Field  2  and  3  to  improve  targeting  of 
signals. Issues with data quality, timeliness of feedback and targeting of early warning signals remain. 
Most Member States have high expectation towards TNA and are looking forward to having this tool 
at their disposal.  

101 Germany's answer to the questionnaire was received by the Commission on 3 August 2017. 

76 

 
 
 
                                                            
Collaboration  with  law  enforcement  authorities  remains  limited  with  only  few  Member  States 
exchanging VAT relevant data. Very few Member States would like to see granting law enforcement 
agencies access to such information.  

Cooperation  between  customs  and  tax  administrations  is  of  growing  importance  for  Member  States. 
Some of them mentioned that VAT fraud often involves transactions across the external border of the 
EU  making  information  exchange  with  customs  authorities  crucial.  Most  Member  States  seem  to 
exchange  VAT  relevant  information  with  customs  administrations  and  would  like  to  have  access  to 
data on importations using Customs Procedure 42/63.  

Most Member States would also like to have an automated access to cars registration information to 
fight VAT fraud.  

The  Member  States  rather  agree  than  disagree  that  joint  audits  could  potentially  be  a  useful  tool  in 
auditing companies involved in intra-EU trade. However a number of issues were raised in relation to 
the rights of the auditors participating in such audits and the extent to which the decision of the audit 
would be binding.  

In sum, the results of this consultation show the need, for the Member States, to improve the current 
instruments in place to fight VAT fraud. In particular a need to better use, share and analyse already 
existing  information  was  expressed  (be  it  already  available  to  tax  administrations  or  not).  All  this 
requires legislative measures that can be best introduced by amending Regulation (EU) 904/2010.  

At the same time, issues in relation to the implementation of the Regulation current provisions have 
also been reported. This is the case with respect to the timeliness of answers, accuracy of VIES data, 
or the content of e-forms used to exchange information. As mentioned above, there are several fora at 
EU  level  where  these  questions  of  implementation  are  discussed.  Many  of  them  are  already  being 
addressed, for instance by introducing an e-forms central application from 2018.  

As  these  issues  are  matters  of  implementation  that  are  best  examined  and  resolved  with  activities 
involving all Member States or by allocating more resources at national level rather than by amending 
the Regulation itself. This is why, over the course of the current process, it has not been considered 
that all these issues would deserve amendments to Regulation (EU) 904/2010 since they rather refer to 
implementation of the current arrangements. 

c. Open-public consultation 

An  open-public  consultation  running  from  2  March  2017  until  7  June  2017  and  available  in  all  EU 
languages was also carried out.  

The purpose of this consultation was:  

 

 

 

to gather views from stakeholders other than tax administrations about their experience of the 
current rules governing administrative cooperation and fight against cross-border fraud in the 
field of VAT; 

to bring new insights for the on-going evaluation of Regulation (EU) 904/2010; 

to provide information about possible improvements including the on-line service for checking 
VAT numbers for intra-EU transactions : VIES on-the-web; and 

77 

 
 
 
 

to  collect  data  on  possible  reduction  or  increase  of  regulatory  costs/benefits  (administrative 
burden  and/or  compliance  costs)  for  businesses  (in  particular  SME’s)  although  in  practice, 
such information was actually not provided in the answers received.  

To this end, the Commission collated respondents’ views on the following topics:  

  general principles governing administrative cooperation and fight against fraud in the field of 

VAT; 

  control of VAT compliance in cross-border transactions – joint audits; 

 

fight against VAT fraud – role of Eurofisc; and 

 

functioning of VIES on-the-web. 

All  stakeholders  –  citizens,  companies,  organisations,  institutions,  public  authorities,  academic 
researchers – were invited to provide their views on this matter.  

Though  the  public  consultation  was  announced  in  several  fora,  publicly  announced  on  Commission 
websites including ‘VIES on the web’ page and being made available in all EU official languages bar 
the  Gaelic,  in  total,  58  individual  replies  from  12  Member  States  were  received  through  the  on-line 
survey tool. Respondents were mainly professionals responding on behalf of their organisation (74% - 
47 replies).  

Status of Respondent 

Status 

Individual 

Professional capacity / on behalf of an organisation  

Total of answers 

Total 

11 

47 

58 

These  professionals  generally  work  for  a  private  enterprise  (75%).  The  others  respondents  were 
citizens, replying in their personal capacity (11 replies).  

Type of organisation 

Type 

Total 

Consultancy or law firm 

International organisation 

Non-governmental organisation, platform or 
network 

Other 

Private small enterprise: between 10 and 49 
employees 

Private medium-sized enterprise: between 50 and 
250 employees 

1 

1 

1 

3 

2 

2 

78 

 
 
 
Private large enterprise: more than 250 employees 

13 

Private micro enterprise: self-employed or less than 
10 employees 

Trade, business or professional association 

Research and academia 

National public authority 

Total of replies 

8 

12 

2 

2 

47 

It is important to note that since only 58 replies from 12 Member States were received over the course 
of  the  open-public  consultation,  these  responses  are  not  statistically  representative  of  the  target 
population. Answer ratios must therefore be interpreted with care without any possibility to draw any 
general conclusions from these replies. 

Results of the open-public consultation 

A  large  majority  of  respondents  (around  50)  support  the  role  of  the  EU  to  assist  and  to  ensure 
administrative cooperation amongst Member States. They widely approve the idea that VAT fraud is 
an international issue that must be dealt with jointly by all competent authorities at national and EU 
level. In their opinion, administrative cooperation at EU level has an added-value. In that perspective, 
23 respondents considered that the costs for cooperation can be justified by additional VAT revenues 
against 9 that disagreed.  

Additionally, respondents frequently emphasised that the exchange of information should be highly-
secured, framed and used only for the purpose of fighting VAT fraud. Apart from this objective, the 
exchange of information would be irrelevant and unwanted. On possible improvements and extensions 
of the current system, respondents insisted that the EU should concentrate on making existing systems 
efficient and performant before thinking of creating new entities. They also frequently noted that all 
improvements  should  be  designed  with  great  carefulness  taking  into  consideration  their  impact  on 
businesses. 

Respondents  widely  agree  that  VAT  fraud  is  an  international  issue  that  must  be  dealt  jointly  at  EU 
level.  To  this  end,  they  see  administrative  cooperation  as  valuable.  Nevertheless,  27  of  them 
considered that the current instruments provided by Regulation (EU) 904/2010 are not very effective 
to fight cross-border VAT fraud and not very suitable for new business models such as e-commerce or 
collaborative  economy.  29  considered  that  the  current  instruments  are  not  effective  to  fight  serious 
VAT fraud organized by criminal organizations. New automated exchanges of information as regards 
cars registration and exempted importations should be envisaged.  

Respondents mainly support the role of Eurofisc to coordinate and carry out joint risk analysis (66%) 
and  would  allow  it  to  coordinate  cross-border  administrative  enquiries  (78%).  Regarding  the 
implementation of an automated joint risk analysis, 47 respondents considered  that it would be very 
useful to fight VAT fraud in an efficient manner. However, few respondents believed that making the 
current system more efficient and transparent would allow better control and enforcement possibilities 
without creating another body – which would generate unnecessary burdens for legitimate businesses. 

Respondents also insisted on the need to develop contacts and cooperation between Eurofisc, national 
tax  agencies  and  European  administrative  entities  such  as  OLAF  and  Europol.  Cooperation  between 
Eurofisc  and  national  financial  administrations  would  also  improve  legal  certainty  of  intra-EU 

79 

 
 
 
transactions.  It  was  also  suggested  by  some  respondents  to  develop  contact  points  between  tax 
authorities  and  businesses,  as  they  usually  possess  very  useful  information  and  have  a  common 
interest to collaborate in order to reduce fraud risks.  

From  the  58  replies  received,  28  respondents  strongly  agree  or  agree  that  more  intense  exchange  of 
data is justified by the objectives pursued, while only 14 disagree or strongly disagree. 45 respondents 
consider  that  these  exchanges  should  be  strictly  proportionate  to  the  specific  objectives  of  fighting 
VAT fraud. 

Respondents expressed an overall positive opinion on joint audit. They widely agree that joint audits 
would constitute a step forward in administrative cooperation regarding fight against VAT fraud and 
would  prevent  duplication  of  tax  audit  which  is  burdensome  for  both  tax  administration  and 
businesses. In specific, 40 of them consider that having a single report at the end of the audit would 
provide taxpayers with more legal certainty.  

However, some of them observed that joint audits could be useful if a common unique procedure is 
clearly defined and if the rely on a legal basis. Joint audits outcomes should be directly shared with 
other Member States as well. It was emphasized that as the expertise of tax officials matters more than 
their citizenship, joint audits could be valuable if they are led by highly-qualified auditors knowing all 
Member States’ tax regulations. Respondents also observed that language barriers are an issue to be 
considered.Two  respondents  insisted  that  joint  audits  could  be  very  useful  in  the  field  of  transfer 
pricing, by preventing double taxation and legal disputes. 

Although checking information by way of VIES on the Web is very useful as it helps reducing delays 
in  processing  VAT  information,  a  majority  of  respondents  considered  that  improvements  should  be 
made  in  this area.  A  large  proportion  of  them  asks  for  more  harmonization  of  information  collected 
and provided by Member States. They suggested that at least the name and address of the legal entity 
concerned should be added. The period of validity of the VAT number could also be provided in the 
system.  Regarding  the  services  proposed  by  VIES  on  the  web,  respondents  asked  for  a  batch 
processing for VAT checks with download possibility and for a report functionality in case of invalid 
VAT check, in order to report potential fraudsters.  

Improvements  in  relation  to  the  accuracy  of  data  shown  by  the  system  could  also  be  made.  These 
concerns  are  serious  since  they  can  impede  the  correct  functioning  of  active  businesses  involved  in 
intra-EU trade. However, they do not require any amendments to Regulation (EU) 904/2010 since it is 
a matter of implementation of the current rules by the Member States. The Commission works on an 
on-going basis with them to help improve the situation.  

d. Other information collected  

Other sources of information were also used in the course of Regulation (EU) 904/2010 evaluation:  

  annual statistics provided by Member States in accordance with Article 49 of Regulation (EU) 

904/2010; 

80 

 
 
 
  discussions held within the Standing Committee on Administrative Cooperation and its Expert 
Group meetings.102 In particular, the evaluation report uses the Working document SCAC-EG 
47 – statistic for 2016 (committee 2016); 

  comments  expressed  by  Member  States'  delegates  in  several  Fiscalis  Project  groups  and 

workshops;  

 

statistics of the use of Regulation (EC) 1798/2003; 

  previous reports : 

o  Report  from  the  Commission  to  the  Council  and  the  European  Parliament.  Seventh 
report under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection 
and control procedures;103 

o  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application  of  Council  Regulation  (EU)  no  904/2010  concerning  administrative 
cooperation and combating fraud in the field of value added tax;104 

o  European Court of Auditors special report no 24/2015: Tackling intra-EU VAT fraud: 

More action needed 105; 

4. Conclusion 

Member  States’  opinion  is  overall  positive  on  the  legal  and  practical  framework  implemented  with 
Regulation (EU) 904/2010. Most of them consider that it has contributed to improve the administrative 
cooperation  between  Member  States.  Amongst  the  instrument  provided  by  the  Regulation,  the 
exchanges of information on request, the automated exchanges (VIES), Eurofisc and the multilateral 
controls are viewed as the most effective, efficient and relevant instruments.  

However, developing new instruments or new ways of cooperating seems to be needed. In particular, 
Eurofisc  seems  to  be  at  a  turning  point  as  Member  Sates  particularly  support  the  possibility  to 
implement a joint processing of VAT data. There is also room to further develop automated exchange 
of  information  or  access  to  new  sets  of  data.  The  exchange  of  information  with  other  EU  law 
enforcement authorities remains however a sensitive area. 

The other stakeholders support the role of the EU to  assist  and to ensure administrative cooperation 
amongst Member States. However, some of them consider that the current instruments are not adapted 
to new business models and to the fight against cross-border or organized crime fraud. New automated 
exchanges  of  information  and  a  greater  collaboration  between  the  competent  authorities  should  be 
envisaged. They support a greater role for Eurofisc. VIES on the Web is considered as very useful by 

102 According to Article 58 of Regulation (EU) 904/2010, the Commission is assisted by the Standing Committee 
on Administrative Cooperation. 
103 COM(2014)  69  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament.  Seventh 
report under Article 12 of Regulation (EEC, Euratom), no 1553/89 on VAT collection and control procedures.  
104 COM(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 
105 http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf  

81 

 
 
 
                                                            
most stakeholders even if some improvements could also be made. They expressed an overall positive 
opinion on joint audit. 

82 

 
 
 
 
 
9.3. Annex 3: Evaluation of Regulation (EU) 904/2010 

TABLE OF CONTENT 

LIST OF FIGURES ............................................................................................................................ 86 

1. EXECUTIVE SUMMARY ............................................................................................................. 89 

2. INTRODUCTION ........................................................................................................................... 91 

3. BACKGROUND TO THE INITIATIVE ...................................................................................... 91 

3.1. SITUATION PRIOR TO REGULATION (EU) 904/2010 .................................................................... 91 

3.2. REGULATION (EU) 904/2010 AND ITS OBJECTIVES .................................................................... 92 

4. EVALUATION QUESTIONS AND METHOD ........................................................................... 93 

4.1. EVALUATION QUESTIONS............................................................................................................ 93 

4.2. EVALUATION MATERIALS ........................................................................................................... 93 

4.2.1. Questionnaire to the tax authorities .................................................................................... 93 

4.2.2. Open-public consultation .................................................................................................... 93 

4.2.3. Yearly statistics .................................................................................................................... 94 

4.2.4. Other sources ...................................................................................................................... 95 

4.3. EVALUATION PROCESS AND MATRIX .......................................................................................... 96 

5. IMPLEMENTATION OF THE REGULATION ...................................................................... 102 

6. ANALYSIS OF THE ANSWERS TO THE EVALUATION QUESTIONS............................ 103 

6.1. TO WHAT EXTENT HAS REGULATION (EU) 904/2010 CONTRIBUTED TO A CLOSER COOPERATION 
BETWEEN MEMBER STATES? (EFFECTIVENESS) .............................................................................. 103 

6.1.1. Development and stakeholder assessment across the various forms of exchange of 
information between Member States ........................................................................................... 103 

6.1.1.1. General views of Member States on changes introduced to Regulation (EU) 904/2010
 ................................................................................................................................................. 103 

6.1.1.2. Evolution of the total number of exchanges of information on request and qualitative 
assessment of the perceived effectiveness of the tools for exchange of information .............. 104 

6.1.1.3. Speediness of answers to request for information and late answers ........................... 106 

6.1.1.4. Evolution of the total number of spontaneous exchange of information and qualitative 
assessment of the perceived effectiveness of this tool ............................................................ 107 

6.1.1.5. Evolution of automatic exchange of information and qualitative assessment of the 
perceived effectiveness of this tool ......................................................................................... 107 

6.1.1.6. Evolution of the total number of feedback requested and provided and qualitative 
assessment of the perceived effectiveness of this tool ............................................................ 108 

6.1.1.7. Overall assessment of the effectiveness of the different exchange of information 
programmes ............................................................................................................................. 109 

6.1.2. Developments and stakeholder assessment of other forms of administrative cooperation 110 

6.1.2.1. Evolution of the total number of requests for administrative notification and qualitative 
assessment of the perceived effectiveness of this tool ............................................................ 110 

83 

 
 
 
6.1.2.2. Evolution of the total number of administrative enquiries and presence of officials in 
the administrative premises of other administrations and qualitative assessment of the 
perceived effectiveness of this tool ......................................................................................... 111 

6.1.2.3. Evolution of the total number of the MLCs and effectiveness of this instrument ...... 111 

6.1.2.4. Overall assessment of the effectiveness of administrative cooperation programmes 
other than exchange of information ......................................................................................... 112 

6.1.3. Development and stakeholder assessment of VIES ........................................................... 112 

6.1.3.1. Evolution of the number of queries made on VIES by Member States ...................... 112 

6.1.3.2. Qualitative assessment of the use, usefulness and quality (e.g. up-to-datedness, 
accuracy, reliability, etc.) of data in VIES of the quality of data in VIES .............................. 113 

6.1.3.3. Overall assessment of the effectiveness of VIES ....................................................... 114 

Summary of findings: to what extent has Regulation (EU) contributed to a closer cooperation 
between Member States? (effectiveness) ..................................................................................... 114 

6.2. TO WHAT EXTENT HAS REGULATION (EU) 904/2010 FACILITATED COOPERATION BETWEEN 
MEMBER STATES BY MAKING IT SMOOTHER, FASTER AND LESS BURDENSOME? (EFFICIENCY) ..... 115 

6.2.1. Positive development and stakeholder assessment on the use of e-forms ......................... 115 

6.2.1.1. Evolution and qualitative assessment of the use of e-forms for EOI on request ........ 115 

6.2.2. Costs and benefits of administrative cooperation between Member States ...................... 116 

6.2.2.1. Costs and benefits associated with the implementation of Regulation (EU) 904/2010
 ................................................................................................................................................. 116 

6.2.2.2. Perceived administrative burden associated with participation in administrative 
cooperation viewed by Member States .................................................................................... 117 

6.2.2.3. Stakeholder other the Member States' assessment of the costs/benefits for Member 
States ....................................................................................................................................... 118 

Summary of findings: to what extent has Regulation (EU) 904/2010 facilitated cooperation 
between Member States by making it smoother and faster and less burdensome? (efficiency) .. 118 

6.3. TO WHAT EXTENT HAS REGULATION (EU) 904/2010 CONTRIBUTED TO PREVENTING BUDGET 
LOSSES STEMMING FROM TAX AVOIDANCE AND EVASION AND FROM ERRORS IN THE APPLICATION 
OF VAT RULES? (EFFECTIVENESS) .................................................................................................. 119 

6.3.1. Extent to which Regulation (EU) 904/2010 has helped Member States to assess and 
recover more VAT ....................................................................................................................... 119 

6.3.1.1. Amounts assessed and recovered on the basis of Regulation (EU) 904/2010 ............ 119 

6.3.1.2. Member States assessment on the extent to which delays and irregularities incurred in 
the process of information exchange are detriment to the correct assessment, control and 
recovery of VAT ..................................................................................................................... 120 

6.3.1.3. Overall assessment of the extent to which Regulation (EU) 904/2010 has helped 
Member States to assess and recover more VAT .................................................................... 120 

6.3.2. Extent to which Member States are better equipped to fight VAT fraud thanks to Regulation 
(EU) 2010/94 ............................................................................................................................... 120 

6.3.2.1. Assessment of the use, utility and future of Eurofisc ................................................. 120 

6.3.2.2. Views of stakeholders other than Member States on the effect of administrative 
cooperation on VAT fraud ...................................................................................................... 122 

84 

 
 
 
6.3.2.3. Overall assessment of the extent to which Member States are better equipped to fight 
VAT fraud thanks to Regulation (EU) 904/2010 .................................................................... 123 

6.3.3. Extent to which Regulation (EU) 904/2010 helped stakeholders other than the Member 
States to correctly apply VAT rules ............................................................................................. 123 

6.3.3.1. Evolution of the use of VIES on the web by stakeholders other than the Member States
 ................................................................................................................................................. 123 

6.3.3.2. Assessment of stakeholders other than the Member States with regard to their 
experience with VIES on the web (VoW) ............................................................................... 124 

6.3.3.3. Overall assessment of the extent to which Regulation (EU) 904/2010 helped 
stakeholders other than the Member States to correctly apply VAT rules .............................. 125 

Summary of findings: to what extent has Regulation (EU) 904/2010 contributed to preventing 
budget losses stemming from tax avoidance and evasion and from errors in the application of 
VAT rules? (effectiveness) ........................................................................................................... 125 

6.4. TO WHAT EXTENT THE PROVISIONS OF REGULATION (EU) 904/2010 CONTINUE TO MEET THE 
NEEDS OF THE MEMBER STATES? (RELEVANCE) ............................................................................. 126 

6.4.1. The administrative cooperation instruments meet the needs of Member States ................ 126 

6.4.1.2. Assessment of the use and problems encountered by Member States in using 
Regulation (EU) 904/2010 for their own needs....................................................................... 127 

6.4.1.3. Qualitative assessment of the problems encountered by tax administrations when 
exchanging information with other law enforcement authorities ............................................ 127 

6.4.1.4. Qualitative assessment of the relevance of VIES for Member States needs and 
problems encountered when using VIES ................................................................................ 128 

6.4.1.5. Qualitative assessment of the relevance of automatic and spontaneous exchange of 
information in confront with other mechanism ....................................................................... 129 

6.4.1.6. Qualitative assessment of the extent to which Eurofisc continues to meet the needs of 
Member States ......................................................................................................................... 129 

6.4.1.7. Overall assessment as to whether administrative cooperation instruments still fits the 
needs of Member States .......................................................................................................... 130 

6.4.2. Views of stakeholders other than the Member States on VIES on the web ........................ 130 

6.4.2.1. Qualitative assessment of the extent to which VIES on the web (VoW) continues to fit 
the needs of stakeholders other than the Member States ......................................................... 130 

6.4.3. Identified areas in need for further changes to Regulation 904/2010 ............................... 131 

6.4.3.1. Qualitative assessment of the need for change in the area of Eurofisc & Risk analysis
 ................................................................................................................................................. 131 

6.4.3.2. Qualitative assessment of the need for change in the area of multilateral activities 
(MLCs, joint audits, administrative enquiries) ........................................................................ 132 

6.4.3.3. Qualitative assessment of the need for change in e-forms ......................................... 135 

6.4.3.4. Qualitative assessment of the need for change in the area of automatic exchange of 
information, including car registration data ............................................................................ 135 

6.4.3.5. Qualitative assessment of the need for change in the area of customs data ............... 137 

6.4.3.6. Qualitative assessment of the need for change in the area of VIES ........................... 138 

6.4.3.7. Qualitative assessment of the need for change in the area of strengthening cooperation 
with other law enforcement bodies .......................................................................................... 139 

85 

 
 
 
6.4.3.8. Overall assessment of identified areas in need for further changes to Regulation (EU) 
904/2010 .................................................................................................................................. 141 

Summary of findings: to what extent the provisions of Regulation (EU) 904/2010 continue to 
correspond to the needs of the Member States? (relevance) ....................................................... 141 

6.5. TO WHAT EXTENT ARE THE PROVISIONS OF REGULATION (EU) 904/2010 IN LINE WITH OTHER 
POLICIES AND PRIORITIES OF THE EU? COULD MEMBER STATES HAVE ACHIEVED SIMILAR RESULTS 
WITHOUT ACTING AT EU LEVEL? (COHERENCE AND EU ADDED VALUE) ....................................... 142 

6.5.1. Administrative cooperation in VAT is a cornerstone for the proper functioning of the single 
market and the fight against VAT fraud ...................................................................................... 142 

6.5.1.1. Qualitative assessment of the level of convergence of the objectives of Regulation 
(EU) 904/2010 with other Commission's strategies ................................................................ 142 

6.5.1.2. Qualitative assessment of the inter-dependence of provisions governing administrative 
cooperation in the VAT with other Commission's strategic initiatives and programmes (e.g. the 
developments in the VAT area towards the definitive VAT system, Fiscalis activities) ........ 143 

6.5.2. Administrative cooperation in VAT contributes to the creation of a single EU VAT area 144 

6.5.2.1. Qualitative assessment of the Regulation (EU) 904/2010's contribution to the creation 
of a common system for cooperation between the Member States ......................................... 144 

6.5.3. Joint EU approach in administrative cooperation in VAT has advantages over other forms 
of national and international forms of tax cooperation .............................................................. 145 

6.5.3.1. Cases of cross-border fraud (e.g. MTIC), MLC indicator, VAT gap) ........................ 145 

6.5.3.2. Exchange of best practices ......................................................................................... 146 

Summary of findings: To what extent are the provisions of Regulation (EU) 904/2010 in line with 
other policies and priorities of the EU? Could Member States have achieved similar results 
without acting at EU level? (coherence and EU added-value) ................................................... 147 

7. CONCLUSIONS............................................................................................................................ 147 

86 

 
 
 
Figure 1: Administrative cooperation instruments provided for by Regulation (EU) 904/2010  

LIST OF FIGURES 

Figure 2: Impact of changes introduced with Regulation (EU) 904/2010 

Figure 3: Number of requests for information sent out by Member States 

Figure 4: Effectiveness of the tools for administrative cooperation 

Figure  5:  Exchange  of  information  on  request.  Number  of  requests  sent  out  by  Member  States 
Evolution between 2011 and 2016 

Figure 6: Percentage of late replies 

Figure 7: Number of spontaneous exchanges of information 

Figure 8: Non-established taxable persons - Volume of data exchanged per year 

Figure 9: New means of transport - Volume of data exchanged per year 

Figure 10: Impact of Member States abstaining from exchanging information without prior request 

 Figure 11: Number of feedbacks requested per year 

Figure 12: Number of feedbacks provided per year 

Figure 13: Requests for administrative notification - Number of requests received per year 

Figure 14: Requests for notification - Number of requests sent out per year 

Figure 15: Administrative enquiries/Presence of officials - Number of requests made per year 

Figure 16: Simultaneous controls - Number of MLCs initiated per year 

Figure 17: Simultaneous controls - Total number of participating Member States 

Figure 18: VIES: total number of requests made by Member States per year 

Figure 19: Usefulness of data exchange over VIES and impact of inaccurate data in VIES 

Figure 20: Effectiveness of automated access to VIES 

Figure 21: Costs in relation to benefits of participating in administrative cooperation 

Figure  22:  Proportionality  of  costs  and  benefits  in  relation  to  participation  in  administrative 
cooperation 

Figure 23: Burden in relation to participating in administrative cooperation 

Figure  24:  Administrative  costs  borne  by  Member  States  to  cooperate  at  EU  level  are  justified  by 
additional VAT revenues  

Figure 25: Impact of late replies to request for administrative cooperation 

87 

 
 
 
 
Figure 26: Effectiveness of Eurofisc in relation to collection of VAT on intra-EU transactions 

Figure 27: Eurofisc liaison officials' rights to consult VIES 

Figure 28: The current instruments are effective to prevent cross-border VAT fraud  

Figure  29:  The  current  instruments  are  effective  to  fight  serious  VAT  fraud  organised  by  criminal 
organisations.  

Figure 30: The current instruments are sufficient to fight VAT fraud occurring in new business models 
such as in the collaborative economy or ecommerce.  

Figure 31: VIES on the Web - Number of requests made per year  

Figure 32: VIES on-the-web is a useful tool for businesses carrying out intra-EU transactions  

Figure 33: How do you rate your general experience with the consultation of the VAT identification 
number of your customers through VIES on-the-web?  

Figure 34: Your VAT identification data was correctly reflected in the VIES on-the-web system? 

Figure 35: The VAT identification data of your customers were correctly reflected in the VIES on-the-
web system?  

Figure 36: Complaints received in relation to VoW data 

Figure 37: To  what extent are the tools for administrative cooperation  provided  by Regulation  (EU) 
904/2010 relevant for the control of intra-EU transactions and the collection of VAT? Please provide 
your opinion on each tool? 

Figure 38: Problems in information exchange with law enforcement authorities 

Figure 39: Data available through VIES and Member States' needs 

Figure  40:  Do  you  encounter  problems  with  getting  automated  access  to  the  information  exchanged 
through VIES as provided for in Article 21?  

Figure 41: Replacing automated and spontaneous exchange of information with other mechanisms 

Figure 42: The availability of the ‘VIES on-the-web’ server is good 

Figure 43: Do you consider that a system of e-mail notification to inform users about technical issues 
with VIES on-the-web would be useful?  

Figure 44: Do you consider that the current way of checking VAT numbers should be replaced with a 
system that inform you about the changes to your clients VAT data such as the validity of their VAT 
number? 

Figure 45: Member States' opinions on TNA 

Figure 46: The fight against cross-border VAT fraud would benefit from an EU wide automated joint 
risk analysis system. 

Figure 47: Member States experience with joint audits 

88 

 
 
 
Figure 48: Member States' opinion on joint audits 

Figure 49: It would be more efficient to also authorise an active participation of tax officials in audits 
carried out by other Member States. 

Figure  50:  Being  audited  by  a  single  team  of  auditors  from  different  Member  States  in  which  you 
carry  out  economic  transactions  and  controlling  your  operations  taxable  therein  would  be  less 
burdensome. 

Figure 51: Having a single report at the end of the audit signed by all the tax administrations involved 
would give taxpayers more legal certainty 

Figure 52: Need to update standard forms 

Figure 53: Modifying categories for automatic exchange of information 

Figure  54:  Tax  administrations  should  have  automated  access  to  information  related  to  cars 
registration from other Member States 

Figure 55: Exchange of information in relation to CP42 

Figure 56: Tax administrations should have automated access to information on exempt importations 
from customs authorities  

Figure 57: In your opinion should the rules for automated access to VIES data (Art 21(2)) be changed?  

Figure 58: Adding categories of information to be exchanged over VIES 

Figure 59: The scope of information directly accessible in VIES should be extended when relevant.  

Figure 60: Allowing law enforcement authorities access to data exchanged over VIES 

Figure 61: Possible collaboration between Europol, OLAF and Eurofisc 

Figure 62: The EU is the best placed to provide Member States with common rules to allow them to 
work more closely together in order to monitor intra-EU trade for VAT purpose and ensure the correct 
application of VAT.  

89 

 
 
 
 
1. EXECUTIVE SUMMARY 

This evaluation of the use of the EU framework for administrative cooperation and combating fraud in 
the  field  of  VAT  accompanies  the  impact  assessment  carried  out  in  conjunction  with  a  legislative 
proposal  to  amend  Council  Regulation  (EU)  No  904/2010  of  7  October  2010  on  administrative 
cooperation  and  combating  fraud  in  the  field  of  value-added  tax  (hereinafter  ‘Regulation  (EU) 
904/2010’).  It  examines  to  which  extent  the  overall  objective  of  this  Regulation  to  contribute  to  a 
closer cooperation between Member States, to avoid budget losses, to fight VAT fraud and to preserve 
principles of fair taxation have been met.  

The evaluation questions relate to the effectiveness,  the efficiency, the relevance, the coherence and 
the EU added value of this EU framework (see section 4.1.).  

The evaluation is mainly based on the comments and responses provided by the Member States' tax 
authorities, the responses provided by stakeholders other than Member States in response to an open 
public  consultation  and  the  yearly  statistics  on  the  use  of  this  EU  framework.  Other  sources  of 
information such as issues addressed in the Standing Committee on Administrative Cooperation and 
its Expert  Group  meetings, in Fiscalis 2020 activities and in other external reports (see section  4.2.) 
have been used when relevant.  

Member  States’  opinion  is  overall  positive  on  the  legal  and  practical  framework  implemented  with 
Regulation  (EU)  904/2010.  The  vast  majority  of  them  consider  that  it  has  contributed  to  improve 
administrative  cooperation  between  Member  States.  Amongst  the  instruments  provided  by  the 
Regulation, Member States reported  that  exchanges of information on request, automated exchanges 
(VIES106), Eurofisc107 and multilateral controls are the most effective instruments.  

Drawbacks in the manner in which administrative cooperation takes place are however reported. Late 
replies  to  requests  for  information  is  the  most  significant.  Although  in  decrease,  the  number  of 
instances where it happens remains significant - 33% - and Member States should work to remedy it. 
The accuracy of data exchange through VIES is a domain where concerns are expressed by both the 
Member States and businesses. Businesses need accurate and up-to-date information to properly apply 
the VAT rules to their intra-EU transactions and Member States should improve this situation.  

Regulation  (EU)  904/2010  appears  to  be  an  efficient  instrument  for  organising  administration 
cooperation.  Most  Member  States  consider  that  costs  incurred  by  participating  in  administrative 
cooperation in the field of VAT are to a high extent proportionate to the benefits achieved. Automated 
access  to  information  through  VIES,  Eurofisc,  simultaneous  controls,  requests  for  information  and 
administrative enquiries score particularly high. These instruments are considered as the most efficient 
by the Member States but at the same time rather burdensome. This is certainly the result of the large 
number of instances where they are used, requiring administrative resources to handle them.  

Member  States  consider  that  costs  incurred  by  administrative  cooperation  are  proportionate  to  the 
benefits although, due to a lack of comparison elements, it has not been possible to precisely assess the 
extent  to  which  Regulation  (EU)  904/2010  has  contributed  to  prevent  budget  losses.  In  the  field  of 
fight  against  VAT  fraud,  Eurofisc  appears  to  be  the  most  powerful  instrument.  A  vast  majority  of 
Member States reports a high level of satisfaction and agrees that it has had a positive impact on the 

106 VIES  (VAT  Information  Exchange  system)  is  an  electronic  system  under  which,  Member  States  exchange 
information on traders registered for VAT purposes and on intra-EU supplies. Member States are responsible for 
ensuring the quality and reliability of the information exchanged. 
107 Eurofisc is an early warning mechanism to facilitate multilateral cooperation to fight VAT fraud. 

90 

 
 
 
                                                            
collection  of  VAT  on  intra-EU  transactions.  However,  there  are  still  shortcomings  regarding  its 
functioning leading to the conclusion that Eurofisc has certainly not reached its potential yet. 

Member  States  consider  that  all  administrative  cooperation  instruments  in  the  field  of  VAT  are 
relevant.  Some  instruments  score  very  high  such  as  VIES  and  requests  for  information.  Developing 
new instruments or new ways of cooperating seems to be needed. In particular, Eurofisc is at a turning 
point  as  Member  Sates  particularly  support  the  possibility  to  implement  a  joint  processing  of  VAT 
data. There is also room to further develop automated exchange of information or access to new sets of 
data.  In  this  context,  Member  States  are  particularly  interested  in  an  access  to  customs  data  or  car 
registration information. The best way to access it still needs to be discussed, although Member States 
are  more  in  favour  of  automated  than  automatic  exchanges.  On  the  opposite,  Member  States  do  not 
demonstrate  a  strong  appetite  to  develop  exchange  of  information  with  other  EU  law  enforcement 
authorities such as Europol or OLAF. 

Improving  administrative  cooperation  in  the  field  of  VAT  is  fully  coherent  with  other  EU  policies 
currently under development. This is particularly the case with regard to mutual assistance in the field 
of direct taxation where a number of improvements took place over the recent years. It is also coherent 
with other EU initiatives underway such as the draft Directive to protect the EU financial interests or 
the  European  Public  Prosecutor's  office.  All  this  demonstrates  that  there  are  several  common 
initiatives taken at EU level with similar objectives: improving cooperation between law enforcement 
authorities and finding new way of fighting the most severe threats to tax revenues. 

Administrative cooperation is essential for the proper functioning of the EU VAT area which itself is a 
cornerstone  of  the  single  market.  Common  VAT  rules  have  been  accepted  by  the  Member  States 
because they were supported by reciprocal, binding and evolving administrative cooperation rules. As 
such,  administrative  cooperation  is  an  essential  component  of  the  free  circulation  of  goods  and 
services which is one of the four freedoms enshrined in the EU. Other forms of cooperation between 
Member States also demonstrate the need to use the EU level as the platform of reference to discuss 
and develop administrative cooperation in the field of VAT.  

In conclusion, it results from this evaluation that Regulation (EU) 904/2010 constitutes the cornerstone 
of administrative cooperation and fighting fraud in the field of VAT. This instrument, coherent with 
other already or to be implemented EU policies, suits the needs of the Member States. The high level 
of  cooperation  developed  between  them  demonstrates  a  good  knowledge  and  appropriation  of  this 
Regulation and further-on its effectiveness and efficiency. Drawbacks in its implementation still exist 
and  Member  States  should  work  at  national  and  EU  levels  to  improve  its  functioning.  At  the  same 
time,  this  evaluation  shows  that  new  administrative  cooperation  instruments  are  needed  by  the 
Member  States.  Reinforcing  Eurofisc  or  providing  new  tools  to  fight  the  most  severe  fraud  threats 
appear to be amongst their highest expectations for the near future.  

91 

 
 
 
2. INTRODUCTION 

On  7  April  2016,  the  Commission  adopted  an  Action  Plan  on  VAT 108 (hereinafter  ‘Action  Plan’) 
setting  out  ways  to  modernise  the  VAT  system  so  as  to  make  it  simpler,  more  fraud-proof  and 
business-friendly. In this context, the Commission announced its intention to adopt in 2017 four VAT-
related proposals: 

 

 

a definitive VAT system for intra-EU cross-border trade based on the principle of taxation in 
the Member  State of destination  in order to create a robust single European  VAT area (first 
step); 

a modernised VAT rates policy so as to allow Member States greater autonomy on setting the 
VAT rates; 

  a comprehensive simplification VAT package for SMEs; 

  a proposal to enhance VAT administrative cooperation and Eurofisc109.  

This  current  framework  for  administrative  cooperation  and  fight  against  VAT  fraud  is  laid  down  in 
Regulation (EU) 904/2010.  

The  purpose  of  this  evaluation  is  to  assess  whether  and  to  what  extent  the  implementation  of 
Regulation  (EU)  904/2010  by  the  Member  States  have  made  administrative  cooperation  and  the 
combat against VAT fraud more efficient and effective.  

It will also assess whether this framework continues to be relevant and coherent for Member States' 
needs and what is the added value of organising this cooperation at EU level.  

Finally,  it  will  assess  to  what  extent  this  administrative  cooperation  needs  to/can  be  improved,  and 
make  recommendations  to  take  into  account  the  current  needs  of  the  Member  States  and  the 
functioning of the single market in a quickly changing economic and political environment. 

3. BACKGROUND TO THE INITIATIVE 

3.1. Situation prior to Regulation (EU) 904/2010 

Along  with  the  abolition  of  the  physical  borders  within  the  EU  and  the  implementation  of  the 
‘transitional arrangements’ for intra-EU trade110, a framework allowing Member States to cooperate to 
better  manage  and  control  VAT  was  put  in  place  by  the  end  of  1992111.  With  the  introduction  of 
Regulation  (EU)  904/2010,  the  first  objective  was  to  gather,  in  a  single  piece  of  legislation,  all 
provisions  in  relation  to  administrative  cooperation  in  the  field  of  VAT.  On  top  of  that,  and  in 
response  to  the  most  severe  and  always  sophisticated  VAT  frauds,  improving  this  administrative 
cooperation framework overall was also viewed as a necessity.  

108  See  Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide 
(COM(2016) 148 final). 
109 In 2010, the Member States initiated ‘Eurofisc’ - a mechanism to enhance their administrative cooperation in 
combating organised VAT fraud and especially carousel fraud/MTIC fraud. 
110 SWD(2014) 338, 29.10.2014, on the implementation of the definitive VAT regime for intra-EU trade. 
111 Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of 
indirect taxation (VAT). 

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3.2. Regulation (EU) 904/2010 and its objectives 

The first purpose of Regulation (EU) 904/2010 currently in force remains the exchange of information 
between Member States tax authorities with three different and complementary types of programmes: 
on  request,  spontaneous  and  automatic.  To  get  information  on  businesses  involved  in  intra-EU 
transactions,  tax  authorities  can  also  rely  on  VIES,  an  IT  tool  developed  as  of  1992 112.  Certain 
information has also been made available to private stakeholders through ‘VIES on the web’113 where 
intra-EU VAT numbers delivered by Member States' tax administrations can be checked on-line.  

Regulation  (EU)  904/2010  also  provides  for  other  cooperation  tools  i.e.  simultaneous  controls  and 
presence in administrative offices and during administrative enquiries. Regulation (EU) 904/2010 has 
also introduced a new means for an enhanced cooperation, namely Eurofisc. 

The functioning of administrative cooperation in the field of VAT, as provided for by Regulation (EU) 
904/2010 can be summarised as showed below in figure 1: 

Figure 1: Administrative cooperation instruments provided for by Regulation (EU) 904/2010  

Different  objectives  were  pursued  with  the  introduction  of  Regulation  (EU)  904/2010  of  which  two 
can be viewed as its main objectives: 

 

to contribute to a closer cooperation between Member States; and 

112 VIES  (VAT  Information  Exchange  system)  is  an  electronic  system  under  which,  Member  States  exchange 
information on traders registered for VAT purposes and on intra-EU supplies. Member States are responsible for 
ensuring the quality and reliability of the information exchanged. 
113 With  this  VIES  on  the  Web,  businesses  can  check  online,  upon  provision  of  the  VAT  number  of  their 
customers, whether this VAT number is valid or not (Member States can decide whether they agree to disclose 
the contact details of the enterprise owning this VAT number). Nevertheless, information on intra-EU sales and 
acquisitions are made available only to tax administrations. 

93 

 
 
 
 
                                                            
 

to avoid budget losses, to fight VAT fraud and to preserve the principle of fair taxation. 

4. EVALUATION QUESTIONS AND METHOD 

4.1. Evaluation questions 

The evaluation is based on the following questions: 

  To  what  extent  has  Regulation  (EU)  904/2010  contributed  to  a  closer  cooperation  between 

Member States? (effectiveness) 

  To what extent has Regulation (EU) 904/2010 facilitated cooperation between Member States 

by making it smoother faster and less burdensome? (efficiency) 

  To  what  extent  has  Regulation  (EU)  904/2010  contributed  to  preventing  budget  losses 

stemming from tax avoidance and evasion? (effectiveness) 

  To  what  extent  the  provisions  of  Regulation  (EU)  904/2010  continue  to  correspond  to  the 

needs of the Member States and other stakeholders? (relevance) 

  To what extent are the provisions of Regulation (EU) 904/2010 in line with other policies and 
priorities of the EU? Could Member States have achieved similar results without acting at EU 
level? (coherence, EU added value) 

4.2. Evaluation materials 

4.2.1. Questionnaire to the tax authorities 

a. 

In order to gather the information necessary for the preparation of this report, the Commission has 
asked  for  the  opinion  of  the  28  Member  States'  tax  authorities  dealing  with  administrative 
cooperation in the field of VAT. At the time this evaluation report was finalised (30 June 2017), 
all Member States but one had replied to the targeted evaluation questionnaire, which was sent to 
them on 7 March 2017 with expected replies by 14 April 2017 at the latest. This questionnaire was 
prepared  by  the  Commission  and  discussed  with  the  inter-service  steering  group  (ISSG)  in  a 
meeting  that  took  place  on  25  January  2017.  One  set  of  replies  was  received  per  responding 
Member States. Overall quality and completeness of replies were satisfactory.  

b.  The overview of Member States' answers to the questionnaire has been presented to them during 

an ‘Anti-Tax Fraud Strategy’ meeting taking place on 10 July 2017114.  

4.2.2. Open-public consultation 

a.  An  open  public  consultation  took  place  from  2  March  to  31  May  2017.  It  was  prepared  by  the 

Commission and discussed with the ISSG in a meeting that took place on 25 January 2017. 

Though  the  public  consultation  was  announced  in  several  fora,  publicly  announced  on 
Commission  websites  including  ‘VIES  on  the  web’  page  and  being  made  available  in  all  EU 
official  languages  bar  the  Gaelic,  there  was  only  a  limited  number  of  responses  to  this  public 
consultation (58).  

114 http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=1963  

94 

 
 
 
                                                            
However,  as  Regulation  (EU)  904/2010  deals  with  cooperation  between  tax  authorities,  the 
stakeholders other than Member States might have thought that there was only a limited interest in 
replying to the open-public consultation, although some parts of it directly related to the business 
(in particular the use of 'VIES on the web' and joint audits). 

It is important to note that since only  58 replies from 12 Member States were  received over the 
course  of  the  open-public  consultation,  these  responses  are  not  statistically  representative  of  the 
target population. Answer ratios must therefore be interpreted with care without any possibility to 
draw any general conclusions from these replies.  

b.  A  summary  report  of  the  responses  to  this  public  consultation  has  been  presented  to  Member 
States during an Anti-Tax Fraud Strategy meeting taking place on 10 July 2017 and published on 
the Commission's website.115 

4.2.3. Yearly statistics 

a.  The  replies  to  the  above  consultations  completed  the  information  already  available  to  the 
Commission from the yearly statistics that Member States have to provide to the Commission in 
accordance  with  Article  49  of  Regulation  (EU)  904/2010.  The  statistics  cover  all  types  of 
administrative cooperation instruments provided for by the Regulation: 

 

 

 

exchange of information on request; 

spontaneous exchange of information; 

automatic exchange of information; 

 

simultaneous controls; 

  presence during administrative enquiries; 

  presence in administrative offices; and 

  use of VIES. 

The  Standing  Committee  on  Administrative  Cooperation  Committee  has  adopted  detailed 
guidelines  with  regard  to  the  calculation  of  the  statistical  data.  Nevertheless,  the  statistical  data 
provided  by  the  Member  States  do  not  always  match.  Mismatches  can  still  be  noted  in  the 
numbers  of  the  requests  sent  and  received.  Such  differences  in  the  reported  figures  can  be 
explained  in  certain  Member  States  by  a  poor  communication  between  some  tax  administration' 
departments  and  the  competent  authority  which  provides  he  Commission  with  the  information. 
This  is  typically  the  case  when  liaison  offices  have  been  implemented  without  suitable  tracking 
instruments.  

Under  these  circumstances,  the  accuracy  of  these  statistics  cannot  be  fully  guaranteed  although 
they have been checked by the Member States. Nevertheless, they provide an estimate of the level 

115 https://ec.europa.eu/taxation_customs/consultations-get-involved/tax-consultations/public-consultation-
functioning-administrative-cooperation-and-fight-against-fraud-field-vat_en  

95 

 
 
 
                                                            
of  administrative  cooperation  which  has  taken  place  between  Member  States  over  the  past  5 
years116.  

b.  The usefulness of the statistics could be improved if more information was collected and if their 
reliability  could  be  checked.  However,  the  statistical  information  that  Member  States  have  to 
provide  annually  cannot  be  decided  without  their  agreement117 and  they  are  reluctant  to  provide 
more  statistics,  as  this  could  entail  additional  administrative  burden  (e.g.  the  information  on 
additional  VAT  assessed  and  collected  by  Member  States  with  the  help  of  administrative 
cooperation  instruments).  In  addition,  the  annual  reports  which  are  prepared  by  the  Eurofisc 
Working  field  coordinators  as  provided  for  in  Article  37  of  Regulation  (EU)  904/2010  and 
compiled in the annual report prepared by the Eurofisc chair are not made public. Therefore, they 
cannot be used despite the fact that they relate to a significant activity provided for by Regulation 
(EU) 904/2010. 

4.2.4. Other sources 

a.  Discussions on certain issues which were held within the Standing Committee on Administrative 

Cooperation and its Expert Group meetings.118  

b.  The  evaluation  also  relied  on  comments  expressed  in  several  Fiscalis  project  groups  and 

workshops.  

c.  The evaluation took account of previous reports, including the following: 

  Report  from  the  Commission  to  the  Council  and  the  European  Parliament.  Seventh  report 
under  Article  12  of  Regulation  (EEC,  Euratom)  n°  1553/89  on  VAT  collection  and  control 
procedures;119  

  Report from the Commission to the Council and the European Parliament on the application of 
Council Regulation (EU) No 904/2010 concerning administrative cooperation and combating 
fraud in the field of value added tax;120 

  The  European  Court  of  Auditors  2015  special  report  no  24/2015:  Tackling  intra-EU  VAT 

fraud: More action needed.121 

116 Regulation (EU) 904/2010 entered into force on 1 January 2012. 5 entire batches of yearly statistics are now 
available. 
117 Articles 49 and 58 of Regulation (EU) 904/2010. 
118  According  to  Article  58  of  Regulation  (EU)  904/2010,  the  Commission  is  assisted  by  the  Standing 
Committee on Administrative Cooperation. 
119 COM(2014)  69  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament.  Seventh 
report under Article 12 of regulation (EEC, Euratom), no 1553/89 on VAT collection and control procedures.  
120 COM(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 
121 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf.  

96 

 
 
 
 
 
                                                            
4.3. Evaluation process and matrix 

a.  The evaluation process was monitored by a Commission inter-service Steering group supporting 

the evaluation and revision of Regulation (EU) 904/2010.122  

b.  The  evaluation  covered  all  Member  States  for  the  entire  period  from  the  date  from  which  the 

provisions of the Regulation had to be applied in the Member States (1 January 2012).123  

c.  The following evaluation matrix has been used: 

Evaluation question 

Judgement criteria 

Indicators 

Data source 

6.1. To what extent has 
Regulation (EU) 
904/2010 contributed to 
a closer cooperation 
between Member States? 
(effectiveness) 

6.1.1. Development and 
stakeholder assessment 
across the various forms 
of exchange of 
information between 
Member States 

6.1.1.1. General views of 
Member States on 
changes introduced to 
Regulation (EU) 
904/2010 

6.1.1.2. Evolution of the 
total number of exchange 
of information on request 
+ qualitative assessment 
of the perceived 
effectiveness of the tools 
for exchange of 
information 

6.1.1.3.Speediness of 
answers to request for 
information and late 
answers 

6.1.1.4. Evolution of the 
total number of 
spontaneous exchange of 
information + qualitative 
assessment of the 
perceived effectiveness 
of this tool 

6.1.1.5. Evolution of 
automatic exchange of 
information + qualitative 
assessment of the 
perceived effectiveness 
of this tool 

Statistics - box2 
Questionnaire MS (2.5, 
2.6) 
Working document 
SCAC-EG 47 – statistics 
for 2015 (committee 
October 2016). 

Working document 
SCAC-EG 47 – statistics 
for 2015 (committee 
October 2016) 
Questionnaire MS (2.8, 
2.9) 
ECA report (para 30) 

Statistics – box 7 
Questionnaire MS (2.5, 
2.6) 
ECA report (para 35) 

Statistics - box 19 and 20 
Questionnaire MS (2.5, 
2.6, 2.10, 2.11) 

122 This Commission inter-service Steering group was composed of the following directorate generals: Taxation 
and customs union (TAXUD), Budget (BUDG), Connect (CNECT), European Anti-Fraud Office (OLAF), Legal 
Service (SJ) and the Secretariat General (SG). 
123   Note: Croatia only joined the EU on 1 July 2013. 

97 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Evaluation question 

Judgement criteria 

Indicators 

Data source 

6.1.2. Developments and 
stakeholder assessment 
of other forms of 
administrative 
cooperation 

6.1.1.6. Evolution of the 
total number of feedback 
requested and provided+ 
qualitative assessment of 
the perceived 
effectiveness of this tool 

6.1.2.1. Evolution of the 
total number of requests 
for administrative 
notification + qualitative 
assessment of the 
perceived effectiveness 
of this tool 

6.1.2.2. Evolution of the 
total number of 
administrative enquiries 
instances of presence of 
officials in the 
administrative premises 
of other administrations 
+ qualitative assessment 
of the perceived 
effectiveness of this tool 

6.1.2.3. Evolution of the 
total number of the 
MLCs and effectiveness 
of this instrument 

6.1.3. Positive 
development and 
stakeholder assessment 
of VIES 

6.1.3.1. Evolution of the 
number of queries made 
on VIES by Member 
States 

Statistics – box 9 – box 
11 
Questionnaire MS (2.5, 
2.6) 

Statistics - box12 – box 
13  
Questionnaire MS (2.5, 
2.6) 

Statistics - box 16 
Questionnaire MS (2.5, 
2.6) 

Statistics - box 17-18 
Questionnaire MS (2.5, 
2.6) 
ECA report (para 45, 46, 
47) 

statistics on the use of 
VIES by Member States 

6.1.3.2. Qualitative 
assessment of the use 
and usefulness of data in 
VIES 

6.2.1.1. Evolution and 
qualitative assessment of 
the use of e-forms for 
EOI on request 

Questionnaire MS (2.14, 
2.15, 2.18, 2.19, 2.20, 
2.21) 

Statistics - box 1-2 
ECA report (para 27) 

6.2.1. Positive 
development and 
stakeholder assessment 
on the use of e-forms 

6.2. To what extent has 
Regulation (EU) 
904/2010 facilitated 
cooperation between 
Member States by 
making it smoother and 
faster and less 
burdensome? 

98 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators 

Data source 

(efficiency) 

6.2.2. Costs and benefits 
of administrative 
cooperation between 
Member States 

6.2.2.1. Costs associated 
with the implementation 
of the Regulation (EU) 
904/2010 

Questionnaire MS (2.28, 
2.29, 2.30, 2.31) 

6.2.2.2. Perceived 
administrative burden 
associated with 
participation in 
administrative 
cooperation viewed by 
Member States 

6.2.2.3. Stakeholder 
other the Member States' 
assessment of the 
costs/benefits for 
Member States 

6.3. To what extent has 
Regulation (EU) 
904/2010 contributed to 
preventing budget losses 
stemming from tax 
avoidance and evasion? 
(effectiveness) 

6.3.1. Extent to which 
Regulation (EU) 
904/2010 has helped 
Member States to assess 
and recover more VAT 

6.3.1.1. Amounts 
assessed and recovered 
on the basis of – 
Regulation (EU) 
904/2010 

Questionnaire MS (2.12, 
2.13) 

Questionnaire MS (2.30, 
2.32) 
Public consultation 
(3.1.7) 
Answers to other 
relevant evaluation 
question, e.g. on VIES or 
speediness of exchange 
of information  

Questionnaire MS (2.30, 
2.31, 2.32) 
Amount assessed in 
relation to MLCs 

6.3.1.2. Member States 
assessment on the extent 
to which delays and 
irregularities incurred in 
the process of 
information exchange are 
detriment to the correct 
assessment, control and 
recovery of VAT 

6.3.2.1. Assessment of 
the use utility and future 
of Eurofisc 

Working document 
SCAC-EG 47 – statistics 
for 2015 (committee 
October 2016) 
Questionnaire MS (2.8, 
2.9, 2.10, 2.16) 
ECA report (para 30) 

Eurofisc report 
(statistics) 
Questionnaire MS (2.24, 
2.25, 2.26, 2.25) 
ECA report (para 51, 52, 
53, 54, 55 

6.3.2.2. Views of 
stakeholders other than 

Public consultation 
(3.1.4, 3.1.5, 3.1.6) 

6.3.2. Extent to which 
Member States are better 
equipped to fight VAT 
fraud thanks to 
Regulation (EU) 2010/94 

99 

 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators 

Data source 

6.3.3. Extent to which 
Regulation (EU) 
904/2010 helped 
stakeholders other than 
the Member States to 
correctly apply VAT 
rules 

the Member States on the 
effect of administrative 
cooperation on VAT 
fraud 

6.3.3.1. Evolution of the 
use of VIES on the web 
by stakeholders other 
than the Member States 

Statistics of the use of 
VIES on the web 
Public consultation 
(3.4.1, 3.4.2) 

6.3.3.2. Assessment of 
stakeholders other than 
the Member States with 
regard to their 
experience with VIES on 
the web? 

Public consultation 
(3.4.3, 3.4.4) 
Questionnaire MS (2.22, 
2.23) 

6.4. To what extent the 
provisions of Regulation 
(EU) 904/2010 continue 
to correspond to the 
needs of the Member 
States? (relevance) 

6.4.1. The administrative 
cooperation instruments 
tools fits the needs of 
Member States 

6.4.1.1. Appropriation of 
administrative 
cooperation instruments 
by Member States 

Questionnaire MS (2.33) 
SCAC/SCAC EG 
meetings 

Questionnaire MS (2.7) 
SCAC/SCAC EG 
meetings 
AC report 2014 + 
CSWD 

Questionnaire MS (3.21, 
3.22, 3.23, 3.24, 3.25, 
3.26, 3.27, 3.28) 

Questionnaire MS (2.19, 
2.20, 2.21) 

6.4.1.2. Assessment of 
the use and problems 
encountered by Member 
States in using 
Regulation (EU) 
904/2010 for their own 
needs 

6.4.1.3. Qualitative 
assessment of the 
problems encountered by 
Member States when 
exchanging information 
with other authorities 

6.4.1.4. Qualitative 
assessment of the 
relevance of VIES for 
Member States needs 
and problems 
encountered when using 
VIES 

6.4.1.5. Qualitative 
assessment of the 
relevance of automatic 

Questionnaire MS (3.3, 
3.4) 
Public consultation 

100 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators 

Data source 

(3.1.8) 

Eurofisc report 
(statistiques) 
Questionnaire MS (2.24, 
2.25, 2.26, 2.25) 
ECA report (para 51, 52, 
53, 54, 55 

Public consultation 
(3.4.5, 3.4.6, 3.4.7, 3.4.8) 

and spontaneous 
exchange of information 
in confront with other 
mechanism 

6.4.1.6. Qualitative 
assessment of the extent 
to which Eurofisc 
continues to meet the 
needs of Member States? 

6.4.2.1. Qualitative 
assessment of the extent 
to which VIES on the 
web (VoW) continues to 
fit the needs of 
stakeholders other than 
the Member States 

6.4.2. Views of 
stakeholders other than 
the Member States on the 
principle governing EOI 

6.4.3. Identified areas in 
need for further changes 
to the Regulation 
904/2010? 

6.4.3.1. Qualitative 
assessment of the need 
for change in the area of 
EUROFISC & Risk 
analysis 

Questionnaire MS (3.15, 
3.16, 3.17, 3.18, 3.19) 
Public consultation 
(3.3.1) 
ECA report 

6.4.3.2. Qualitative 
assessment of the need 
for change in the area of 
multilateral activities 
(MLCs, joint audits, 
administrative enquiries) 

6.4.3.3. Qualitative 
assessment of the need 
for change in e-forms 

6.4.3.4. Qualitative 
assessment of the need 
for change in the area of 
AEOI, including car 
registration data 

6.4.3.5. Qualitative 
assessment of the need 
for change in the area of 
customs data 

Questionnaire MS (3.39, 
3.40, 3.41, 3.42, 3.43, 
3.44, 3.45) 
Public consultation 
(3.2.1, 3.2.2, 3.2.3, 3.2.4, 
3.2.5, 3.2.6, 3.2.7, 3.2.8) 
and (3.3.2, 3.3.3) 
ECA report 
Report FPG49 on joint 
audits 

Questionnaire MS (3.1, 
3.2) 

Questionnaire  MS  (3.5, 
3.6, 3.9, 3.34, 3.35, 3.36, 
3.37, 3.38) 
Public consultation 
(3.1.10) 
ECA report 

Questionnaire MS (3.9, 
3.6, 3.31, 3.32) 
Public consultation 
(3.1.11) 
ECA report (para 78, 79, 
80, 81, 82, 83, 84, 85) 

101 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators 

Data source 

Questionnaire MS (3.9, 
3.10, 3.11, 3.12, 3.13, 
3.25, 3.26) 
Public consultation 
(3.1.9) 

Questionnaire MS (3.21, 
3.25, 3.26, 3.27, 3.30) 
Public consultation 
(3.1.12,3.1.13, 3.1.14) 
and 3.3.4, 3.3.5, 3.3.6, 
3.3.7, 3.3.8, 3.3.9, 
3.3.10) 
ECA report (para 95, to 
103) 

Questionnaire MS (3.33) 

Questionnaire MS (2.34, 
2.35) 

Questionnaire MS (3.46, 
3.47) 

Commission's official 
documents (e.g. 
communications, 
legislation, report, etc.) 

Commission's official 
documents (e.g. 
communications, 
legislation, report, etc.) 

6.4.3.6. Qualitative 
assessment of the need 
for change in the area of 
VIES 

6.4.3.7. Qualitative 
assessment of the need 
for change in the area of 
strengthening 
cooperation with other 
law enforcement bodies 

6.4.3.8. Qualitative 
assessment of the need 
for change in the area of 
strengthening 
cooperation with other 
non-EU countries 

6.4.3.9. Provisions 
considered as no longer 
relevant 

6.4.3.10. Other 
suggestions made by 
Member States 

6.5. To what extent are 
the provisions of 
Regulation 904/2010 in 
line with other policies 
and priorities of the EU? 
Could Member States 
have achieved similar 
results without acting at 
EU level (coherence, EU 
added value)? 

6.5.1. Administrative 
cooperation in VAT is a 
cornerstone for the 
proper functioning of the 
internal market and fight 
against VAT fraud 

6.5.1.1. Qualitative 
assessment of the level 
of convergence of the 
objectives of Regulation 
904/2010 with other 
Commission's strategic 
documents 

6.5.1.2. Qualitative 
assessment of the inter-
dependence of 
provisioning governing 
the administrative 
cooperation in the VAT 
with other Commission's 
strategic initiatives and 
programmes (e.g. the 
developments in the 
VAT area towards the 

102 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators 

Data source 

6.5.2. Administrative 
cooperation in VAT 
contributes to the 
creation of a single EU 
VAT area 

6.5.3. Joint EU approach 
in administrative 
cooperation in VAT has 
advantages over other 
forms of national and 
international forms of tax 
cooperation 

definitive system, 
Fiscalis activities) 

6.5.2.1Qualitative 
assessment of the 
Regulation 904/2010's 
contribution to the 
creation of a common 
system for cooperation 
between the Member 
States 

6.5.3.1. Cases of cross-
border fraud (e.g. MTIC) 
MLC indicator 
VAT gap 

Descriptive summary of 
elements of the relevant 
evaluation question 

ECA report (qualitative 
overall assessment) 
Fiscalis supporting 
measures  
Public consultation 
(3.1.1, 3.1.2, 3.1.3) 

6.5.3.2. Exchange of best 
practices 

Fiscalis activities 
Questionnaire MS 
Commission services 

5. IMPLEMENTATION OF THE REGULATION 

Council  Regulations  do  not  have  to  be  transposed  by  Member  States  and  are  directly  applicable. 
Hence, Regulation (EU) 904/2010 applies from the date laid down in Article 62 that is 1 January 2012 
except for Croatia that joined the European Union on 1 July 2013.  

103 

 
 
 
 
 
 
 
 
 
 
6. ANALYSIS OF THE ANSWERS TO THE EVALUATION QUESTIONS 

6.1. To what extent  has Regulation (EU) 904/2010 contributed  to a closer cooperation between 
Member States? (effectiveness) 

6.1.1.  Development  and  stakeholder  assessment  across  the  various  forms  of  exchange  of 
information between Member States 

 6.1.1.1. General views of Member States on changes introduced to Regulation (EU) 904/2010 

Member States’ opinion is overall positive regarding changes introduced in 2010 in Regulation (EU) 
904/2010 (Figure 32). A large majority of Member States consider that they contributed to improve the 
administrative  cooperation  framework  at  EU  level,  to  increase  legal  certainty  for  the  taxpayers,  to 
improve  the  monitoring  and  collection  of  VAT  for  cross-border  transactions  and  to  improve  the 
quality, reliability, timeliness and governance of the information exchanged.  

One Member State (CZ) considers that the quality of information exchanged has improved mainly due 
to the introduction of Eurofisc. However Italy notes that the quality of information remains an issue 
though  signals  received  led  to  numerous  follow  up  actions.  Three  Member  States  (SE,  FI  and  LU) 
insist on the growing need for the exchange of information to be faster. 

Figure 2: Impact of changes introduced with Regulation (EU) 904/2010 

About Regulation 904/2010 : to what extent do you agree that …  

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree

The provisions on Vies-on-the-Web (name and address)
contributed to increasing the legal certainty for taxpayers ?

6 

The setting up of Eurofisc contributed to improving the collection
of VAT for cross-border transactions ?

11 

 Regulation (EU) 904/2010 allowed for a better monitoring of
cross-border transactions ?

 Regulation (EU) 904/2010 improved quality, reliability and
timeliness of information exchanged ?

Regulation (EU) 904/2010 improved governance (collection,
storage and exchange) of the information ?

5 

5 

7 

15 

17 

19 

18 

17 

4 

1 

2 

1 

3 

1 

3 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
6.1.1.2.  Evolution  of  the  total  number  of  exchanges  of  information  on  request  and  qualitative 
assessment of the perceived effectiveness of the tools for exchange of information 

Figure 3: Number of requests for 
information sent out by Member 
States per year 

As a whole (Figure 3), and following the entry into force 
of  Regulation  (EU)  904/2010,  an  increasing  number  of 
outgoing  requests  for  information  has  been  reported  by 
the Member States with a total number of 46.000 requests 
in 2012 and 49.000 in 2013. Since then this number has 
been  stable  close  to  49.000  requests  per year  with  small 
fluctuations over the last years.  

In  sum,  Regulation  (EU)  904/2010  may  have  had  a 
positive  effect  on  the  total  number  of  outgoing  requests 
for  information  at  the  beginning.  The  number  reached  a 
plateau after about two years.  

51.000
50.000
49.000
48.000
47.000
46.000
45.000
44.000
43.000
42.000

No  targets  have  been  set  as  regards  the  number  of 
requests  for  information  sent  annually.  Such  targets 
would be difficult to set as the intensity of cooperation is 
an outcome  of many externalities such as the volume of 
cross-border  economic  activities,  changing  trends  in 
fraud  schemes,  changes  in  the  administrative  capacity  of  the  Member  States,  the  implementation  of 
domestic anti-fraud measures or of best practices identified as a result of cross-border cooperation or 
the maturity in the use of the available instruments. The volume of exchange is thus prone to change in 
an  unpredictable  manner  at  any  point  in  time.  It  also  depends  on  the  trends  by  country  (see  below 
Figure 5) with some countries making a better use of this instrument while others use it less.  

2012 2013 2014 2015 2016

When  it  comes  to  the  effectiveness  of  exchange  of  information  on  request  provided  by  Regulation 
(EU) 904/2010 as it is actually perceived by the Member States, and indicated in Figure 4, it appears 
that  all  Member  States  either  find  this  instrument  effective  or  very  effective  to  ensure  the  correct 
collection  and  application  of  VAT.  The  European  Court  of  Auditors  (hereinafter  'ECA')  in  its  2015 
report124 on  tackling  intra-EU  VAT  fraud  came  to  the  same  conclusion  by  indicating  that  Member 
States consider information exchanges as the most effective administrative cooperation tool. 

However  Bulgaria,  Latvia,  Croatia,  Lithuania,  Portugal,  and  the  United  Kingdom  stressed  that  all 
Member States should fully commit to participating in information exchanges and provide complete, 
accurate and properly targeted information – otherwise effective action to fight VAT fraud could not 
be carried out. 

124 European Court of Auditors 2015, Special report no 24/2015: Tackling intra-EU VAT fraud: More action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf. 

105 

 
 
 
  
                                                            
How effective do you find the tools for administrative cooperation provided by Regulation (EU) 
904/2010 when it comes to monitoring the correct application of VAT on cross-border transactions and 
ensuring your ability to collect VAT? 

Very effective

Effective

Somewhat effective

Not very effective

Not at all effective

 Simultaneous controls/MLC's (art 29)

12 

Presence during administrative enquiries (art 28)

 Presence in administrative offices (art 28)

 Request for administrative notification (art 25)

3 

3 

5 

 Feedback (art 16)

1 

Spontaneous exchange of information without prior request (art 15)

6 

Automatic exchange of information without prior request (art 14)

1 

16 

15 

17 

13 

16 

15 

14 

4 

4 

3 

9 

9 

1 

2 

2 

1 

1 

2 

2 

6 

3 

1 

2 

Request for information and for administrative enquiries (art 7)

8 

19 

Figure 4: Effectiveness of the tools for administrative cooperation 

As regards the number of requests for information sent out by Member States between 2011 (last year 
where  Regulation  (EC)  1798/2003125 was  in  force),  and  year  2016  (last  year  for  which  statistics  for 
Regulation  (EU)  904/2010  are  available),  as  illustrated  in  Figure  5,  it  appears  that  the  number  of 
requests has increased for 21 Member States and decreased for 8 of them (Austria, Denmark, Greece, 
France, Ireland, Romania, Sweden). For some Member States, this increase is very significant with 12 
Member States having an increase above 50%: Lithuania (+512%), Czech Republic (+ 295%), Latvia 
(+276%),  Poland  (+254%),  Bulgaria  (+105%),  Estonia  (+114%),  Slovenia  (+90%),  Cyprus  (+75%), 
Finland (+70%), , Portugal (+65%), Malta (+59%), and Slovak Republic (54%).  

It is nevertheless difficult to draw a conclusion as to whether this trend is due to the entry into force of 
Regulation  (EU)  904/2010.  In  particular,  most  of  the  Member  States  with  the  most  significant 
increases belong to the group of most recent Member States while older Member States have a stable 
or an even decreasing number of such requests. One could argue that these increases are the result of a 
better appropriation of the administrative cooperation instruments by these Member States while the 
older ones have already approached a certain level of maturity in this respect. On the other hand, the 
fact  that  some  businesses  moved  their  activities  to  Central  and  Eastern  Europe  and  the  increase  of 
intra-EU  trade  with  these  countries  over  the  years  following  their  accession  could  also  explain  the 
increase of their requests.  

Figure 5: Exchange of information on request. Number of requests sent out by 
Member States Evolution between 2011 and 2016 

12.000

10.000

8.000

6.000

4.000

2.000

2011

2016

0

125 Council  Regulation  (EC)  1798/2003  of  7  October  2003  on  administrative  cooperation  in  the  field  of  value 
added tax and repealing Regulation (EEC) No 2018/92 was the Regulation organising administrative cooperation 
U
H
in the field of VAT before it was repealed and replaced by Regulation (EU) 904/2010. 

T
M

K
D

K
U

G
B

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C

O
R

R
H

U
L

V
L

E
D

T
A

L
N

K
S

Z
C

E
B

R
F

E
E

L
E

T
L

L
P

T
P

E
S

S
E

E
I

T
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I
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I
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106 

 
 
 
 
 
 
 
 
 
 
 
                                                            
 
6.1.1.3. Speediness of answers to request for information and late answers 

Figure 6: Percentage of late replies 

45

40

35

30

25

20

15

10

5

0

Percentage of
late replies

2012 2013 2014 2015 2016

The  number  of  late  replies  decreased  between 
2012  and  2016  from  19.500  requests  not 
answered  within  the  mandatory  three  months 
deadline  in  2012  to  16.800  requests  in  2016. 
At the same time, the total number of outgoing 
request  increased.  Overall,  the  proportion  of 
requests  not  answered  within  three  months, 
decreased from 43 % in 2012 to 33 % in 2016 
(see figure 6). 

Member  States  usually  have  a  monitoring 
system  in  place  to  follow-up  requests  for 
information  in  order  to  meet  the  three  months 
deadline.  Despite  this,  the  high  level  of  late 
replies  demonstrates 
there  are  still 
shortcomings in the way some Member States 
deal  with  the  incoming  requests.  This  was 
already highlighted in the Commission Report 
to the Council and the European Parliament on 
the 
(EU) 
904/2010126. 

of  Regulation 

application 

that 

The high level of late replies was also stressed as unsatisfactory by the ECA in its 2015 report. It was 
also  emphasised  that  six  Member  States  replied  late  more  than  50  %  of  the  time,  which  seems  to 
indicate that some Member States experience difficulties in effectively organising and managing the 
administrative  cooperation  within  their  tax  administration.  Moreover,  an  analysis  of  the  number  of 
requests  received  per  Member  State  showed  that  delays  were  not always  explained  by  the  workload 
caused by the number of  requests. With the exception  of the United  Kingdom, none of the Member 
States’  tax  authorities  audited  by  the  ECA  at  that  time  had  set  operational  targets  for  reducing  the 
percentage of late replies.  

126 Com(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 

107 

 
 
 
 
 
                                                            
6.1.1.4.  Evolution  of  the  total  number  of  spontaneous  exchange  of  information  and  qualitative 
assessment of the perceived effectiveness of this tool 

Figure 7: Number of spontaneous exchanges of 
information 

The  spontaneous  exchange  of  information127 
is  an  instrument  that  already  existed  under 
Regulation  (EC)  1798/2003  and  in  which 
Member  States  had  already  a  high  level  of 
the  number  of 
experience.  Therefore, 
exchanges  remained  stable  with  the  entry 
into  force  of  Regulation  (EU)  904/2010 
(about  7.000  exchanges  per  year).  The  only 
exception was year 2013 where only 6.000 of 
such exchanges took place (Figure 7).  

8.000

6.000

4.000

2.000

0

of 

the 

effectiveness 

Regarding 
this 
instrument, as showed in figure 4, 6 Member 
States find it very effective and 17 effective to monitor the correct application of VAT on cross-border 
transactions  and  ensure  their  ability  to  collect  VAT.  In  its  2015  report,  the  ECA  also  indicated  that 
Member  States  clearly  found  this  tool  useful  and  provided  many  examples  (additional  VAT 
assessments,  information  about  missing  traders,  corrections  in  VIES)  in  which  the  exchange  of 
information without prior request had been valuable to them.  

2012

2014

2013

2015

2016

6.1.1.5. Evolution of automatic exchange of information and qualitative assessment of the perceived 
effectiveness of this tool 

The  experience  of  Member  States  in  automatic  exchange  of  information  is  long-standing  since  such 
exchanges regarding non-established taxable (NETP) persons and new means of transport already took 
place under Regulation (EC) 1798/2003. The replies from the Member States to the questionnaire (see 
figures  4)  demonstrate  that  they  are  less  convinced  that  this  instrument  is  useful  for  the  correct 
application  of  VAT  on  cross-border  transactions.  Only one  Member  State  sees  it  as  a  very  effective 
instrument, 15 as effective and 11 as either somewhat effective or not very effective. Such perception 
is  explained  partially  by  the  statistics  (see  below),  which  may  indicate  that  the  limited  usefulness  is 
due rather to the lack of use of the tool rather than loopholes in its design.  

According to the two diagrams below (see Figures 8 and 9), the number of such exchanges remained 
low with on average 25.000 to 30.000 pieces of data exchanged per year on non-established taxable 
persons and 20.0000 on new means of transport. As regards the latter, half of the Member States do 
not exchange any data at all and the vast majority of information exchanged (on average half of the 
total) comes from a single country, Belgium.  

127 The  exchange  of  information  without  prior  requests  as  provided  for  in  Regulation  (EU)  904/2010  can  be 
carried  out  in  a  non-automatic  way  (‘spontaneous  exchange’)  or  in  an  automatic  way.  The  latter  means  the 
systematic  transmission  of  predefined  set  of  information  to  another  Member  State  at  pre-established  regular 
intervals. 

108 

 
 
 
                                                            
Figure 8: Non-established taxable 
persons-  
Volume of data exchanged per year 

Figure 9: New means of transport  
Volume of data exchanged per year 

40000

30000

20000

10000

0

30000

25000

20000

15000

10000

5000

0

Number of
data
exchanged

Number of
data
exchanged

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

The  United  Kingdom  notes  that  non-
participation  to  automatic  exchange  of 
vehicle 
information  has  a  greater 
negative  impact  than  non-participation 
to NETP exchange. France declares not 
being  affected  by  other  Member  States 
not participating in automatic exchange 
of information. 

It  is  surprising  to  notice  in  Figure  10 
that  a  large  number  of  Member  States 
considers  that  the  lack  of  participation 
of  the  others  in  information  exchanges 
without  prior  request  affects  at  least  to 
some extent their ability to collect VAT 
while a few Member States seem to be 
active in this area.  

 Does the fact that some Member States abstain from exchanging 
information without prior request affects your ability to collect VAT?  

16 

7 

1 

2 

To a very high
extent

To a high extent

To some extent

To a low extent

1 

Member States
abstaining from
exchanging
information without
prior request does
not affect your
ability to collect
VAT

Figure 10: Impact of Member States abstaining from 
exchanging information without prior request. 

6.1.1.6. Evolution of the total number of feedback requested and provided and qualitative assessment 
of the perceived effectiveness of this tool 

As  reported  in  Figure  4,  17  Member  States  consider  the  provision  of  feedbacks  as  either  a  very 
effective  or  effective  instrument  to  monitor  the  correct  application  of  VAT  on  cross-border 
transactions and for the control of intra-EU transactions. A feedback can demonstrate the usefulness or 
accuracy of the information  provided. It is also  a  means for a requested  Member State to  determine 
whether its practices to meet the needs of its counterparts are appropriate and if not to improve them. 
Ultimately, it is also rewarding for officials engaged in administrative cooperation be it at central or 
field levels.  

Feedbacks were introduced in the VAT administrative cooperation framework with Regulation (EU) 
904/2010.  On  average,  2.500  feedbacks  were  requested  and  provided  by  Member  States  in  2016 
(Figures 11 and 12). This is significant increase - +400 % - since only 500 of them were requested and 
provided in 2012 and still 1.800 in 2014 only. As this tool was new in 2012, it was used in a limited 
number  of  instances  at  the  beginning.  Since  then,  a  better  awareness  of  it  explains  this  significant 
increase for the period under review.  

109 

 
 
 
 
Figure 11: Number of feedbacks 
requested per year 

Figure 12: Number of feedbacks 
provided per year 

3000

2500

2000

1500

1000

500

0

Number of
feedback
requested

3000

2500

2000

1500

1000

500

0

Number of
feedback
provided

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

The match between the number of feedbacks requested and provided as shown in Figures 11 and 12 
demonstrates that when asked to do so, Member States do provide such feedbacks. At the same time, 
this also means that spontaneous feedbacks are provided in a limited number of instances, even where 
the  requesting  Member  State  is  content  with  the  information  received  as  it  has  been  useful  and  has 
provided the expected results.  

6.1.1.7. Overall assessment of the effectiveness of the different exchange of information programmes 

It results from the data presented above that when it comes to effectiveness of exchange of information 
whichever its form, Regulation (EU) 904/2010 meets its objectives. The stable number of request for 
information,  spontaneous  and  automatic  exchanges  since  2013  shows  a  good  appropriation  by 
Member States and a maturity in the use of this instrument: 

  with  regard  to  exchange  of  information  on  request,  Member  States  are  content  with  the 
framework created by Regulation (EU) 904/2010 which is, to a large extent, the continuation 
of  Regulation  (EC)  1798/2003.  This  framework  seems  to  be  effective  although  late  replies 
remain  a  concern  for  a  large  majority  of  them.  The  total  number  of  late  replies  while  in 
progress remains high. The three month deadline is still not met in 33% of instances while at 
the  same  time  Member  States  recognise  that  this  situation  is  not  appropriate.  This  issue  has 
always  existed.  Addressing  it  would  require  that  Member  States  implement  adequate 
procedures  to  collect  information  and  evidences  in  due  time  and  to  properly  monitor  the 
deadlines.  Such  measures  should  be  taken  by  the  Member  States  in  order  to  meet  the 
requirements provided for by Regulation (EU) 904/2010; 

  The stability of the number of spontaneous exchanges demonstrates a good appropriation of 
the  instrument  by  Member  States.  However,  although  a  vast  majority  of  Member  States 
considers  this  instrument  to  be  effective,  the  total  number  of  such  spontaneous  exchanges 
remains  relatively  low:  there  are  seven  times  more  exchanges  on  request  than  spontaneous 
ones. To be used to a larger extent, such tools require a change in the administrative practices 
in  a  spirit  of  solidarity  within  the  EU:  the  tax  authorities  should  try  to  protect  the  financial 
interest of the other Member States like they do for their own country. 

  The  automatic  exchange  of  information  was  already  provided  for  by  Regulation  (EC) 
1798/2003. Despite this long-standing experience, it seems that Member States do not really 

110 

 
 
 
 
 
 
 
 
 
 
 
 
invest  in  this  type  of  instrument  while,  paradoxically,  they  consider  it  to  be  effective  and 
report negative impacts due to a lack of commitment of the other Member States. Room for 
improvements  exists  in  this  area  to  implement  efficient  procedures  to  collect  data  for  the 
different  categories  of  automatic  exchange  of  information  provided  for  by  Regulation  (EU) 
904/2010. Member States should actively cooperate in all types of administrative cooperation 
instrument provided by the Regulation; 

  With regard to feedbacks, while the number of exchanges is increasing, Member States are of 
the opinion that this instrument should be more often and better used. This demonstrates that 
this is an effective tool. At the same time, if not specifically requested, these feedbacks are not 
provided. This requires raising awareness in the Member States about the effectiveness of this 
tool and the existing e-forms that has been drawn up to facilitate its use. 

6.1.2. Developments and stakeholder assessment of other forms of administrative cooperation 

6.1.2.1.  Evolution  of  the  total  number  of  requests  for  administrative  notification  and  qualitative 
assessment of the perceived effectiveness of this tool 

With a little bit more than 300 requests sent out and received in 2016, the request for administrative 
notification remain an instrument that is not often used by Member States although the number of such 
requests made per year doubled between 2012 and 2016 (Figures 13 and 14).  

Figure 13: Requests for administrative 
notification 
Number of requests received per year 

Figure 14: Requests for administrative 
notification  
Number of requests sent out per year 

350
300
250
200
150
100
50
0

Number of
requests
received

350
300
250
200
150
100
50
0

Number of
requests sent
out

 It  also  results  from  Member  States'  answers  to  the  targeted  questionnaire  that  the  requests  for 
administrative notification is one of the relatively least appreciated instrument with only 16 Member 
States  viewing  it  at  very  effective  or  effective  to  monitor  the  correct  application  of  VAT  on  cross-
border transactions (see Figures 4). One Member States (SI) notes that it is not used much and has a 
limited impact on VAT assessment due to differences in procedures within the EU. The only problem 
mentioned in relation to use of this tool is linguistic as requests must often be translated.  

111 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.1.2.2.  Evolution  of  the  total  number  of  administrative  enquiries  and  presence  of  officials  in  the 
administrative  premises  of  other  administrations  and  qualitative  assessment  of  the  perceived 
effectiveness of this tool 

the  entry 

With  regard  to  presence  in  administrative  offices  and 
presence  during  administrative  enquiries  (PAOE), 
since 
into  force  of  Regulation  (EU) 
904/2010, the number of such requests (Figure 15) has 
increased  steadily  from  100  for  2012  to  200  for  in 
2016 with a downward fluctuation in 2015. However, 
the  number  of  instances  where  officials  participate  in 
foreign  administrative  enquiries  or  are  present  in 
administrative  offices  abroad  remain 
low  when 
compared  to  the  50.000  requests  for  information  sent 
each year. 

250

200

150

100

Figure 15: Administrative 
enquiries/Presence of officials 
Number of requests made per year 

Number of
requests sent

50

0

to 

language  barriers, 

When  it  comes  to  its  effectiveness,  as  reported  in 
Figure  4,  Member  States  note  that  PAOE  are  rarely 
lack  of  human 
used  due 
resources,  legislation  differences  between  Member 
States and lack of awareness as regards its usefulness. 
The absence of common rules also hampers its use. As a consequence, each Member State approaches 
the use of these tools differently which creates confusion for the auditors. To deal with these issues, 
one Member State suggests creating a separate CCN mailbox for PAOEs. A number of Member States 
are  of  the  opinion  that  these  instruments  should  be  promoted  more  at  national  and  EU  levels  for 
instance by way of workshops, similarly to those organised for simultaneous controls.  

One  Member  State  (UK)  notes  that  usually  presence  in  administrative  offices  is  used  by  Member 
States  to  examine  records  relating  to  one  of  their  businesses  that  are  kept  in  another  Member  State. 
This approach seems to be beneficial as it speeds up the audit and therefore reduces the administrative 
burden.  However  in  such  cases,  the  requesting  Member  State  is  not  conducting  the  audit  itself  and 
must rely on an official from the requested Member State to perform the audit and provide him with 
the  information.  It  suggests  that  this  practice  should  be  harmonised  to  allow  a  Member  State  to 
conduct and audit in another Member State (with the consent of the business and the other Member 
State administration) if the records of the first Member State business are held in the second Member 
State. 

6.1.2.3. Evolution of the total number of the MLCs and effectiveness of this instrument 

As  for  PAOE,  the  number  of  simultaneous/multilateral  controls  ('MLCs')  initiated  per  year  remains 
limited with less than 50 controls in 2016 and 40 controls on average for the period 2012-2016 (Figure 
16). After a certain stability with 120 different countries participating in these MLCs during the period 
2012-2015 (Figure 17), this number has increased to reach more than 160 countries in 2016. However, 
this last figure is the direct result of a higher number of MLCs launched in 2016 only; on average three 
different countries are involved in each MLC, a figure that has been stable since the entry into force of 
Regulation (EU) 904/2010. 

112 

 
 
 
 
 
Figure 16: Simultaneous controls 
Number of MLCs initiated per year 

Figure17: Simultaneous controls 
Total number of participating 
Member States 

60

50

40

30

20

10

0

Number of
MLCs
initiated

200

150

100

50

0

Total number
of
participating
Member
States

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

Member  States  recognize  the  added  value  of  MLCs  as  it  is  considered  as  effective  to  collect  VAT. 
However two Member States (LV and NL) note that the underlying procedure is ineffective and needs 
to  be  provided  with  more  resources.  Mismatches  in  national  legislations  create  further  obstacles  for 
effective  application  of  this  tool.  It  was  also  noted  that  such  controls  often  take  too  long  which 
decreases their effectiveness further. One Member State (LV) mentioned that the option of combining 
simultaneous controls and PAOE should be envisaged.  

The ECA also came to the conclusion in its 2015 report that 27 Member States consider MLCs as a 
useful tool for combating VAT fraud. The ECA also noted that the instrument was not fully exploited. 
The same conclusion can also be drawn from the statistics above. 

6.1.2.4. Overall assessment of the effectiveness of administrative cooperation programmes other than 
exchange of information 

As  regards  request  for  administrative  notification,  given  the  low  up-take  of  this  instrument,  it  is 
difficult to assess the level of its effectiveness. 

On PAOE end MLCs, these tools are considered to be effective or very effective by Member States. 
The  MLC  instrument  is  the  second  best  scored  by  Member  States  regarding  its  effectiveness  after 
requests for information. However, no indicators have been put in place by Member States to precisely 
measure the effect of this tool. It also seems that promotion and better communication are still needed 
to  give  this  instrument  its  full  potential.  This  could  be  the  case  if  all  Member  States  allocated  to  it 
more  resources  and  ensured  that  they  either  launch  or  actively  participate  in  them.  The  use  of  the 
PAOE tool could still be improved as it is considered as an appropriate means for tax administrations 
and taxpayers to save time as common issues can be solved jointly and in a quicker way. 

6.1.3. Development and stakeholder assessment of VIES 

6.1.3.1. Evolution of the number of queries made on VIES by Member States 

The total number of queries made by Member States in VIES is very high (Figure 18): more than 300 
million of queries are made on an annual basis. In 2016, this number exceeded 400 million. From the 
statistics, it appears that this increase is mainly the results of a growing number of requests concerning 
registration  information  (Registry  Messages)  while  the  number  of  requests  concerning  turnover  date 
(TOD message) remains between 50 and 100 million for 2013 to 2016 after reaching a peak at almost 
250 million queries in 2012. It has not been possible to provide an explanation to this decrease.  

113 

 
 
 
 
 
 
 
 
 
 
 
Figure 18: VIES: total number of requests made by Member States per year 

450.000.000

400.000.000

350.000.000

300.000.000

250.000.000

200.000.000

150.000.000

100.000.000

50.000.000

0

VIES_Registry Messages

VIES_TOD Messages

Total VIES Messages (sum of
Registry and TOD messages)

2012

2013

2014

2015

2016

6.1.3.2.  Qualitative  assessment  of  the  use,  usefulness  and  quality  (e.g.  up-to-datedness,  accuracy, 
reliability, etc.) of data in VIES of the quality of data in VIES 

Member States generally find data shared through VIES system rather useful (Figure 819 below). They 
report that such data is necessary to guarantee the correct application of VAT exemption of intra-EU 
supplies, to identify potential VAT risks, to minimize the number of information requests and to make 
these  requests  more  targeted.  Some  Member  States  mention  that  the  usefulness  of  VIES  data  is 
undermined  by  retroactive  changes  introduced  by  tax  administrations  and  complain  about  not  being 
able  to  view  the  history  of  those  changes.  All  Member  States  either  strongly  agree  or  agree  that 
inaccurate VIES data has a negative impact on their ability to collect VAT. They finally mention that 
inaccurate data create administrative burdens as tax administrations have to conduct additional checks 
and send requests for information that could have otherwise been avoided. 

How useful do you find the data (art. 17 para a, 
b & c) exchanged/made available through the 
VIES system ?  

Very useful Useful

Somewhat useful Not very useful Not at all useful

To what extent do you agree that 
inaccurate VIES data have a 
negative impact on the work of 
your Tax administration and 
your ability to collect VAT?  

Data on the identity, activity, legal form
and address of the VAT registered person

16 

10 

14 

13 

 Data on Intra-Community supplies

23 

 Data on the dates when the VAT number
was issued or became invalid

21 

4 

6 

VAT identification numbers

24 

3 

0 

0 

0 

Strongly
agree

Agree

Neither
agree nor
disagree

Disagree

Strongly
disagree

Figure 19: Usefulness of data exchange over VIES and impact of inaccurate data in VIES 
114 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 How effective is automated access to the 
information exchanged through VIES as 
provided for in Article 21 for control of intra-EU 
transactions and efficient collection of VAT?  

13 

14 

0 

0 

0 

All  Member  States  find  automated  access  to 
VIES  to  be  effective  (Figure  1020)  and  allow 
them  to  control  intra-EU  transactions  and 
collecting VAT. However some Member States 
mentioned that the current restrictions listed in 
Article  21(2)(e)  of  Regulation  (EU)  904/2010 
to  send  the  so-called  "third  Member  State 
additional 
requests" 
complications  (see  Chapter  6.4.3.6  for  more 
details). 

into  VIES 

create 

Effective

Very
effective

Somewhat
effective

Not very
effective

Not at all
effective

Figure 20: Effectiveness of automated access to VIES 

The issue of the timely cancellation of VAT ID 
numbers  was  also  stressed  in  the  Commission 
Report  to  the  Council  and  the  European 
Parliament  on  the  application  of  Regulation 
(EU) 904/2010128 and again by the ECA 2015 report, in this last instance both from the Member States 
replies as well as the audits carried out by the ECA itself. It also results from these audits that the error 
messages received by the Member States are not followed-up in most instances. The ECA came to the 
conclusion  that  whilst  VIES  is  a  very useful  tool  for  exchanging  data  on  intra-EU  supplies  between 
Member  States,  there  are  weaknesses  in  its  use  which  occasionally  affect  the  reliability,  accuracy, 
completeness and timeliness of VIES data and therefore its overall effectiveness in tackling fraud. 

6.1.3.3. Overall assessment of the effectiveness of VIES 

The growing number of queries made by Member States to the system shows its usefulness for the tax 
authorities. The same level of appreciation is also reported by the Member States in their replies to the 
questionnaire. There is a broad consensus amongst Member States to consider the instrument effective 
or very effective.  

However  the  Member  States  complain  that  the  accuracy  of  VIES  data  is  not  always  ensured.  This 
hampers their ability to control and collect VAT. Member States are not in all instances in a position 
to  maintain  their  databases  up-to-date  and  some  of  them  update  them  retroactively  (e.g.  when 
cancelling a VAT identification number). These practices jeopardise the legal certainty of the Member 
States and the businesses (see below). They should be avoided to the best extent possible to maintain 
the credibility of VIES which it based on its reliability.  

Summary  of  findings:  to  what  extent  has  Regulation  (EU)  contributed  to  a  closer  cooperation 
between Member States? (effectiveness) 

Many administrative cooperation instruments provided for by Regulation (EU) 904/2010 were already 
in place under Regulation (EC) 1798/2003. This is the case for exchange of information on requests, 
spontaneous,  automatic,  and  automated  exchange  of  information,  administrative  notifications  or 
simultaneous controls.  

Member States’ opinion is overall positive as concerns the legal and practical framework implemented 
with Regulation (EU) 904/2010. The vast majority of them considers that it has contributed to improve 

128 COM(2014)  71  final.  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the 
application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud 
in the field of value added tax. 

115 

 
 
 
                                                            
the administrative cooperation framework at EU level. From statistics annually provided by Member 
States,  it  can  be  noted  that  between  2012  and  2016,  the  number  of  instances  where  administrative 
cooperation took place is more or less stable for the most significant and powerful-scored instruments: 
exchanges  of  information,  whichever  the  type  of  exchanges,  and  simultaneous  controls.  This 
demonstrates a good appropriation of administrative cooperation instruments in the field of VAT by 
Member States, a maturity in their use and ultimately their effectiveness.  

As regards exchanges of information on request, as constantly reported by Member States in surveys 
or to the Commission, the level of late replies remain significant although their proportion decreased 
from  43 %  in  2012  to 33 %  in  2016.  This  issue  questions  Member  States'  capacities  to  put  in  place 
adequate  measures  to  collect  information  and  evidences  in  due  time.  Further  work  in  this  area  at 
Member States level is still needed.  

Whilst a majority of Member States considers the exchange of information without prior request as an 
effective  instrument  to  combat  fraud  in  the  field  of  VAT,  the  use  of  spontaneous  and  automatic 
exchanges  remains  below  expectations.  At  the  same  time,  the  Member  States  also  highlight  the  fact 
that the lack of commitment of the others Member States to engage in such programmes hampers to a 
certain extent their capacities to properly fight VAT fraud.  

The automated exchange of data by way of VIES is viewed as a very effective tool. At the same time, 
the Member States report that the way some of them manage their VIES data often negatively affects 
the reliability, accuracy, completeness and timeliness of VIES data and therefore its effectiveness in 
tackling fraud. 

As regards multilateral controls and the presence in foreign administrative offices and enquiries, these 
tools  are  considered  to  be  very  effective  or  effective  by  Member  States.  However,  the  number  of 
instances  where  they  are  used  remain  low,  around  respectively  50  and  200  instances  per  year.  It  is 
clear that the potential of these tools is not fully exploited in particular when it is viewed together with 
the total number of exchanges of information on requests made per year – around 49.000.  

 6.2.  To  what  extent  has  Regulation  (EU)  904/2010  facilitated  cooperation  between  Member 
States by making it smoother, faster and less burdensome? (efficiency) 

6.2.1. Positive development and stakeholder assessment on the use of e-forms 

6.2.1.1. Evolution and qualitative assessment of the use of e-forms for EOI on request 

The  last  version  of  electronic  forms  (e-forms)  for  the  exchange  of  information  has  been  used  as  of 
2013. In 2018 a new major evolution will be put in place with the future e-forms Central Application 
(eFCA) to replace the electronic transmission of XML files129. When they were first implemented, e-
forms  brought  a  lot  of  advantages.  A  single  form,  used  by  all  Member  States,  including  predefined 
questions  translated  into  all  official  languages  and  exchanged  electronically  and  immediately,  was  a 
means to deeply improve the efficiency of the exchanges of information between Member States. 

The  ECA  in  its  2015  report  mentioned  that  according  to  Member  States,  exchanges  of  information 
made  through  e-forms  are  the  most  powerful  tool  to  fight  VAT  fraud,  since  replies  can  be  used  as 

129 DG  TAXUD  is  developing  a  central  web-based  application  called  e-Forms  Central  Application  (eFCA),  to 
manage  the  e-Forms  in  the  context  of  administrative  cooperation  in  the  fields  of  direct  taxation,  VAT  and 
recovery of claims. This application will bring new functionalities such as automatic sending of the e-forms and 
should be more user-friendly. 

116 

 
 
 
                                                            
evidence before court. E-forms are functioning in a satisfactory manner, leading to speedier processing 
of requests.  

No  specific  issues  in  relation  to  the  use  of  e-forms  have  been  reported  by  Member  States  in  their 
replies to the targeted consultation and overall e-forms implemented at EU level meet their needs and 
is considered as an efficient way to exchange information. 

6.2.2. Costs and benefits of administrative cooperation between Member States 

6.2.2.1. Costs and benefits associated with the implementation of Regulation (EU) 904/2010 

in 

their 

participation 

25  out  of  27  Member  States  strongly  agree  or 
agree that costs associated with participating in 
administrative  cooperation  are  proportionate  to 
the  benefits  (Figure  1421).  Unfortunately  very 
few  Member  States  provided  monetary 
estimations of the costs and benefits in relation 
to 
administrative 
cooperation. Member States note that costs and 
benefits resulting from the use of each specific 
tool  can  hardly  be  estimated  as  many  of  tax 
auditors  and  officials  deal  with  both  European 
and  national  enquiries.  Only  Estonia  managed 
to provide a break-down of (salaries) costs by a 
specific 
tool  offered  by  Regulation  (EU) 
904/2010.  Based  on  this,  it  can  be  concluded 
that  the  biggest  costs  are  associated  with 
requests  for  information  and  administrative 
enquiries,  multilateral  controls  and  Eurofisc 
operations.  

To what extent do you agree that the 
costs of participating in administrative 
cooperation as provided by Regulation 
(EU) 904/2010 are proportionate to the 
benefits achieved?  

16 

9 

2 

0 

0 

Strongly
agree

Agree

Neither agree
nor disagree

Disagree

Strongly
disagree

Figure 21: Costs in relation to benefits of 
participating in administrative cooperation 

As reported above, the vast majority of Member States have not been able to provide quantitative data 
precisely  detailing  the  costs  incurred  by  their  participation  in  administrative  cooperation  and  the 
balance with the benefits achieved. Only few of them have managed to provide some quantification of 
these  benefits.  Nevertheless,  most  estimates  cover  multiple  years  and  reporting  periods  vary  across 
Member  States.  Substantial  differences  in  amounts  also  hint  that  Member  States  seem  to  be  using 
different  methodologies  in  estimating  those  benefits.  Differences  in  Member  States  sizes  also  make 
data submitted incomparable. It is therefore not possible to provide any significant results in relation to 
this  matter.  From  the  rather  limited  information  received,  it  is  even  more  not  possible  to  make 
comparisons and to extrapolate a robust quantification.  

When broken down by specific instrument for administrative cooperation (see Figure 22), automated 
access to information through VIES scores particularly high with 18 Member States noting that cost-
benefit  ratio  is  proportionate  to  a  very  high  extent.  Eurofisc,  simultaneous  controls  and  request  for 
information  and  administrative  enquiries  also  score  high.  Other  tools  do  not  rank  as  high  with 
feedback being the least proportionate tool when looking at the cost-benefit ratio. Indeed the feedback 
is useful to the Member States which has provided the information so it is not directly used to assess 
and recover additional VAT revenues but to improve the administrative practices in dealing with the 
administrative cooperation instruments in the long run. 

117 

 
 
 
To what extent the costs of participating in administrative cooperation provided by 
Regulation (EU) 904/2010 are proportionate to the benefits achieved as regards the 
following instruments?: 

To a very high extent

To a high extent

To some extent

To a low extent

The tool is not at all cost efficient

Request for information and for administrative enquiries (art 7)

9 

Automatic exchange of information without prior request (art 14)

2 

12 

15 

9 

2 

3 

Spontaneous exchange of information without prior request (art 15)

1 

18 

7 

Feedback (16)

7 

6 

 Request for administrative notification (art 25)

2 

13 

9 

3 

Presence in administrative offices (art 28)

Presence during administrative enquiries (art 28)

5 

4 

11 

11 

 Simultaneous controls/MLCs (art 29)

Eurofisc (art 33)

10 

9 

10 

11 

16 

17 

Automated access to information through VIES (art 21)

18 

7 

2 

1 

1 

1 

1 

1 

1 

1 

Figure 22: Proportionality of costs and benefits in relation to participation in administrative cooperation 

6.2.2.2.  Perceived  administrative  burden  associated  with  participation  in  administrative  cooperation 
viewed by Member States 

When it comes to assessing burden in relation to particular tools offered by Regulation (EU) 904/2010 
it  seems  that  the  largest  burdens  are  associated  with  tools  that  require  significant  human  resources 
such  as  dealing  with  requests  for  administrative  enquiries,  replying  to  requests  for  feedback  and 
participating in multilateral controls.  

How burdensome do you find participating in administrative cooperation when you 
are the requested Member State or providing information without prior request ? 

Very burdensome

Burdensome

Somewhat burdensome

Not very burdensome

Not at all burdensome

Replying to the requests for information and for administrative enquiries (art
7)

Exchanging (sending) information without prior request in automated
manner (art 14)

1 

1 

5 

5 

Exchanging (sending) information without prior request in spontaneous
manner (art 15)

3 

5 

15 

18 

18 

5 

1 

3 

1 

 Replying to the requests for feedback (16)

1 

4 

11 

Replying to the requests for administrative notification (art 25)

3 

3 

14 

Allowing officials from other Member States to be present in administrative
offices (art 28)

1 

2 

4 

Allowing officials from other Member States to be present during
administrative enquiries (art 28)

2 

3 

3 

16 

15 

11 

7 

4 

4 

 Taking part in simultaneous controls/MLCs (art 29)

5 

8 

13 

1 

Informing the requesting authority about being late (art 12)

2 

8 

12 

5 

Figure 23: Burden in relation to participating in administrative cooperation. 

118 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Member States mentioned additional issues that increase the burden of participating in administrative 
cooperation:  

 

language  barrier,  the  need  to  translate  enquiries  and  often  the  poor  quality  of  those 
translations; 

  MLCs  as  well  as  presence  in  office  and  during  enquiries  can  be  burdensome  as  they 

require more organisation and operational work than using information on request; 

 

although  a  large  part  of  Member  States  does  not  consider  that  replying  to  feedbacks  is 
excessively burdensome, some of them note that feedbacks are deprived of any additional 
value compared to resources it requires; 

  difference in national tax procedure within the EU is an issue that should be addressed to 

facilitate administrative cooperation; 

 

insufficient  capacity  at  domestic  level  to  collect  data  for  automatic  exchange  of 
information; and 

  multiple  requests  concerning  the  same  taxpayer  (e.g.  request  in  relation  to  different 

taxable periods) create additional complications. 

6.2.2.3. Stakeholder other the Member States' assessment of the costs/benefits for Member States 

Stakeholders  other  than  Member  States'  tax  authorities  have  also  been  asked  as  to  whether 
administrative costs borne by Member States to cooperate at EU level are justified by additional VAT 
revenues  (Figure  24).  23  respondents  out  of  58  considered  that  the  costs  are  justified  by  additional 
VAT revenues against 9 that disagreed. At the same time 15 respondents did not have an opinion.  

Figure 24: Administrative costs borne by Member States to cooperate at EU 
level are justified by additional VAT revenues  

30% 

13% 

13% 

15% 

28% 

2% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

Summary of findings: to what extent has Regulation (EU) 904/2010 facilitated cooperation between 
Member States by making it smoother and faster and less burdensome? (efficiency) 

Overall the Member States expressed a high level of satisfaction with regard to the efficiency of the 
administrative cooperation instruments.  

Some  of  the  exchanges  of  information  between  Member  States  rely  on  the  use  of  e-forms  and  no 
specific  issues  in  relation  to  them  have  been  reported  by  Member  States  in  their  replies.  E-forms 
appear  to  be  already  an  efficient  way  to  exchange  information.  The  implementation  of  the  e-form 
central application (eFCA) planned for 2018 is expected to improve the situation further.  

119 

 
 
 
 
 
 
 
 
 
With  respect  to  ratio  cost/benefit  of  the  administrative  cooperation,  more  than  half  of  the  Member 
States  consider  that  costs  are  to  a  very  high  or  a  high  extent  proportionate  to  the  benefits  achieved. 
Automated  access  to  information  through  VIES,  Eurofisc,  simultaneous  controls,  request  for 
information and administrative enquiries score particularly high. These instruments are considered as 
the most efficient instruments by Member States. 

However  while  these  instruments  are  the  most  cost-efficient,  they  are  also  scored  as  the  most 
burdensome,  probably  because,  apart  from  MLCs,  these  are  the  most  used  tools  and  require  most 
involvement from tax authorities in particular in terms of human and IT resources. A number of issues 
have been reported by Member States but most of them, like languages, legislation issues or multiple 
requests for a same taxpayer, are well documented and already discussed at EU level. 

6.3.  To  what  extent  has  Regulation  (EU)  904/2010  contributed  to  preventing  budget  losses 
stemming  from  tax  avoidance  and  evasion  and  from  errors  in  the  application  of  VAT  rules? 
(effectiveness) 

 6.3.1. Extent to which Regulation (EU) 904/2010 has helped Member States to assess and recover 
more VAT 

6.3.1.1. Amounts assessed and recovered on the basis of Regulation (EU) 904/2010 

Very few Member States provided monetary estimations of the costs and benefits in relation to their 
participation in administrative cooperation. Member States note that costs and benefits resulting from 
the use of each specific tool can hardly be estimated. For Member States that have been in a position 
to  provide  figures,  the  corresponding  additional  amount  of  tax  assessed  strongly  varies  among 
Member States, from EUR 11 million in Slovenia to EUR 400 million in Hungary.  

Bulgaria declares that administrative cooperation was used in 207 of its audits in 2016 and contributed 
to the establishment of about EUR 55millions of additional liabilities. Replies to outgoing requests and 
incoming  spontaneous  information  have  resulted  in  EUR  21,23  million  of  additional  established 
liabilities.  Amount  of  additional  VAT  due  to  exchanges  of  information  in  Slovak  Republic  is  about 
EUR  150  million.  Some  Member  States  note  that  the  requested  estimates  could  be  available  in  the 
future.  

With regard to MLCs, it appears that each single audit led to an average result of EUR 18,5 million 
additional liabilities (VAT and direct taxes). It should be noted at the same time that MLCs, and other 
cooperation tools, help to identify and assess the additional amounts of unpaid VAT but their recovery 
is a matter of further national administrative and legal proceedings. It means that the effective amounts 
returned  to  the  national  budgets  will  be  likely  lower  than  the  nominal  amounts  identified  through 
exchange of information and other tools. 

Despite  the  fact  that  the  Commission  has  been  constantly  asking  the  Member  States  to  provide 
estimates  of  the  amounts  of  additional  VAT  revenues  assessed  and  recovered  due  to  the  use  of 
administrative cooperation instruments, these figures are often not available or are not provided. This 
is mostly the result of a lack of monitoring tools available to Member States to measure in any way the 
extent to which administrative cooperation has contributed to identifying additional liabilities.  

In many instances administrative cooperation is regarded as an additional instrument to national tools 
that Member States use in the fight against VAT avoidance and evasion. The use of several tools can 
contribute  to  the  same  assessment  to  an  extent  which  is  difficult  to  evaluate.  Therefore  most  of  the 
Member States do not estimate the specific impact of each instrument used. And any such estimates 

120 

 
 
 
should  always  be  treated  with  caution  while  bearing  in  mind  that  Member  States  measure  these 
differently and depart from different footing.  

The ECA itself, in its 2015 report, noted that with the exception of the United Kingdom no monitoring 
or indicators on intra-EU VAT fraud had been put in place in Member States and consequently that no 
further impact indicators to monitor progress or results in fight VAT fraud were set up. Furthermore, 
the same report indicated that, with the exception of the United Kingdom, none of the audited Member 
States’ tax authorities had set operational targets for collecting additional revenue arising from VAT 
information exchanges or  for the number of assessments carried out or fraud cases identified  due to 
administrative cooperation. 

6.3.1.2.  Member  States  assessment  on  the  extent  to  which  delays  and  irregularities  incurred  in  the 
process of information exchange are detriment to the correct assessment, control and recovery of VAT 

25  Member  States  note  that  late  replies  to 
request  for  administrative  cooperation  have,  at 
least  to  some  extent,  negative  impacts  on  their 
ability to collect VAT (Figure 625). A number of 
Member States mentioned that due to domestic 
timelines  for  conducting  audits,  replies  often 
arrive when such a timeline is over making the 
information  useless.  However  it  is  also  noted 
that quick but of poor quality replies are useless 
as well. Member States also mentioned that the 
need  to  send  reminders  when  the  reply  is  late 
creates additional burden for liaison officials.  

The  same  happens  in  relation  to  automated 
exchanges  made 
through  VIES  where 
irregularities and delays in updating data has a 
detrimental  effect  on  their  ability  to  assess, 
control and collect VAT. 

To what extent do late replies to your requests for 
administrative cooperation negatively affect your 
ability to collect VAT ?  

9 

10 

6 

2 

0 

To a very high
extent

To a high extent To some extent To a low extent Late replies do
not have any
negative effect
on our ability to
collect VAT

Figure 25: Impact of late replies to request for 
administrative cooperation 

All these shortcomings were already stressed by the ECA in its 2015 report. 

6.3.1.3.  Overall  assessment  of  the  extent  to  which  Regulation  (EU)  904/2010  has  helped  Member 
States to assess and recover more VAT 

Few Member States are in a position to provide figures about the VAT assessed and recovered due to 
the  use  of  administrative  cooperation  instruments.  However,  it  can  reasonably  be  concluded  that 
administrative  cooperation  has  a  positive  effect  on  Member  States'  capacity  to  assess  and  recover 
VAT.  

6.3.2. Extent to which Member States are better equipped to fight VAT fraud thanks to Regulation 
(EU) 2010/94 

6.3.2.1. Assessment of the use, utility and future of Eurofisc 

The  objective  of  Regulation  (EC)  1798/2003  was  to  put  in  place  an  administrative  cooperation 
framework between Member States in the field of VAT. With the entry into force of Regulation (EU) 
904/2010  fighting  VAT  fraud  became  another  and  complementary  objective  of  mutual  assistance 

121 

 
 
 
 
between  Member  States.  As  a  result,  Eurofisc,  the  first  administrative  cooperation  instrument 
dedicated  to  the  fight  against  the  most  severe  VAT  threats  was  implemented.  None  of  the  other 
instruments  provided  for  by  Regulation  (EU)  904/2010  has  the  same  unique  purpose.  Therefore  the 
assessment  of  Eurofisc  is  central  when  assessing  the  effectiveness  of  Regulation  (EU)  904/2010  in 
fighting VAT fraud. 

A majority of Member States agrees that Eurofisc has a positive impact on the collection of VAT on 
intra-EU transactions (Figure 1226) although not all Member States participate in all working fields. It 
appears that the two working fields where all Member State participate (Working Field 1 and 4130) are 
considered to be the most effective by Member States. 

To what extent do you agree that Eurofisc is an effective early warning tool that 
improves the collection of VAT on intra-EU transactions?  

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree We do not participate in this Working Field

 Working Field 1 – Missing Trader Intra-Community (MTIC) … 

 Eurofisc (in general)

10 

12 

17 

15 

Working Field 2 - Cars[1]

5 

18 

4 

Working Field 2 - Boats and planes

15 

3 

9 

Working Field 3 – Customs Procedure No 42 (CP42[2]) 

2 

18 

2 

 Working Field 4 - Observatory

11 

14 

2 

2 

Figure 26: Effectiveness of Eurofisc in relation to collection of VAT on intra-EU transactions 

However, 0some Member States mentioned that the quality, swiftness and targeting of the information 
exchanged should be further improved, in particular in relation to Working Fields 2 and 3. The number 
of information exchanged is viewed as far less useful than the quality and targeting of signals. 

Member  States  also  note 
the  current 
medium  for  information  exchange  –  online 
portal CircaBC131 – is not user friendly.  

that 

Eurofisc liaison officials have extended rights to 
consult  VIES.  Contrary  to  other  officials  who 
can  only  consult  intra-EU  supplies  involving 
their  own  country,  they  can  access  information 
on  all  transactions.  These  extended  rights  were 
introduced  by  Regulation  (EU)  904/2010  to 
accompany  the  implementation  of  Eurofisc. 
Member  States  mainly  agree  that  this  extended 
right  to  consult  VIES  for  Eurofisc  officials  is 
useful  and  contribute  to  make  Eurofisc  an 

To what extent do you agree that the extended 
right to consult VIES for Eurofisc officials (art 
21.2.e) is useful and contributes to Eurofisc 
being an effective early warning tool that 
improves the collection of VAT on intra-EU 
transactions?  

14 

11 

1 

1 

Strongly agree

Agree

Neither agree
nor disagree

Disagree

0 

Strongly
disagree

Figure 27: Eurofisc officials' rights to consult VIES 

130 Working  field  No  1  deals  with  MTIC  fraud,  working  field  No  2  with  frauds  on  cars,  boats  and  planes, 
working field No 3 with Customs Procedure 42 frauds and working field No 4 with new fraud trends. Working 
fields No 5 (e-commerce) and 6 (TNA) that have been recently created are not assessed in this evaluation report.  
131 CIRCABC is a Commission services online platform designed to share and distribute meeting documents. 

122 

 
 
 
                                                            
effective early warning tool which positively impact collection of VAT on intra-EU transactions as it 
enhances fast and accurate detection of fraudulent cross-border transactions chains (Figure 1327).  

This assessment confirms the one made by the ECA in its 2015 report where it was mentioned that 27 
Member  States  consider  Eurofisc  to  be  an  efficient  early  warning  system  for  fraud  prevention. 
However the ECA pointed out the following weaknesses, which were also confirmed by the audit tests 
in  Member  States:  (i)  feedback  was  not  frequent  enough;  (ii)  data  exchanged  was  not  always  well 
targeted;  (iii)  not  all  Member  States  participated  in  all  Eurofisc  working  fields;  (iv)  exchanges  of 
information were not user friendly; and (v) data exchanges were too slow. 

Some Member States made suggestions on how Eurofisc can be improved. They are further detailed in 
Chapter 6.0. 

6.3.2.2. Views of stakeholders other than Member States on the effect of administrative cooperation on 
VAT fraud 

A number of questions in relation to the effect of administrative cooperation on VAT fraud have been 
asked to stakeholders other than Member States through the open public consultation. 27 respondents 
out of 58 considered that the current instruments against VAT fraud are not effective (Figure 28). 29 
of them considered that the current instruments are not effective in the fight against fraud organised by 
criminal organisations (Figure 29). 

Figure 28: The current instruments are effective to prevent cross-border VAT 
fraud  

5% 

16% 

16% 

18% 

13% 

31% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

Figure 29: The current instruments are effective to fight serious VAT fraud 
organised by criminal organisations  

7% 

13% 

33% 

20% 

20% 

7% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

28  respondents  considered  that  the  current  instruments  are  not  adapted  to  the  new  business  models 
such  as  e-commerce  or  collaborative  economy  (Figure  30).  At  the  same  time  14  did  not  have  an 
opinion.  

123 

 
 
 
 
 
 Figure 30: The current instruments are sufficient to fight VAT fraud 
occurring in new business models such as in the collaborative economy or 
ecommerce  

7% 

9% 

25% 

33% 

18% 

7% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

These comments came from stakeholders who are not directly involved in the fight against VAT fraud 
but could be potentially indirectly impacted by VAT fraud, be it at professional or personal level as 
taxpayers. The relevance and accuracy of this perception according to which the current instruments 
available to Member States to act in this area are not sufficient, not powerful enough or not used to 
their full potential is difficult to assess. 

6.3.2.3.  Overall  assessment  of  the  extent  to  which  Member  States  are  better  equipped  to  fight  VAT 
fraud thanks to Regulation (EU) 904/2010 

When  it  comes  to  Eurofisc  which  was  introduced  by  Regulation  (EU)  904/2010,  the  level  of 
satisfaction  of  Member  States  scores  very  high:  all  Member  States  strongly  agree  or  agree  that 
Eurofisc is an effective tool that improves the control of intra-EU transactions. As for any instrument, 
in particular when it is relatively new, improvements in relation to the functioning of Eurofisc are still 
needed.  The Member  States  have  for  instance  identified  some  shortcomings  in  the  manner  in  which 
information  is  exchanged  or  signals  targeted.  The  Chair  and  Coordinators  of  Eurofisc  and  Eurofisc 
working  field  coordinators  are  aware  of  these  shortcomings  and  have  been  working  with  Eurofisc 
liaison  officials  to  improve  the  situation.  As  a  result,  the  number  of  signals  exchanged  has  been 
decreasing, demonstrating a better targeting. The quick and accurate provision of feedbacks is another 
area where room for improvement is possible and would help in making Eurofisc more effective.  

All this leads to the conclusion that Eurofisc has certainly not reached its full potential yet.  

6.3.3. Extent to which Regulation (EU) 904/2010 helped stakeholders other than the Member States 
to correctly apply VAT rules 

6.3.3.1. Evolution of the use of VIES on the web by stakeholders other than the Member States 

VIES  on  the  Web  (VoW)  is  the  IT  tool 
made  available  to  businesses  involved  in 
intra-EU  transactions  to  check  the  validity 
of  VAT  registration  numbers  attributed  by 
Member States. This is an essential tool for 
the correct application of VAT in intra-EU 
transactions.  

Between  2012  and  2016,  the  number  of 
queries  made  on  VoW  tripled  to  reach  1,2 
billion  (Figure  31).  This  means  that  the 
instrument  is  needed  by  stakeholders  other 
than  Member  States  to  identify  the  VAT 
intra-EU 
treatment  applicable 

their 

to 

Figure 31 : VIES on the Web 
Number of queries made per year  

1.400.000.000
1.200.000.000
1.000.000.000
800.000.000
600.000.000
400.000.000
200.000.000
0

124 

Number of
requests made

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

 
 
 
 
transactions.  

This  is  emphasized  by  the  replies  to  the  open  public  consultation  where  41  respondents  agreed  or 
strongly  agreed  that  VoW  is  a  useful  tool  for  businesses  carrying  out  intra-EU  transactions  (Figure 
32). 43 consider that the tool is at least satisfactory for their needs (Figure 33) 

Figure 32: VIES on-the-web is a useful tool for businesses carrying out intra-
EU transactions  

45% 

32% 

15% 

2% 

2% 

4% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

Figure 33: How do you rate your general experience with the consultation of 
the VAT identification number of your customers through VIES on-the-web?   

19% 

21% 

42% 

13% 

6% 

Very positive

Positive

Satisfactory

Unsatisfactory

Not at all adequate

6.3.3.2. Assessment of stakeholders other than the Member States with regard to their experience with 
VIES on the web (VoW) 

47 respondents report that their registration information was correctly recorded in VoW although only 
36 of them indicate that information on their customers was also accurate in VoW (Figures 34 and 35). 
This is an indication of the fact that VoW does not always provide the expected level of accuracy to 
these  stakeholders.  This  has  direct  consequences  on  them  since  they  are  not  able  to  assess  with  a 
sufficient level of confidence the VAT status of their business counterparts.  

 Figure 34: Your VAT identification 
data was correctly reflected in the 
VIES on-the-web system? 

 Figure 35: The VAT identification 
data of your customers were 
correctly reflected in the VIES on-
the-web system?  

No 
10% 

No 
28% 

Yes 
72% 

Yes 
90% 

125 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
More  than  half  of  the  Member  States  have 
received  complaints  from  traders  in  relation  to 
VoW data (Figure 936) which are generally related 
to  the  accuracy,  completeness,  and  availability  of 
the  system.  Three 
information  provided  by 
Member  States  (SE,  LT  and  CZ)  mention  that 
retroactive  deregistration  from  VAT  registers  can 
cause  problems  for  business  too.  This  is  the  case 
when businesses check VAT registration numbers 
on  VoW, 
these  numbers  are  valid  and 
deregistration  takes  place  at  a  later  time  with  a 
retroactive  date.  Few  Member  States  report 
discrepancies between data reported by VoW and 
their national databases. One Member State (UK) 
stressed  that  a  business  not  having  informed  the 
administration  that  it  has  engaged  in  intra-EU 
supplies  does  not  appear  in  the  system  after 
registration. 

Do (did) you receive complaints from 
traders in relation to the data 
communicated through Vies-on-the-Web?  

No; 14 

Yes; 13 

Figure 36:  Complaints received by Member States in 
relation to VoW data 

6.3.3.3.  Overall  assessment  of  the  extent  to  which  Regulation  (EU)  904/2010  helped  stakeholders 
other than the Member States to correctly apply VAT rules 

VoW  is  an  essential  tool  for  businesses  involved  in  intra-EU  transactions.  Without  this  instrument, 
these  businesses  are  not  in  a  position  to  meet  the  requirements  set  by  the  Member  States  to  deliver 
goods  or  services  VAT  free  to  clients  located  abroad.  Although  respondents  to  the  open  public 
consultation reported their satisfaction regarding the accuracy of their own data recorded on VoW, it 
seems that the overall satisfaction level of the instrument is below expectation. The lack of accuracy of 
the  information  made  available  by  the  Member  States  has  direct  impacts  on  the  reliability  of  data 
stored in VoW since both systems are linked. There is still room for improvement with regard to the 
manner in which data recorded in VoW are kept up-to-date by Member States and necessary measures 
should  be  taken  to  make  sure  that  VoW  is  a  reliable  instrument  that  meets  the  needs  of  businesses 
involved in intra-EU transactions.  

Summary  of  findings:  to  what  extent  has  Regulation  (EU)  904/2010  contributed  to  preventing 
budget losses stemming from tax avoidance and evasion and from errors in the application of VAT 
rules? (effectiveness) 

It  is  difficult  to  ascertain  the  extent  to  which  Regulation  (EU)  904/2010  has  contributed  to  prevent 
budget  losses  since  only  a  few  number  of  Member  States  keep  records  showing  the  additional 
liabilities  assessed  and  collected  thanks  to  administrative  cooperation.  Nevertheless,  as  a  large 
majority  of  Member  States  does  consider  that  benefits  derived  from  administrative  cooperation  are 
proportionate to the costs incurred, it can be considered that this impact is positive. 

Many  Member  States  have  raised  some  administrative  cooperation  shortcomings  which  impact 
revenue  collection  such  as  late  replies  and  irregularities  in  VIES  data.  These  two  aspects  have  been 
reported as having a detrimental effect on Member States' ability to assess, control and collect VAT. 

When it comes to Eurofisc, the more prominent instrument to fight VAT fraud, a majority of Member 
States agree that this new instrument introduced with the entry into force of Regulation (EU) 904/2010 
has  had  a  positive  impact  on  the  collection  of  VAT  on  intra-EU  transactions.  A  very  high  level  of 

126 

 
 
 
satisfaction is reported by Member States. However, there are still drawbacks regarding its functioning 
leading to the conclusion that Eurofisc has certainly not reached its potential yet.  

Regarding the use of VoW, it results from the open public consultation that this instrument is essential 
to  enabling  the  businesses  to  apply  properly  the  VAT  rules.  Nevertheless,  VoW  does  not  always 
provide the level of reliability these stakeholders expect which demonstrates that there is still a room 
for  improvement  in  the  manner  in  which  data  recorded  in  VoW  are  kept  up-to-date  by  the  Member 
States. 

6.4. To what extent the provisions of Regulation (EU) 904/2010 continue to meet the needs of the 
Member States? (relevance) 

6.4.1. The administrative cooperation instruments meet the needs of Member States 

Figure  37  below  describes  the  Member  States'  general  assessment  of  the  relevance  of  each 
administrative cooperation instrument made available to them. Some instruments score very high: 22 
Member States consider VIES as a relevant tool to a very high extent and 18 do the same for requests 
for  information.  If  Eurofisc  and  simultaneous  controls  rank  a  little  bit  behind,  overall,  almost  all 
Member  States  consider  that  these  two  instruments  are  relevant  to  a  very  high  or  to  a  high  extent. 
Feedback and request for administrative notification are again the less best-rated instruments.  

Figure 37: To what extent are the tools for administrative cooperation provided by 
Regulation (EU) 904/2010 relevant for the control of intra-EU transactions and the 
collection of VAT? Please provide your opinion on each tool? 

To a very high extent

To a high extent

To some extent

To a low extent

The tool is no longer relevant

 Request for information and for administrative enquiries (art 7)

Automatic exchange of information without prior request (art 14)

4 

18 

13 

7 

2 

6 

3 

1 

Spontaneous exchange of information without prior request (art 15)

7 

16 

Feedback (16)

2 

Request for administrative notification (art 25)

3 

Presence in administrative offices (art 28)

Presence during administrative enquiries (art 28)

Simultaneous controls/MLCs (art 29)

 Eurofisc (art 33)

8 

7 

10 

11 

13 

11 

13 

12 

 Automated access to data through VIES (art 21)

22 

 Third Member State access to data for Eurofisc officials (art21.2.e)

13 

2 

4 

7 

9 

16 

16 

9 

1 

1 

4 

5 

3 

4 

4 

5 

5 

6.4.1.1. Appropriation of administrative cooperation instruments by Member States 

As  described  under  Chapter  6.1,  from  the  statistics  annually  provided  by  Member  States,  it  can  be 
noted  that  between  2012  and  2016,  the  number  of  instances  where  administrative  assistance  was 
provided has been stable for the most significant and effective instruments: exchanges of information, 
whichever the type of exchanges, and simultaneous controls. This demonstrates a good appropriation 
of  the  legal  framework  provided  for  by  Regulation  (EU)  904/2010  by  the  Member  States'  tax 
administrations  and  a  maturity  in  the  use  of  its  instruments.  This  can  be  explained  as  most  of  these 
tools were already available to them with Regulation (EC) 1798/2003. 

127 

 
 
 
 
Some  administrative  cooperation  instruments  are  far  less  used  than  others  like  requests  for 
administrative  notification  or  provision  of  feedbacks.  Nevertheless,  this  does  not  mean  that  they  are 
irrelevant  or  should  be  discontinued.  The  limited  use  is  rather  due  to  various  factors  such  as  the 
particularities  of  the  procedural  law  of  the  cooperating  Member  States  as  regards  the  MLCs  or  the 
presence of foreign officials. Other instruments could be considered as still gaining traction (e.g. the 
feedback).  Further  details  on  the  relevance  and  use  of  the  different  instruments  as  well  as  the 
associated difficulties are described below. 

6.4.1.2. Assessment of the use and problems encountered by Member States in using Regulation (EU) 
904/2010 for their own needs 

One  Member  State  out  of  two  encounters  problems  either  at  EU  or  national  levels  when  using 
Regulation (EU) 904/2010. At EU level, they include problems related to the lack of commitment or 
participation of some Member States in respect of some of the instruments, late replies or transmission 
of incomplete and inaccurate information. Some issues regarding differences between Member States 
VAT reporting obligation or tax legislation are also raised. A few Member States also insist that only 
one working language should be used which illustrates some linguistic problems.  

At national level, the following problems can be mentioned: 

 

lack  of  awareness  amongst  national  auditors  with  regard  to  the  different  administrative 
cooperation  instruments  that  exist  (feedbacks,  presence  in  offices  and  during  enquiries, 
simultaneous control), their usefulness and their application; 

  difficulties to train tax officials to the use of e-forms; 

  very slow procedures to carry out request for information and administrative enquiries; and 

 

lack of human resources and language skills.  

No  specific  serious  issue  in  relation  to  the  implementation  of  Regulation  (EU)  904/2010  or  any 
questioning  of  its  relevance  were  raised  by  the  Member  States  in  the  evaluation  process.  That 
implicitly means that the Regulation tools continue to be needed. It is worth mentioning that when a 
new  issue  is  raised,  Member  States  usually  report  it  to  the  Commission  to  address  it  with  the  other 
Member States. Fiscalis activities are specifically designed to address some of the concerns raised, for 
instance training and information on administrative cooperation tools such as MLCs or the use of e-
forms.  

6.4.1.3. Qualitative assessment of the problems encountered by tax administrations when exchanging 
information with other law enforcement authorities 

The responsibility to enforce VAT legislation at national level falls in all Member States with national 
tax  authorities.  Nevertheless,  other  authorities  and  bodies  either  at  national  or  EU  levels  are  also 
involved in the enforcement of these obligations or in the fight against VAT fraud. This is typically the 
case for customs or police authorities, be it at national or EU level. 

Member States tax administrations report various experiences regarding the exchange of VAT-related 
information with other authorities (Figure 38). A large part of them (two thirds) do not exchange tax 
information at all with OLAF, Europol, and national social security agencies. Such information can be 
shared sometimes with other financial and criminal national authorities but only if they have expertise 
in field of VAT.  

128 

 
 
 
Do you encounter problems for exchanging VAT related information (VIES data, etc.) with other 
authorities?   

To a very high degree

To a high degree

Somewhat

To a low degree

To a very low degree Not applicable (e.g. we do not exchange information with ….) 

Europol

 OLAF

Customs

3 

3 

3 

 Police

1 

2 

1 

2 

4 

4 

9 

19 

19 

16 

4 

3 

8 

4 

9 

6 

8 

 Prosecutors office

 Social Security Agency

1 

6 

4 

3 

3 

16 

Other (please explain below)

1 

1 

3 

22 

Figure 38: Problems in information exchange with law enforcement authorities 

6.4.1.4.  Qualitative  assessment  of  the  relevance  of  VIES  for  Member  States  needs  and  problems 
encountered when using VIES 

Member States are divided as to whether data available through the VIES system meets all their needs 
(Figure  1139  below).  The  provisions  relating  to  VIES  were  amended  to  increase  the  amount  of 
information  stored  and  exchanged,  in  particular  in  relation  to  the  mini  one  stop  shop 132 (MOSS). 
Member  States  are  usually  satisfied  with  the  relevance  of  this  information.  Nevertheless,  as  set  out 
under  section  6.4.3.6.,  Member  States  also  consider  that  new  types  of  information  should  be 
exchanged in an automated manner. 0 

Member States report difficulties in using VIES, in particular when it relates to the accuracy of data. 
Some Member States also consider as creating difficulties the existing restrictions to consult intra-EU 
supplies  where  neither  the  supplier  nor  customer  is  registered  in  the  Member  State  of  the  official 
making the enquiry. Currently this access is only granted to Eurofisc liaison officials and under strict 
conditions. 

Do you find that the information 
made available through VIES 
system meets all your needs ?  

No; 13 

Yes; 14 

Figure 40: Do you encounter problems 
with getting automated access to the 
information exchanged through VIES as 
provided for in Article 21?   

No answer; 1 

No; 12 

Yes; 14 

Figure 39: Data available through VIES and 
the needs of Member States 

132 The  MOSS  allow  a  supplier,  rather  than  registering  for  VAT  in  each  Member  State  in  which  he  has  a 
customer,  to  register,  declare  and  pay  the  VAT  due  on  supplies  of  telecommunications,  broadcasting  and 
electronic  services  in  other  Member  States  via  a  single  web  portal  in  one  single  Member  State  -  the  Member 
State of identification. 

129 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
6.4.1.5.  Qualitative  assessment  of  the  relevance  of  automatic  and  spontaneous  exchange  of 
information in confront with other mechanism 

Member States are divided as to whether automatic and spontaneous exchange of information could be 
replaced  by  other  mechanisms  (Figure  1841).  As  concluded  under  Chapters  6.1.1.4.  and  6.1.1.5., 
Member States recognise that spontaneous and automatic exchanges of information can be effective, 
although these exchanges could be further intensified.  

At the same time, it also results from the analysis under Chapter 6.1. that Member States do not fully 
engage in this type of instruments. This raises questions as to whether these two types of exchanges 
still meet the Member States' needs.  

In  addition,  half  of  the  Member  States 
could support an alternative approach and 
mentioned 
that  granting  direct  access 
either  to  tax  officials  from  other  Member 
States or to Eurofisc liaison officials could 
reduce administrative burden and improve 
the  quality  of  the  information  exchanged. 
The transaction network analysis133 (TNA) 
is  here  viewed  as  a  solution  to  improve 
exchange and analysis of information (see 
section 6.4.3.1. below). 

Do you find that the automatic and spontaneous 
exchange of information (art 14-15) could be 
replaced by some other mechanism (e.g. direct 
access granted to tax officials from other 
Member States  or Eurofisc liaison officials)?  

No; 13 

Yes; 14 

However, 13 Member States disagree with 
the  possibility  to  implement  other  access 
such  as 
to 
granting 
national 
databases. 

information  mechanisms 
to 

access 

direct 

Figure 41: Replacing automated and spontaneous exchange of 
information with other mechanism 

6.4.1.6. Qualitative assessment of the extent to which Eurofisc continues to meet the needs of Member 
States 

A majority of Member States agree that Eurofisc has a positive impact on the collection of VAT on 
intra-EU transactions (Figure 1226) although not all Member States participate in all working fields.  

However, as reported by the ECA in its 2015 report, the information exchange within Eurofisc is to 
some extent rudimentary, slow and not user-friendly as it takes place using spreadsheets. The Eurofisc 
working  field  coordinators  manually  compiles  and  disseminates  these  spreadsheets  among  liaison 
officers  of  each  participating  Member  State.  This  runs  the  risk  of  transmitting  incomplete  or  wrong 
information. This audit also demonstrated that there are no common criteria or sources of information 
to perform risk analysis. Furthermore, feedback on the usefulness of the data exchanged is scarce. As a 
result,  Member  States  participating  in  different  working  fields  often  exchange  information  that 
includes non-dubious traders, thereby wasting resources. 

133 TNA is a tool for information exchange and joint processing of VAT data for Eurofisc officials. 

130 

 
 
 
 
                                                            
6.4.1.7. Overall assessment as to whether administrative cooperation instruments still fits the needs of 
Member States 

The Member  States generally recognise that the administrative  cooperation  instruments  are relevant. 
Requests for information, Eurofisc, MLCs and administrative enquiries score particularly high. If in a 
general  manner  Member  States  can  sometimes  be  faced  with  some  difficulties  when  using  these 
instruments, none of them seem to prevent them to engage in administrative cooperation. 

With  regard  to  difficulties  encountered  when  exchanging  information  with  other  law  enforcement 
authorities,  tax  administrations  in  most  Member  States  indicate  to  have  a  very  limited  or  no 
experience. This is particularly the case in relation to Europol or OLAF. It is difficult to rely on this 
very limited experience to draw conclusions.  

It is also difficult to draw conclusions as to whether new ways to access information could be more 
relevant than spontaneous and automatic exchange of information. There is no clear view shared by all 
Member States on this. At the same time, most of them also consider that there is room to develop new 
automated exchange of information. The right balance here would probably be to develop and improve 
already  existing  means  to  exchange  information,  whichever  their  format.  Direct  access  to  national 
databases by foreign officials is certainly the limit that a majority of Member States would not accept 
to cross. 

Overall, it seems that the automated exchange of information is viewed as a relevant instrument for a 
majority of Member States. Despite its imperfections, VIES is considered as a tool which should be 
further developed with the inclusion of new categories of data or additional information to that already 
present.  Taking  into  account  other  comments,  if  new  automated  exchange  of  information  was 
introduced, it would also be necessary to evaluate first whether VIES constitutes the most suitable tool 
to achieve the objectives. Indeed, new innovative IT solutions have been  developed over the last 25 
years and this may better suit the Member States' needs.  

Finally,  although  not  perfect,  Member  States  consider  Eurofisc  as  a  relevant  instrument  given  the 
objectives for which it was set up i.e. a network of liaison officials for swift and targeted exchanges of 
information  to  fight  serious  VAT  fraud.  Nevertheless,  and  according  to  replies  to  the  questionnaire, 
after  7  years,  most  Member  States  think  that  Eurofisc  is  at  a  turning  point  and  would  like  to  see  it 
modernised (see Chapter 6.4.3.1. below).  

6.4.2. Views of stakeholders other than the Member States on VIES on the web 

6.4.2.1.  Qualitative  assessment  of  the  extent  to  which  VIES  on  the  web  (VoW)  continues  to  fit  the 
needs of stakeholders other than the Member States 

As detailed above under section 6.3.3. of this report, concerns were raised by stakeholders other than 
Member  States  regarding  the  accuracy  of  data  made  available  to  them  by  VoW.  As  regards  the 
availability of the instrument (Figure 42), 33 respondents considered it to be sufficient. 

Figure 42: The availability of the ‘VIES on-the-web’ server is good  

11% 

49% 

22% 

9% 

4% 

5% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

131 

 
 
 
 
 
 
35  respondents  would  like  to  have  an  automated  notification  system  that  would  inform  them  on 
technical issues with VIES on-the-web. 46 respondents would prefer to be informed on the changes in 
their customers VAT details rather than checking themselves. 

Figure 43: Do you consider that a 
system of e-mail notification to 
inform users about technical issues 
with VIES on-the-web would be 
useful?  

Figure 44: Do you consider that the 
current way of checking VAT numbers 
should be replaced with a system that 
inform you about the changes to your 
clients VAT data such as the validity of 
their VAT 

No 
36% 

Yes 
64% 

No 
13% 

Yes 
87% 

A large majority of respondent reported that some data are missing from VoW. For instance, name and 
address of the legal entity  concerned or the period  of validity of the VAT number should  be added. 
Regarding services proposed by VoW, respondents asked for a batch processing for VAT checks with 
download  possibility  and  for  a  reporting  functionality  in  case  of  invalid  VAT  number  to  report 
potential fraudsters.  

Overall,  and  beyond  the  question  of  accuracy  and  timeliness  of  information  provided  on  VoW,  this 
tool meets its users' needs and is therefore broadly used. Its relevance was never questioned and as the 
high number of users indicates, the tool is popular. The results from the open-public consultation and 
feedback  received  from  the  Member  States  show  that  adding  new  functionalities  would  increase  the 
relevance and utility of VoW further. Therefore, although the relevance of VoW is not questioned, it 
could be improved to suit its users' needs even better. 

6.4.3. Identified areas in need for further changes to Regulation 904/2010 

6.4.3.1. Qualitative assessment of the need for change in the area of Eurofisc & Risk analysis 

After 7 years of Eurofisc functioning, the areas where processes could be improved are well known. 
As reported by the ECA in its 2015 report, 27 Member States consider Eurofisc to be an efficient early 
warning system for fraud prevention, but they still pointed out the following weaknesses, which were 
also  confirmed  by  the  audit  tests  in  Member  States:  (i)  feedback  was  not  frequent  enough;  (ii)  data 
exchanged  was  not  always  well  targeted;  (iii)  not  all  Member  States  participated  in  all  Eurofisc 
working fields; (iv) exchanges of information were not user friendly; and (v) data exchanges were too 
slow. 

Amongst other things, the ECA concluded that the Commission should recommend Member States to 
introduce  a  common  risk  analysis  including  the  use  of  social  network  analysis  to  ensure  that  the 
information exchanged through Eurofisc is well targeted to fraud.  

It results from the Member States consultation (Figure 45) that most of them support the development 
of this common risk analysis in Eurofisc. When commenting on common risk analysis within Eurofisc 
most  Member  States  refer  to  the  TNA  as  a  tool  that  can  facilitate  such  an  approach.  Most  Member 
States  also  agree  that  TNA  should  be  managed  by  Eurofisc  and  are  willing  to  participate.  Most 

132 

 
 
 
 
 
 
 
 
 
  
Member  States  also  support  TNA  having  access  to  data  necessary  to  build  networks.  A  majority  of 
Member States also support creating an explicit legal base to implement TNA. 

In relation to the development of TNA  

Yes

No

No opinion

0%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Do you support the development of TNA tool to improve Eurofisc capacity?

Do you agree that TNA should be managed by Eurofisc?

Are you willing to participate in exchange of information through TNA?

Do you agree that TNA should have automated access to data on cross-
border supplies exchanged through VIES?

Do you agree that TNA should have access to data exchanged through and
gathered by Eurofisc (early warning signals on suspicious traders and
qualifications provided to those traders)?

 Do you support creating a clear legal basis for TNA in Regulation (EU)
904/2010?

 Do you agree that the Commission IT services could get access to data
exchanged through TNA only in so far as it is necessary for care,
maintenance and development of TNA (similarly to the current…

26 

26 

25 

26 

26 

24 

24 

1 

1 

1 

1 

1 

1 

1 

2 

2 

1 

Figure 45: Member States' opinions on TNA 

Under  current  legal  arrangements  the  Commission  cannot  have  access  to  Eurofisc  operational  data 
which, in case of the Commission hosting TNA, will require complicated organisational arrangements 
and possibly additional development  costs. Most Member States support granting  the Commission  a 
limited access to these data. 

Stakeholders  other  than  Member  States  that  have  responded  also  share  the  view  that  an  automated 
joint risk analysis would be of help in fighting VAT fraud (47 strongly agree or agree).  

Figure 46:  The fight against cross-border VAT fraud would benefit from an 
EU wide automated joint risk analysis system  

44% 

42% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I don't know

5% 

4% 

5% 

6.4.3.2.  Qualitative  assessment  of  the  need  for  change  in  the  area  of  multilateral  activities  (MLCs, 
joint audits, administrative enquiries) 

The joint audit is an instrument through which a taxable person is subject to a coordinated audit by a 
single  audit  team  made  up  of  tax  officials  of  two  or  more  jurisdictions.  Regulation  (EU)  904/2010 
does not provide for joint audits but only for the passive presence of officials from another Member 
State during an administrative enquiry in the taxpayer premises. 

133 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A  project  group  in  relation  to  joint  audits  took  place  under  the  auspice  of  the  Fiscalis  2020 
programme.  The  participants  in  this  project  group  came  to  the  conclusion  that  there  would  be  an 
overall  benefit  to  joint  auditing  taxpayers.  Joint  audits  could  take  place  when  this  tool  would  be 
considered as more suitable than already existing joint actions. The group recommend the Commission 
to  consider  making  a  proposal  to  introduce  this 
instrument in Regulation (EU) 904/2010.  

According  to  replies  received,  only  4  Member  States 
have experience with joint audits but none in relation to 
VAT. Member States are largely divided (Figure 47) as 
to  whether  there  were  cases  in  their  work  where  joint 
audits would have been a more useful tool as compared 
to  the  tools  currently  offered  by  the  Regulation  (EU) 
904/2010.  

Have you had cases where joint audits would have 
been a more useful tool to audit a taxpayer for VAT 
purpose comparing to the list of tools currently 
provided by Regulation (EU) 904/2010?  

Yes; 9 

No opinion; 10 

When  it  comes  to  possible  benefits  of  joints  audits 
(Figure  48)  around  half  of  the  Member  States  either 
strongly  agree  or  agree  that  joint  audit  would  be  a 
useful  and  cost  effective  tool  to  audit  cross-border 
trader. They also consider that an audit by a single team 
of  auditors  would  provide  more  legal  certainty  and  would  be  more  cost  efficient  for  businesses 
undergoing these joint audits.  

Figure 47: Member States experience with  
joint audits 

No; 8 

To what extent do you agree that:  

Strongly agree

Agree

No opinion

Disagree

Strongly disagree

Neither agree nor disagree

Joint audits would be a useful tool to audit cross border activities
(in particular e-commerce)?

 Joint audits would be a cost effective tool for tax administrations
to audit cross-border activities?

 Being audited by a single team of auditors in a joint audit would
contribute to provide more legal certainty for the businesses
involved as compared to being audited multiple times by…

Being audited by a single team of auditors in a joint audit would
be more cost efficient for the businesses involved as compared to
being audited multiple times by auditors in different countries?

6 

6 

4 

4 

9 

9 

10 

11 

8 

2 

2 

8 

2 

3 

8 

8 

1 

3 

4 

Figure 48: Member States' opinion on joint audits 

However, it is also noted that a number of Member States have no opinion on this and those Member 
States that are sceptical towards joints audits further explained that: 

 

the absence of a national and European legal base for joint audits is a concern; 

  differences in approach towards audits in Member States may hamper the effectiveness of the 

instrument;  

  asking  a  Member  State  of  establishment  to  collect  information  at  the  request  of  another 

Member States may be more efficient than setting-up a team of auditors; and 

134 

 
 
 
  They  are  not  completely  sure  of  the  extent  to  which  the  report  produced  within  joint  audits 

would be binding for all participating Member States. 

Stakeholders other than Member States are also divided as to whether joint audits would be of interest 
(Figure  49).  19  respondents  agreed  and  17  disagreed  that  an  active  participation  of  foreign  auditors 
would make it more efficient. 19 respondents could not decide. 

 Figure 49: It would be more efficient to also authorise an active participation 
of tax officials in audits carried out by other Member States  

22% 

24% 

27% 

13% 

11% 

4% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

19 respondents consider that a joint audit would be less burdensome than being audited at request of 
different  Member  States  and  19  are  neutral  neither  agreeing  or disagreeing  or  having  no opinion  on 
this question (Figure 50). 40 respondents considered that having a single report at the end of the audit 
would provide taxpayers with more legal certainty (Figure 51). 

Figure 50: Being audited by a single team of auditors from different Member 
States in which you carry out economic transactions and controlling your 
operations taxable therein would be less burdensome?  

15% 

24% 

35% 

5% 

2% 

20% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

 Figure 51: Having a single report at the end of the audit signed by all the tax 
administrations involved would give taxpayers more legal certainty.  

48% 

26% 

6% 

7% 

4% 

9% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

Respondents  widely  agree  that  joint  audit  would  constitute  a  step  forward  in  administrative 
cooperation  and  would  prevent  duplication  of  tax  audits  which  is  burdensome  for  both  tax 
administration  and  businesses.  However,  number  of  respondents  notice  that  joint  audits  could  be 
useful as long as a common unique procedure is clearly defined.  

135 

 
 
 
 
 
 
 
 
 
 
 
 
6.4.3.3. Qualitative assessment of the need for change in e-forms 

Most Member States consider e-forms as relevant and useful. But they also agree that they could be 
redesigned (Figure 1752). Some of the remarks that were made in relation to possible updates: 

 

 

 

allowing  request  based  on  more  than  one 
company,  in  order  to  deal  with  cases  of 
suspected  fraud  networks  in  the  requested 
Member State. (IE)  

identifiers  other 
than  VAT  registration 
numbers  such  as  business  name,  contact 
details, website should be supported. (IE) 

forms should support EOI for import/export 
data, which are more and more often related 
to VAT MTIC fraud. (FI) 

  mandatory use of one language in filling the 

forms should be implemented. (NL) 

Do you see the need to update the 
standard forms used for request for 
administrative cooperation?  

No; 11 

Yes; 16 

Figure 52: Need to update standard forms 

 

forms should be made  more user friendly e.g. by allowing  corrections without having to fill 
the whole form from the start (NL), simplifying the form by showing only the field that are 
relevant to a particular request (IE). 

A number of Member States (AT, CY, EL, LT, PT, SK and SI) suggested that a section specific to the 
MOSS  should  be  added.  However  one  Member  State  (UK)  considers  that  questions  in  relation  to 
MOSS  can  be  addressed  using  free  text  fields  and  reports  that  forms  should  be  kept  simple  without 
excessive  amount  of  pre-defined  questions.  Regarding  technical  issue,  one  Member  State  (EL) 
suggests to implement an automatic system to cover sensitive data for cases where forms are requested 
by the Prosecutor’s Office for instance. Member States have high expectations towards future central 
application (eFCA) and believe that it is going to be a more convenient tool for sending requests. 

6.4.3.4.  Qualitative  assessment  of  the  need  for  change  in  the  area  of  automatic  exchange  of 
information, including car registration data 

Most  Member  State  do  not  support  dropping  already  existing  categories  or  have  no  opinion  on  this 
matter  (Figure  1953).  Car  registration  information,  data  relevant  for  controlling  e-commerce 
transactions  and  payment  data  held  by  financial  institutions  are  the  most  popular  information  that 
Member  States  would  like  to  see  exchanged  in  an  automatic  manner.  None  of  the  other  categories 
proposed receive a support of the majority of Member States. 

136 

 
 
 
Do you find that the list of categories for automatic exchange of information should be modified? 

Agree

Disagree

No opinion

Car registration data should be added

Payment data held by financial institutions should be added

14 

Ecommerce data (IDs of vendors and clients, data on transactions, etc.)
held by Internet Platforms (intermediaries) should be added

Drop information on the allocation of VAT identification numbers to
taxable persons established in another Member State

Drop information on VAT refunds to taxable persons not established in the
Member State of refund but established in another Member State

Drop information on supplies exempted of new means of transport by
persons regarded as taxable persons who are identified for VAT purposes

Drop information on supplies exempted of new vessels and aircraft by
taxable persons identified for VAT purposes to persons not identified…

Drop information on supplies exempted of new motorised land vehicles by
taxable persons identified for VAT purposes to persons not identified…

7 

2 

2 

1 

1 

4 

12 

20 

20 

16 

16 

17 

17 

2 

5 

9 

3 

4 

9 

8 

9 

9 

9 

 Other type of information should be added

8 

2 

17 

Figure 53: Modifying categories for automatic exchange of information 

A potential access to car registration data has been discussed several times in Standing Committee on 
Administrative Cooperation Expert Group (SCAC-EG) meetings. In this context it was agreed to make 
an in-depth study on the technicalities and related costs of some options to access Eucaris134 data on 
cars. This should be considered as a new form of automated access to specific information stored in 
national  databases.  A  vast  majority  of  Member  States  consider  that  access  to  Eucaris  data  for  tax 
purposes  would  be  useful  to  control  the  VAT  treatment  of  vehicles.  Member  States  mentioned  that 
having access to such data would help to detect of tax frauds with vehicles, in particular the abuse of 
margin scheme. This would also simplify the work of Eurofisc working field 2. 

A number Member States (BG, CZ, SI, PT, AT, RO, FI, UK, IE, NL) would also like access to such 
application not to be limited only to Eurofisc officials while four (BE, IT, MT, LU) would like access 
to be limited to Eurofisc officials. 

Concerning  stakeholders  other  than  Member  States,  29  respondents  considered  that  tax  authorities 
should have automated access to data on cars registration from other Member States (Figure 54). 

Figure 54: Tax administrations should have automated access to information 
related to cars registration from other Member States  

22% 

31% 

24% 

4% 

4% 

16% 

I strongly agree

I agree

I do not agree nor
disagree

I strongly disagree

I disagree

I don't know

134 Eucaris  is  the  European  platform  where  information  on  cars  registration  is  exchanged  between  national 
authorities. 

137 

 
 
 
 
                                                            
6.4.3.5. Qualitative assessment of the need for change in the area of customs data 

In its 2015 report, the ECA mentioned that imports exempted from VAT under the Customs Procedure 
No 42 (CP 42) may lead to abuses and, consequently, to underpayments of the Member States’ VAT. 
The audit showed a lack of completeness of VIES data concerning imports under CP 42 and a lack of 
information  sharing  between  tax  and  customs  authorities.  Therefore  tax  authorities  were  not  able  to 
cross-check customs data on imports under CP 42 with the VAT recapitulative statement and the VAT 
return submitted by the importer and the VAT return of the recipient of the goods.  

Additionally,  it  was  also  indicated  that  with  the  exception  of  one  Member  States,  no  automatic 
checking  of  VAT  numbers  was  available  in  the  customs  electronic  clearance  systems  of  the  visited 
Member  States.  The  ECA  then  recommended  that  The  Commission  should  propose  legislative 
amendments enabling effective cross-checks between customs and tax data. 

According  to  their  replies  (Figure  38),  most 
information  with 
Member  States  exchange 
customs. 
In  most  cases  Member  States 
encounter problems either to a very low or to a 
low  degree  but  they  have  not  specified  the 
nature  of  these  problems.  Member  States  note 
that  often  there  is  a  single  tax  and  customs 
authority,  which  makes  it  easier  to  provide 
VAT-related  information  to  customs.  Customs 
administration in most Member States also have 
access  to  data  exchanged  over  VIES.  Tax 
information  on 
administrations 
imports  made  under  CP42  should  be  made 
available  by  customs  authorities  (Figure  55). 
to  have 
Most  Member  States  would 
automated access to such data. 

think 

like 

that 

Do you think that the information on imports using the 
Customs Procedure No 42 (e.g. VAT identification 
number of the importer and/or of the customer, type of 
commodities, value) collected by the customs should be 
made available to the tax authorities  

No; 1 

No 
opinion; 4 

Yes; 22 

Figure 55: Exchange of information in relation to CP42 
imports 

Stakeholders  other  than  Member  States  (Figure  56)  are  also  of  the  opinion  that  tax  administration 
should  have  automated  access  to  information  on  exempt  importations  from  customs  authorities  (17 
respondents strongly agree, 24 agree). 

Figure 56: Tax administrations should have automated access to information 
on exempt importations from customs authorities  

31% 

44% 

13% 

6% 

6% 

I strongly agree

I agree

I do not agree nor
disagree

I strongly disagree

I don't know

As  a  whole,  it  seems  that  Member  States'  tax  administrations  are  fully  aware  of  the  need  to  be  in 
position to correctly check importations made under a CP42 procedure. To this end more information 
should  be  shared  between  tax  and  customs  authorities  so  that  each  administration  would  be  able  to 
properly enforce the legislation it is responsible for.  

138 

 
 
 
 
6.4.3.6. Qualitative assessment of the need for change in the area of VIES 

Access to VIES, in particular for Eurofisc liaison officials (Art. 21(2) of the Regulation 

Figure 57: In your opinion should the 
rules for automated access to VIES 
data (Art 21(2)) be changed?  

For the moment, VIES data are accessible to 
tax officials controlling intra-EU transactions 
involving their country. Only Eurofisc liaison 
officials  have  a  broader  access  to  VIES. 
Under strict conditions, this access covers all 
intra-EU transactions, even when there is no 
connection  with  their  country  According  to 
comments  received,  a  number  of  Member 
States  (LV,  SE,  EL,  PT,  LT,  HU,  and  IE 
consider  that  restrictions  in  access  to  so 
called ‘3rd Member State inquiry’ – a right to 
consult  VIES  on  intra-EU  supplies  where 
neither 
is 
registered in the Member State of the official 
making the enquiry- is a difficulty they encounter when using VIES.  

supplier  nor  customer 

the 

No; 9 

No opinion; 
5 

Yes; 13 

Type of data to be exchanged in VIES 

When  they  are  asked  as  to  whether 
additional  categories  of 
information 
should  be  exchanged  over  VIES  (Figure 
2158),  a  vast  majority  of  Member  States 
report  positives  views.  The  question  of 
car  registration  and  customs  data  was 
already  discussed  in  section  6.4.3.4.  and 
6.4.3.5.  above.  14  Member  States  would 
also  like  to  be  able  to  check  over  VIES 
validity  of  so-called  domestic  VAT 
numbers135.  

Do you think that the following additional data 
should be shared via VIES?  

Data on imports using the Custom Procedure
No 42

Data on the identity, activity, legal form and
address of taxable persons who have not been
allocated a EU VAT Identification Number

14 

EUCARIS data on cars and owners

on 

on 

shareholders 

Other type of Information should be added

2  Member  States  have  reported  other 
categories  of  information  that  could  be 
exchanged  over  VIES  such  as  detailed 
acquisitions, 
reports 
intra-EU 
information 
and 
managers  (LV),  non-established  taxable 
persons  registration  (CZ),  information  in 
relation  to  margin  scheme  (PT),  NACE 
code (UK), MOSS  registration  number for third country  company (NL), invoice registers data (LT), 
information on the allocation of VAT identification numbers to taxable persons established in another 
Member State (BG), total amount of sales towards a Member State in the field of e-commerce (BE). 
One Member State (IE) noted that all Member States should be required to show standardised data i.e. 

Figure 58: Adding categories of information to be exchanged 
over VIES 

12 

19 

19 

135 Such numbers do not permit the trader to make VAT exempt intra-EU supplies. 

139 

 
 
 
                                                            
name,  address,  activity,  registration  number  and  date  and  also  names  of  officers  of  the  company  or 
sole trade wherever available.  

One Member State (HR) indicates that VIES should be modernised before implementing any changes 
to  the  system  otherwise,  additional  information  must  be  shared  through  other  channels.  Another 
Member State (FI) notes that VIES might not be the best tool for exchange of information.  

Stakeholders other than Member States who have answered support at a vast majority (47 respondents) 
extending the scope of information exchanged through VIES (Figure 59).  

 Figure 59: The scope of information directly accessible in VIES should be 
extended when relevant  

44% 

42% 

5% 

4% 

2% 

4% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

VIES access granted to law enforcement authorities 

As detailed by the ECA in its 2015 report,  neither Europol nor OLAF have access to Eurofisc data. 
They also do not have access to VIES. It reduces Europol and OLAF’s ability to help Member States 
tackling VAT fraud. 

When  asked  about  granting  access  to  VIES  to  Europol  and  OLAF,  only  a  very  limited  number  of 
Member States (2) reported that they already provide this access and only 5 and 6 of them would agree 
to do it in the future (Figure 60).  

Do you think that any of the authorities listed 
below should be given access to data exchanged 
through VIES in order to fight tax and other 
frauds?:  

Yes

No

5 

6 

13 

10 

Europol

 OLAF

Customs

 Police

 Prosecutors office

 Social Security Agency

5 

Other (please explain below)

8 

22 

21 

24 

3 

14 

17 

22 

19 

Do you provide access to data exchanged 
through VIES to any of the authorities listed 
below?:  

Yes

No

Europol

 OLAF

2 

2 

Customs

 Police

 Prosecutors office

 Social Security Agency

Other (please explain below)

25 

25 

23 

4 

11 

10 

5 

6 

16 

17 

22 

21 

Figure 60: Allowing law enforcement authorities access to data exchanged over VIES 

6.4.3.7.  Qualitative  assessment  of  the  need  for  change  in  the  area  of  strengthening  cooperation  with 
other law enforcement bodies  

Beyond granting an access to VIES to EU law enforcement authorities, the ECA also recommended in 
its  2015  report  to  remove  legal  obstacles  preventing  the  exchange  of  information  between 
administrative,  judicial  and  law  enforcement  authorities  at  national  and  EU  level.  In  particular,  the 

140 

 
 
 
 
ECA recommended that OLAF and Europol should have access to Eurofisc data and Member States 
should benefit from intelligence information supplied by them. So far, Member States invoke Regula-
tion (EU) 904/2010 and national tax secrecy rules to deny such access.  

The  ECA  notes  that  it  reduces  Europol  and  OLAF’s  ability  to  tackle  VAT  fraud  through  the 
identification and disruption of organised crime groups behind the carousels and even their ability to 
assess the real impact of intra-EU VAT fraud.  

Do you think that it would be useful if Europol and/or OLAF participated in 
relevant Eurofisc Working Fields and whether Europol and/or OLAF got access 
to intelligence on organised crime structures exchanged through Eurofisc in 
order to assist Member Stat 

Agree

Disagree

No opinion

OLAF should receive targeted Eurofisc intelligence.

 It would be useful if OLAF participated in Eurofisc Working
Fields work.

Europol should receive targeted Eurofisc intelligence.

 It would be useful if Europol participated in Eurofisc Working
Fields work.

8 

10 

12 

12 

7 

8 

4 

12 

9 

11 

7 

8 

Figure 61: Possible collaboration between Europol, OLAF and Eurofisc 

When asked about the sharing of intelligence between Europol and Eurofisc (Figure 61), 12 Member 
States  agree,  4  disagree  and  11  have  no  opinion.  When  it  comes  to  providing  OLAF  with  such 
intelligence,  8  Member  States  agree,  7  are  against  and  12  have  no  opinion.  In  case  intelligence  is 
shared  with  Europol  and  OLAF,  14  Member  States  agree  that  Europol  should  provide  Eurofisc 
feedback  on  the  use  of  this  information.  However,  it  seems  that  tax  administrations  are  largely 
unaware  of  what  information  Europol  and  OLAF  have  and  could  not  specify  what  sort  of  feedback 
they  would  expect.  Should  there  be  some  form  of  exchange  of  information  between  OLAF  and 
Europol on one hand and Eurofisc on the other hand, then Member States would like to see a step by 
step approach with information exchange happening on case by case basis.  

12  Member  States  agree  that  it  would  be  useful  if  Europol  participate  in  Eurofisc  working  field 
meetings. 4  Member States are against such participating  and 8 have no opinion. 10 Member States 
would agree with OLAF participation in Eurofisc meeting, 8 are against and 9 have no opinion on the 
matter. Member States further clarified that such cooperation should be limited to OLAF and Europol 
participation in Working Field 4 meetings dealing with VAT fraud trends. One country saw a problem 
in such participation as in their view there cannot be direct cooperation between Europol and Eurofisc 
as Eurofisc officials are from tax administrations. 

As  regards  stakeholders  other  than  Member  States,  32  respondents  considered  that  the  current 
arrangements for cooperation between tax authorities and law enforcement bodies are not effective and 
34  respondents  consider  that  the  cooperation  between  tax  authorities  and  law  enforcement  bodies 
should  be  changed.  42  respondents  considered  that  Eurofisc  should  share  relevant  information  on 
serious VAT fraud with OLAF and 45 respondents with Europol. 

In  this  context,  28  respondents  considered  that  the  fight  against  VAT  fraud  would  justify  more 
exchange  of  personal  data  between  tax  authorities  and  law  enforcement  bodies  and  45  that  such 
exchanges should be proportionate to the objectives. 

141 

 
 
 
6.4.3.8.  Overall  assessment  of  identified  areas  in  need  for  further  changes  to  Regulation  (EU) 
904/2010 

It  results  from  the  consultation  of  Member  States  that  the  introduction  of  a  dedicated  legal  basis  to 
implement TNA receives a broad consensus with a majority of Member States agreeing to grant the 
Commission the necessary access rights to perform its duties in the most cost-efficient fashion.  

Whilst Member States do not reject the introduction of joint audits in Regulation (EU) 904/2010, they 
remain divided as to whether such instruments would bring an added-value and question its relevance 
and the situations in which it could be used.  

Overall,  Member  States  are  satisfied  with  the  relevance  and  content  of  e-forms  for  the  exchange  of 
information although 16 of them consider that they should be redesigned. Obviously, new needs are 
expressed in particular when new legal provisions are implemented (MOSS) or new fraud trends are 
encountered.  

There  is  certainly  room  to  further  develop  automatic  and  automated  exchange  of  information. 
Amongst categories of information that Member States consider as the most relevant, car registration 
information, data relevant for controlling e-commerce transactions and payment data held by financial 
institutions are the most popular. With regard to VIES, Member States still view it as a relevant and 
needed  instrument.  They  consider  that  more  categories  of  information  could  be  exchanged  in  an 
automated fashion with broader access to tax officials than today.  

Cooperation  with  customs  authorities  is  viewed  as  essential  and  most  Member  States  tax 
administrations  would  welcome  more  exchanges  of  information  with  these  authorities.  They  also 
consider that automated exchange of information would constitute the best instrument to achieve their 
expectations and be in a better position to fight frauds in relation to CP 42.  

Concerning exchange of information with law enforcement authorities, it results from the consultation 
that  Member  States  are  more  open  to  exchanging  intelligences  with  Europol  and  OLAF  than  giving 
them an access to VIES. As regards their participation in Eurofisc, views are more balanced with less 
Member  States  rejected  upfront  the  possibility  of  enhanced  exchanges  with  Europol  and  OLAF,  in 
particular when it comes to participation in working field 4. 

Summary  of  findings:  to  what  extent  the  provisions  of  Regulation  (EU)  904/2010  continue  to 
correspond to the needs of the Member States? (relevance) 

Statistics provided by Member States and detailed under Chapter 6.1 demonstrate a good appropriation 
by Member States of the instruments of Regulation (EU) 904/2010 and a maturity in their use.  

Experience in exchanging information with OLAF and Europol is rather limited or even absent. It is 
difficult  to  draw  conclusions  as  to  whether  difficulties  are  encountered  by  Member  States  when 
exchanging  information  with  these  law  enforcement  authorities.  Results  from  the  Member  States 
consultation show a limited appetite to grant these two authorities an access to VIES. Participation in 
Eurofisc  working  field  meetings  or  exchange  of  intelligence  between  Eurofisc,  Europol  and  OLAF 
seem to be better avenues to improve cooperation between authorities involved in fighting VAT fraud. 
Member States also consider that more information should be shared with customs authorities so that 
each administration would be able to properly enforce the legislation it is responsible for. 

It appears that automated exchange of information is viewed as a relevant instrument for a majority of 
Member States. Despite its imperfections, VIES is considered as a tool whose potential may be further 

142 

 
 
 
developed  with  the  inclusion  of  new  categories  of  data  or  additional  information  to  that  already 
present.  With  regard  to  VoW,  new  functionalities  would  help  private  stakeholders  to  perform  their 
VAT  obligations  in  a  more  efficient  fashion.  Although  the  relevance  of  VoW  is  not  questioned,  the 
instrument could be improved to better suit the users' needs.  

Finally, although not perfect, Member States consider Eurofisc as a relevant instrument. Nevertheless, 
after 7 years of functioning, most Member States think that Eurofisc would like to see it modernised. 
To this end, the introduction of a dedicated legal basis to implement a joint processing of VAT data 
receives a broad consensus.  

The  Member  States  generally  recognise  that  the  existing  administrative  cooperation  instruments  are 
relevant.  However,  the  interest  they  show  in  further  developing  or  enhancing  some  of  them 
demonstrate that they could better meet their needs.  

6.5. To what extent are the provisions of Regulation (EU) 904/2010 in line with other policies and 
priorities of the EU? Could Member States have achieved similar results without acting at EU 
level? (coherence and EU added value) 

6.5.1. Administrative cooperation in VAT is a cornerstone for the proper functioning of the single 
market and the fight against VAT fraud 

6.5.1.1.  Qualitative  assessment  of  the  level  of  convergence  of  the  objectives  of  Regulation  (EU) 
904/2010 with other Commission's strategies 

Traditionally,  initiatives  for  administrative  cooperation  have  always  been  based  on  the  "mutual" 
interest  of  the  contracting  States.  Nevertheless,  administrative  cooperation  in  the  field  of  VAT 
between EU Member States also serves another objective: it contributes to the proper functioning of 
the EU VAT area that is a key component of the single market. Common EU VAT rules are necessary 
to  allow  the free  circulation  of  goods and  services  and  prevent any  distortions  that  would  emerge  if 
such  rules  were  not  harmonised  across  Member  States.  Common  EU  VAT  rules  ensure  fiscal 
neutrality  for  economic  decisions  of  EU  businesses  and  simplify  cross-border  transactions  between 
Member States and ensure the VAT revenues are protected. 

In  this  sense,  administrative  cooperation  in  the  field  of  VAT  is  not  only  an  instrument  whereby 
Member States can provide mutual assistance to each other, but an EU policy whereby, through a set 
of  rules  governing  how  the  Member  States  exchange  information  and  cooperate  on  VAT  matters,  it 
actively pursues the wider EU objectives of a proper functioning EU VAT area and of tax fairness and 
fight against tax evasion and avoidance. As such, administrative cooperation organised at EU-level is 
fully coherent with wider EU strategies, policies and priorities.  

taxation  matters,  direct  and 

Firstly,  administrative  cooperation  in  the  field  of  VAT  is  part  of  a  more  global  administrative 
cooperation  framework  between  Member  States  for 
indirect. 
Administrative  cooperation  in  the  field  of  direct  taxation  is  also  organised  at  EU  level  under  the 
umbrella of the Council Directive 2011/16/EU of 15 February 2011. The same goes in the area of tax 
recovery  assistance  on  the  basis  of  Council  Directive  2014/24/EU  of  16  March  2010.  In  all  areas, 
administrative cooperation and mutual  assistance is  organised at EU level so that  all Member States 
provide the same level of assistance to each other and share a common objective of safeguarding their 
tax revenues and protecting market rules. In an increasingly open economy, with new patterns of trade 
and new trading opportunities, the Member States are drawn into a global 'playground' where interest 
fuse and become shared. So do, as an undesired consequence, the problems, which can effectively be 

143 

 
 
 
addressed uniquely by Member States working together. No Member State single-handedly would be 
able to solve problems related to VAT in a cross-border context.  

Secondly, on 7 April 2016, the Commission presented a Communication to the European Parliament, 
the Council  and the European Economic and Social Committee on an action plan  on VAT136 setting 
out  ways  to  modernise  the  VAT  system  so  as  to  make  it  simpler,  more  fraud-proof  and  business-
friendly. As described under Chapter 2 of this report, improving administrative cooperation in the field 
of VAT and Eurofisc has been considered as an essential instrument to achieve these objectives and 
further action in that area was explicitly called for. 

Thirdly,  20  Member  States  have  recently  reached  a  political  agreement  on  the  establishment  of  the 
new European Public Prosecutor's office under enhanced cooperation. The European Parliament will 
have to give its consent. Once in place, the independent EU public prosecutor will be equipped with 
the power to investigate and prosecute criminal cases affecting the EU budget, such as corruption or 
fraud with EU funds, or cross-border VAT fraud. It will be a strong, independent and efficient body 
specialised  in  fighting  financial  crime  across  the  EU.  The  same  goes  for  the  adoption  of  the 
Commission  proposal  for  a  Directive  on  the  fight  against  fraud  to  the  Union's  financial  interests  by 
means of criminal law to cover serious EU-wide VAT fraud. 

It results from the above that administrative cooperation is a fundamental aspect of the common EU 
VAT system and the single market in general. Furthermore, there are at the moment several initiatives 
whose  purpose  is  to  put  the  emphasis  on  fighting  the  most  serious  VAT  threats.  Many  of  them  are 
cross-border  offences,  exploring  the  loopholes  of  the  current  VAT  system.  Improving  VAT 
administrative cooperation between Member States and in particular Eurofisc is completely coherent 
with these initiatives. 

6.5.1.2.  Qualitative  assessment  of  the  inter-dependence  of  provisions  governing  administrative 
cooperation  in  the  VAT  with  other  Commission's  strategic  initiatives  and  programmes  (e.g.  the 
developments in the VAT area towards the definitive VAT system, Fiscalis activities) 

The  first  Administrative  Cooperation  Regulation  in  the  field  of  VAT  was  introduced  along  with  the 
abolition of the physical borders across the EU for the trade of goods. Further, implementing all VAT 
rules, including administration cooperation provisions, was a prerequisite for each country outside the 
EU willing to join it.  

Each  time  the  VAT  system  was  improved  or  expanded,  this  was  accompanied  by  additional 
administrative cooperation instruments to support and permit these developments. Can be mentioned 
here the modernisation of cross-border VAT rules to business to business transactions on services, the 
creation of the mini one stop shop, the adoption - under way - of new rules in relation to e-commerce, 
and at a later stage the definitive VAT regime. It is not conceivable to implement new VAT rules at 
EU level if improved cooperation rules between Member States creating a deterrent effect to this set of 
common rules are not adopted at the same time.  

136  See  Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide 
(COM(2016) 148 final). 

144 

 
 
 
 
 
                                                            
6.5.2. Administrative cooperation in VAT contributes to the creation of a single EU VAT area 

6.5.2.1.  Qualitative  assessment  of  the  Regulation  (EU)  904/2010's  contribution  to  the  creation  of  a 
common system for cooperation between the Member States 

Providing mutual assistance and exchange information in the field of VAT is in the interest of all EU 
Member  States  (and  of  their  citizens  and  companies),  despite  the  unequal  use  of  the  assistance 
framework.  As  described  above,  the  problems  related  to  VAT  evasion  and  avoidance  are  becoming 
increasingly cross-border, demanding a coordinated approach of the countries involved. Many a time 
it will not be possible to say at the first glance which country's interests are at stake because the fraud 
schemes are getting ever more sophisticated, cutting across territories and markets. In this sense, it is 
the  interest  of  all  Member  States  to  be  equally  involved  in  active  exchange  of  information  and 
cooperation, with the view not only to react on fraud detected, but also, and more importantly, prevent 
future  attempts.  That  common  interest  should  be  an  incentive  for  all  Member  States  to  provide 
sufficient  resources  for  administrative  cooperation  in  the  EU  and  adhere  fully  to  the  principle  of 
reciprocity. 

The  extent  to  which  the  EU  VAT  administrative  cooperation  framework  is  used  differs  from  one 
Member  State  to  another.  Moreover,  due  to  the  market  patterns,  geographical  location,  socio-
demographic  factors  (including  cultural)  or  size  of  economies,  some  Member  States  are  more  often 
requested to provide assistance than others. 

Even  more,  it  results  from  figures  presented  under  chapter  6.1.  of  this  report  that  the  most  recent 
Member States are those that have viewed the most important increase in the use of Regulation (EU) 
904/2010  over  the  period  2011-2016.  This  demonstrates  that  this  Regulation  is  not  only  a  means  to 
sustain the single market and the free circulation of goods and services but a necessary instrument to 
properly  enforce  VAT  legislation  and  liabilities  in  each  Member  State.  This  cooperation  is  best 
organised  at  EU  level  since  it  would  otherwise  be  difficult  for  Member  States  to  reach  similar 
convergences  of  objectives  and  efforts  on  the  basis  of  bilateral  agreements  or  non-EU  multilateral 
instruments.   

Furthermore,  all  authorities  can  use  the  common  electronic  request  forms  and  uniform  instruments 
(uniform notification form and uniform instrument  permitting  enforcement  in the requested Member 
State). The use of common rules and common forms  – with an automated translation – considerably 
facilitates the work of the authorities dealing with administrative cooperation. This constitutes a major 
advantage for the cooperation between the Member States' tax authorities. Taking this simple example 
of any common EU e-form, one could imagine a situation where every country, or group of countries, 
would come up with their own form, or other means, to ask each other for assistance. Each of these 
countries would then need to make such requests somehow communicating to their national systems in 
order to pull the asked for data. The result would be an incredibly dense and burdensome web of non-
inter-operable,  linguistically  and  methodologically  challenging,  non-uniform  means  through  which 
Member States would be attempting to assist each other. The overall effect is not difficult to picture 
and the effectiveness of cooperation based on such approach would be completely disproportionate to 
the  effort  put  it  (assuming  Member  States  do  actually  bother),  showing  the  great  added  value  of 
agreeing on the rules governing such cooperation and providing for common instruments to do so as 
effectively  and  efficiently  as  the  circumstances  permit.  What  is  important  to  note  is  that  any  such 
forms  are  actually  discussed  and  agreed  on  amongst  the  Member  States,  which  makes  them  fitting 
their needs, administrative and technological capacities as best as possible. This is explained in further 
detail under section 6.5.3.2.  

145 

 
 
 
The  Commission  services  are  currently  building  a  central  application  aimed  at  encompassing  all 
electronic forms for all taxation domains. This central application will allow further streamlining and 
rationalisation  of  electronic  forms,  ensuring  quick  modification  at  Commission  level,  tackling  new 
challenges in the field of exchange of information, while reducing drastically the deployment costs at 
EU and Member States levels. This development will allow to simplify the lay-out of the e-forms and 
to make them still more user-friendly. All Member States have been consulted on the development of 
the central platform design for the request forms.137 

6.5.3. Joint EU approach in administrative cooperation in VAT has advantages over other forms of 
national and international forms of tax cooperation 

6.5.3.1. Cases of cross-border fraud (e.g. MTIC), MLC indicator, VAT gap) 

The  EU  is  the  only  area  with  an  integrated  VAT  system  worldwide.  Moreover,  it  results  from 
discussions in fora outside the European Union, at OECD level for instance, that the EU is the only 
area  with  an  in  depth  and  long-standing  close  cooperation  in  the  field  of  VAT.  When  other 
organisations only start to think about exchanging information on VAT or developing other forms of 
close  cooperation,  the  EU  can  already  rely  and  gain  from  a  40  year  experience  with  administrative 
cooperation between its Member States. This has a great value and has no comparison worldwide. 

Hence,  if  with  respect  to  administrative  cooperation  in  the  field  of  direct  taxation  several  mutual 
assistance instruments can be used, this is far less the case in the field of VAT. Bilateral double tax 
conventions  are  almost  not  used  to  this  end  and  the  joint  OECD/CoE  multilateral  convention,  if 
promising, is only an emerging instruments that is not really used by countries with a long-standing 
and established tradition of administrative cooperation. It results from this that if VAT administrative 
cooperation  would  not  be  organised  at  EU  level,  Member  States  would  not  be  in  a  position  to 
individually  achieve  the  same  objectives  since  they  could  not  rely  on  any  other  agreements,  be  it 
bilateral or multilateral.  

When  it  comes  to  cross-border  transactions,  an  area  where  VAT  fraud  is  severe,  mutual  assistance 
between Member States is essential to achieve tangible results. National tax authorities must enforce 
their national VAT legislations. In relation to cross-border transactions they cannot do it without the 
support of their EU counterparts because many of the problems they aim to tackle are not restricted to 
their  own  territory.  VIES  was  first  implemented  to  enable  national  administrations  to  determine 
whether goods have been introduced VAT free onto national markets. Further, it has been considered 
that more powerful and targeted administrative cooperation instruments should be introduced between 
Member States to put an end to VAT fraud and close, at least to some extent, the VAT gap. This is 
precisely  why  Member  States  have  decided  to  create  Eurofisc  and  more  recently  to  reinforce  it  by 
setting up two new working fields and implementing the transaction network analysis. All this needs 
to  be  implemented  at  EU  level  in  a  coordinated  manner  as  otherwise  it  would  create  loopholes  that 
could be used by fraudsters to abuse the system.  

Over the course of the open public consultation, views of stakeholders other than Member States tax 
administration  on  administrative  cooperation  were  sought  (Figure  62).  It  results  from  this  that  49 
respondents  agree  or  strongly  agree  that  the  EU  is  the  best  placed  to  provide  Member  States  with 
common  rules  to  allow  them  to  work  more  closely  together  in  order  to  monitor  intra-EU  trade  for 
VAT purpose and ensure the correct application of VAT. Furthermore, 53 of them consider that the 

137 A Fiscalis workshop has been organised on 23-24 June 2016 and a specific Fiscalis project group (071) has 
been set up to prepare the work to make the electronic forms more user-friendly. 

146 

 
 
 
                                                            
EU should assist the Member States so that they use these tools to the largest extent possible and 89 % 
that should ensure that the Member States use these tools to the largest extent possible. 

 Figure 62: The EU is the best placed to provide Member States with common 
rules to allow them to work more closely together in order to monitor intra-
EU trade for VAT purpose and ensure the correct application of VAT  

61% 

27% 

9% 

2% 

2% 

I strongly agree

I agree

I do not agree nor
disagree

I strongly disagree

I don't know

6.5.3.2. Exchange of best practices 

The  EU  tradition  of  providing  different  programmes  of  administrative  cooperation  is  also  long-
standing. Beyond operational exchange of information instruments, the EU also provides a framework 
where  tax  authorities  can  exchange  best  practices  or  meet  to  discuss  specific  issues  and  try  to  find 
responses or develop common approaches.  

To  this  end,  and  amongst  other  things,  the  Fiscalis  programme138 was  developed.  Different  types  of 
cooperation can take place under Fiscalis such as project groups, workshops or seminars. In particular, 
a  number  of  recent  initiatives  answering  needs  expressed  by  Member  States  in  the  field  of  VAT 
administrative cooperation have been developed: 

  Eurofisc organised under 7 different Fiscalis project groups, a group for coordinators and 6 for 

each working field; 

  The multilateral control platform to improve the functioning and use of MLCs and to improve 

their overall quality; 

  control of e-commerce whose purpose was to find new sources of information and new ways 

of cooperation to detect frauds in this sector; 

 

 

joint audit to analyse in what circumstance this instrument could be useful and would it have 
an added value compared to other tools and analyse the legal and organisational obstacles to 
organise a joint audit; 

transaction  network  analysis  to  define  the  user  needs  and  requirements,  specify  the  exact 
operational processes, security plan and terms of reference, including roles and responsibilities 
of stakeholders; 

  domestic VAT listings : VAT listing allow tax authorities to collect data in addition to what is 
being reported in VAT returns in particular detailed data on incoming and outgoing invoices 
for a specific reporting period. The project group is looking at potential benefits and threats of 
such a system. 

138 Regulation  (EU)  No  1286/2013  of  11  December  2013  establishing  an  action  programme  to  improve  the 
operation of taxation systems in the European Union for the period 2014-2020 (Fiscalis 2020). 

147 

 
 
 
 
 
 
 
 
                                                            
In addition, seminars are also  organised, in particular Head  of Central liaison office seminars where 
cross-cutting issues in managing VAT administrative cooperation can be discussed amongst Member 
States.  

Summary of findings: To what extent are the provisions of Regulation (EU) 904/2010 in line with 
other policies and priorities of the EU? Could Member States have achieved similar results without 
acting at EU level? (coherence and EU added-value) 

Administrative cooperation is essential for the good functioning of the EU VAT area which itself is a 
cornerstone  of  the  single  market.  Common  VAT  rules  have  been  accepted  by  the  Member  States 
because they had first been supported by reciprocal, binding and evolving administrative cooperation 
rules. As such, administrative cooperation is an essential component of the free circulation of goods 
and services which is one of the four freedoms enshrined in the EU.  

Administrative cooperation is also coherent with other EU policies such as the fight against the most 
serious threats to the financial interests of the EU and of the Member States and ensuring tax fairness 
for  the  European  businesses.  Improvements  in  that  area  have  been  explicitly  called  for  in  the  VAT 
Action  Plan  as  one  of  the  key  action  to  be  taken  at  the  EU  level.  Well-functioning  administrative 
cooperation  goes  in  the  same  direction  as  the  initiatives  to  create  a  European  Public  Prosecutor's 
Office or to implement rules to protect the EU financial interests. 

It  results  from  this  evaluation  report  that  the  EU  is the  most  VAT  integrated  area  worldwide  with  a 
long-standing  and  unique  experience  in  providing  administrative  cooperation.  All  details  provided 
above demonstrate that Regulation (EU) 904/2010 is widely used by all Member States. Furthermore 
the EU has been in a position to create a unique, binding and appropriate administrative cooperation 
landscape to fit the needs of tax authorities to properly enforce the VAT legislation. In addition, other 
forms  of  cooperation  taking  place  under  the  Fiscalis  programme  also  demonstrate  the  need,  for 
Member States, to use the EU level as the platform of reference to discuss and develop administrative 
cooperation in the field of VAT.  

7. CONCLUSIONS 

1. Member States’ opinion is overall positive on the legal and practical framework implemented with 
Regulation (EU) 904/2010. The vast majority of them consider that it has contributed to improve the 
administrative  cooperation  between  Member  States.  Amongst  the  instrument  provided  by  the 
Regulation,  exchange  of  information  on  request,  automated  exchanges  (VIES),  Eurofisc  and 
multilateral  controls  are  viewed  as  the  most  effective  instruments  in  the  field  of  administrative 
cooperation.  

2.  Drawbacks  in  the  manner  in  which  administrative  cooperation  takes  place  are  however  reported. 
Late replies to requests for information are the most significant one. Although in decrease, the number 
of instances where it happens remains significant - 33% - and Member States should work to remedy 
it. The accuracy of data exchange through VIES is a domain where concerns are expressed by both the 
Member  States  and  the  businesses.  Businesses  need  accurate  and  up-to-date  information  to  properly 
apply the VAT rules to their intra-EU transactions.  

3.  As  regards  the  efficiency  of  the  administrative  cooperation  instruments,  most  Member  States 
consider that costs incurred by participating in the administrative cooperation in the field of VAT are 
to  a  high  extent  proportionate  to  the  benefits  achieved.  Automated  access  to  information  through 
VIES,  Eurofisc,  simultaneous  controls,  request  for  information  and  administrative  enquiries  score 

148 

 
 
 
particularly high. These instruments are considered as the most efficient instruments by the Member 
States. 

4. However, the Member States consider some instruments as rather burdensome. This is the case for 
exchanges  of  information  on  request  and  multilateral  controls.  This  is  the  result  respectively  of  the 
large number of instances where this tool is used and high resources required from tax authorities to 
carry out such controls.  

5.  While  Member  States  report  a  high  level  of  satisfaction  with  regard  to  the  effectiveness  and 
efficiency of the Regulation (EU) 904/2010 instruments, it has not been possible to ascertain the extent 
to  which  they  have  contributed  to  prevent  budget  losses.  Nevertheless,  Member  States  consider  that 
the costs incurred by administrative cooperation are proportionate to the benefits. They also consider 
that inaccuracies in the information exchanged or a lack of commitment of their counterparts can have 
a  detrimental  effect  on  the  ability  to  assess  VAT.  Nevertheless,  it  seems  that  thanks  to  Regulation 
(EU)  904/2010,  they  are  able  to  collect  additional  VAT  with  positive  effects  on  the  prevention  of 
budget losses.  

6.  Eurofisc  has  been  introduced  in  Regulation  (EU)  904/2010  as  an  early  warning  mechanism  to 
facilitate  multilateral  cooperation  to  fight  VAT  fraud.  A  vast  majority  of  Member  States  agrees  that 
this new instrument has had a positive impact on the collection of VAT on intra-EU transactions and 
Member  States  report  a  high  level  of  satisfaction.  However,  there  are  still  drawbacks  regarding  its 
functioning leading to the conclusion that Eurofisc has certainly not reached its potential yet. 

7. The Member States consider that all administrative cooperation instruments in the field of VAT are 
relevant. Some instruments score very high such as VIES and requests for information. If Eurofisc and 
simultaneous  controls  rank  a  little  bit  behind,  overall,  almost  all  Member  States  consider  that  these 
two  instruments are relevant to a high extent.  Feedbacks and requests for administrative notification 
are the less best-rated instruments. 

8. Developing new instruments or new ways of cooperating seems to be needed. In particular, Eurofisc 
appears to be at a turning point as Member Sates particularly support the possibility to implement a 
joint process of VAT data. There is also room to further develop automated exchange of information 
or access to new sets of data. In this context, Member States are particularly interested by an access to 
customs  data  or  cars  registration  information.  The  best  way  to  access  it  still  needs  to  be  discussed, 
although Member States are more in favour of automated than automatic exchanges.  

9.  Exchange  of  information  with  EU  law  enforcement  authorities  remains  a  sensitive  area. 
Participation  in  Eurofisc  working  fields  meetings  or  exchange  of  intelligence  between  Eurofisc, 
Europol and OLAF seem to be better avenues to improve cooperation between authorities involved in 
fighting VAT fraud at EU level than granting these two authorities an access to VIES. 

10. Improving administrative cooperation in the field of VAT is fully coherent with other EU policies 
currently under development. This is particularly the case with regard to mutual assistance in the field 
of direct taxation where a number of improvements took place over the recent years. It is also coherent 
with other EU initiatives underway such as the draft Directive to protect the EU financial interests or 
the  European  Public  Prosecutor's  office.  All  this  demonstrates  that  there  are  several  common 
initiatives taken at EU level with similar objectives: improving cooperation between law enforcement 
authorities and finding new way of fighting the most severe threats to tax revenues. 

11. Administrative cooperation is essential for the proper functioning of the EU VAT area which itself 
is a cornerstone of the single market. Common VAT rules have been accepted by the Member States 

149 

 
 
 
because they were supported by reciprocal, binding and evolving administrative cooperation rules. As 
such,  administrative  cooperation  is  an  essential  component  of  the  free  circulation  of  goods  and 
services which is one of the four freedoms enshrined in the EU. Other forms of cooperation between 
Member States also demonstrate the need to use the EU level as the platform of reference to discuss 
and develop administrative cooperation in the field of VAT.  

150 

 
 
 
 
 
 
 
9.4. Annex 4: Consultation of Members States 

 CONSULTATION OF THE MEMBER STATES ON THE FUNCTIONING OF THE 
ADMINISTRATIVE COOPERATION AND FIGHT AGAINST FRAUD IN THE FIELD OF 
VAT 

SUMMARY OF THE REPLIES 

Introduction 

In  the  context  of  evaluating  current  arrangements  for  administrative  cooperation  and  fight  against 
fraud  in  the  field  of  VAT  the  Commission  sent  out  a  targeted  consultation  to  Member  States'  tax 
administration. The consultation sought to gather Member States' views on: 

  effectiveness  of  the  current  arrangements  for  administrative  cooperation  to  assess  to  what 

extent the objectives of the intervention have been achieved; 

  efficiency of the current arrangements for administrative cooperation to assess to what extent 

the costs borne are proportionate to the benefits; 

 

relevance of the current arrangements for administrative cooperation to  assess to what extent 
the objectives of the intervention are still corresponding to the needs of the Member States; 

  coherence of the current arrangements for administrative cooperation to assess how its various 

internal components operate together to achieve the objectives of the intervention; 

 

the EU added value to assess to what extent having common rules and tools at EU level makes 
the difference compared to what Member States could achieve at a national level. 

The  Commission  also  sought  Member  States  opinion  on  the  possibility  to  introduce  additional 
instruments and enhance existing ones for cross-border administrative cooperation: the possibility  to 
expand  data  sources  available  to  tax  administrations,  possible  ways  to  ensure  that  law  enforcement 
authorities have access to relevant VAT data in order for them to perform their tasks and, in particular, 
to carry out criminal investigations when necessary. 

This  report  summarises  the  replies  provided  by  the  Member  States  to  that  consultation.  Chapter  1 
makes general conclusion on Member States opinions on currently available tools for administrative 
cooperation and fight against fraud. Chapter 2 goes more in depth and aims at evaluating efficiency, 
usefulness and relevance of current intervention. Chapter 3 looks at burden and costs associated with 
participation  in  administrative  cooperation  and  fight  against  fraud  in  the  field  of  VAT.  Chapter  4 
summarises  Member  States  opinions  on  possible  changes  to  current  framework  for  administrative 
cooperation and fight against fraud in the field of VAT.  

The  consultation  was  made  available  to  Member  States  on  2nd  of  March  2017.  27  Member  States 
provided  their  replies.  Germany  is  yet  to  provide  the  replies  to  the  consultation  and  therefore 
Germanys' views are not taken into account in this report.  

151 

 
 
 
 
 
1. General conclusions of the targeted consultation 

Current  arrangements  for  administrative  cooperation  and  fight  against  fraud  meet  Member  States' 
needs either to a very high or to a high extent. Member States mostly either  strongly agree or agree 
that new provisions introduced into the framework of administrative cooperation or fight against fraud 
in  the  field  of  VAT  under  Regulation  (EU)  904/2010  have  improved  their  ability  to  monitor  cross-
border  transactions  and  to  collect  VAT,  improved  quality,  reliability  and  timeliness  of  information 
exchange as well as contributed to increased legal certainty for traders. 

Majority of Member States are of the opinion that cost of participating in administrative cooperation is 
proportionate to the benefits achieved although opinions vary across the range of tools offered under 
current legal framework. 

Automated access to information is highly valued by the Member States. Ability to check information 
over VIES system is considered to be very relevant for control of intra-EU transactions and efficient in 
collection  of  VAT.  This  tool  also  offers  the  biggest  benefits  in  relation  to  costs.  Extended  rights  to 
consult  VIES  for  Eurofisc  officials  are  also  highly  valued  by  the  Member  States.  However  many 
Member  States  consider  that  limiting  those  rights  only  to  Eurofisc  officials  along  with  additional 
conditions is an ineffective out of date arrangement that hinders efficient fight against fraud.  

Eurofisc is considered to be an effective mechanism for fight against fraud by the majority of Member 
States. However not all Eurofisc Working Fields are equally effective – while Working Field 1 and 4 
rank high then in relation to Working Field 2 and 3 further actions are needed to improve targeting of 
signals. Issues with data quality, timeliness of feedback and targeting of early warning signals remain. 
Majority of Member States have high expectation towards TNA and are looking forward to having this 
tool at their disposal. 

Collaboration with law enforcement remains limited with only few Member States exchanging VAT 
relevant data. Very few Member States would like to see granting law enforcement agencies access to 
VAT relevant data.  

Cooperation with customs is of growing importance. Some Member States mention that VAT frauds 
often  involve  transactions  across  the  external  border  making  information  exchange  with  customs 
important. Majority of Member States seem to exchange VAT relevant information with customs and 
would like to have access to data on importations using Customs Procedure 42. 

Member States would like to have access to car registration data to better fight against VAT fraud. 

Member States rather agree than disagree that joint audits could potentially be a useful tool in auditing 
companies involved in intra-EU trade. However a number of issues were raised in relation to rights of 
the auditors participating in such audits and extent to which the decision of the audit is binding. 

152 

 
 
 
 
 
2. Efficiency, usefulness and relevance of current intervention 

are 

fairly 

Member  States 
satisfied  with 
administrative cooperation and fight against fraud 
in  the  field  of  VAT  instruments  provided  by 
Regulation  (EU)  904/2010.  26  Member  States 
have replied that the Regulation meets their needs 
to a very high or to a high extent (Figure 2).  

To what extent has the Regulation met your needs for 
intra-EU administrative cooperation and fight against 
fraud in the field of VAT ?  

22 

4 

1 

Member  States’  opinions  are  overall  positive 
regarding  changes  introduced  to  administrative 
cooperation  framework  in  2010  (Figure  3).  One 
Member  States  (CZ)  thinks  that  the  quality  of 
information  exchange  has  improved  mainly  due 
Figure 1: Extent to which current Regulation Member States' needs 
to introduction Eurofisc. Another Member State (IT)  notes that in relation to Eurofisc the quality of 
information  remains  an  issue  though  signals  received  led  to  numerous  follow  up  actions.  Three 
Member  States  (SE,  FI  and  LU)  insist  on  the  growing  need  for  the  exchange  of  information  to  be 
faster.  

To a low extent The current
arrangements
are not at all
adequate

To a very high
extent

To a high
extent

To some
extent

0 

0 

About Regulation 904/2010 : to what extent do you agree that …  

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree

The provisions on Vies-on-the-Web (name and address)
contributed to increasing the legal certainty for taxpayers ?

6 

The setting up of Eurofisc contributed to improving the collection
of VAT for cross-border transactions ?

11 

 Regulation (EU) 904/2010 allowed for a better monitoring of
cross-border transactions ?

 Regulation (EU) 904/2010 improved quality, reliability and
timeliness of information exchanged ?

Regulation (EU) 904/2010 improved governance (collection,
storage and exchange) of the information ?

5 

5 

7 

Figure 2: Impact of changes introduced with Regulation (EU) 904/2010 

15 

17 

19 

18 

17 

4 

1 

2 

1 

3 

1 

3 

2.1.  Requests  for  administrative  enquiries,  exchange  of  information  without  prior  request, 
feedback, presence in  administrative  offices and during  administrative enquiries, simultaneous 
controls 

A majority of Member States find that tools provided by Regulation (EU) 904/2010 are either very 
effective  or  effective  when  it  comes  to  monitoring  the  correct  application  of  VAT  on  cross-border 
transactions  and  ensuring  their  ability  to  collect  VAT  (Figure  5).  Member  States  all  declare  that 
request  for  information  and  administrative  enquiries  (art  7),  spontaneous  exchange  of  information 
without prior request (art 15), automated access to data through VIES (art 21), simultaneous controls 
(art  29)  and  Eurofisc  (art  33)  are  overall  relevant  for  the  control  of  intra-EU  transactions  and  the 
collection of VAT (Figure 4).  

153 

 
 
 
 
How effective do you find the tools for administrative cooperation provided by Regulation (EU) 904/2010 
when it comes to monitoring the correct application of VAT on cross-border transactions and ensuring your 
ability to collect VAT? 

Very effective

Effective

Somewhat effective

Not very effective

Not at all effective

 Simultaneous controls/MLC's (art 29)

12 

Presence during administrative enquiries (art 28)

 Presence in administrative offices (art 28)

 Request for administrative notification (art 25)

 Feedback (art 16)

Spontaneous exchange of information without prior request (art 15)

Automatic exchange of information without prior request (art 14)

3 

3 

5 

6 

1 

1 

16 

15 

17 

13 

16 

15 

14 

4 

4 

3 

9 

9 

1 

2 

2 

1 

1 

2 

2 

6 

3 

1 

2 

Request for information and for administrative enquiries (art 7)

8 

19 

Figure 4: Effectiveness of the tools for administrative cooperation 

To what extent are the tools for administrative cooperation provided by Regulation (EU) 904/2010 
relevant for the control of intra-EU transactions and the collection of VAT? Please provide your 
opinion on each tool : 

To a very high extent

To a high extent

To some extent

To a low extent

The tool is no longer relevant

 Request for information and for administrative enquiries (art 7)
Automatic exchange of information without prior request (art 14)
Spontaneous exchange of information without prior request (art 15)
Feedback (16)
Request for administrative notification (art 25)
Presence in administrative offices (art 28)
Presence during administrative enquiries (art 28)
Simultaneous controls/MLCs (art 29)
 Eurofisc (art 33)
 Automated access to data through VIES (art 21)
 Third Member State access to data for Eurofisc officials (art21.2.e)

4 

7 

2 

3 

8 

7 

10 

11 

18 

13 

13 
11 

16 

13 

12 

22 

13 

7 

6 

2 

3 

1 

2 

4 

7 
9 

16 

16 

9 

1 

1 

4 

5 
3 

4 
4 

5 
5 

Figure 3: Relevancy of the tools provided by the Regulation (EU) 904/2010 

2.11. Request for information and administrative enquiries (art 7) and feedback (art 16) 

Member  States  consider  request  for  information  and  administrative  enquiries  to  be  effective  and 
relevant for control of intra-EU transactions and collection of VAT. However Member States consider 
replying  to  such  requests  to  be  relatively  burdensome  (Figure  15)  but  the  burden  seems  to  be 
proportionate  to  the  benefits  achieved  (Figure  16).  Member  States  note  that  inaccurate/incomplete 
requests,  multiple  requests  in  relation  to  one  trader,  problems  with  interpretation  of  open-field 
questions  create  additional  burden.  One 
Member  State  (IE)  mentioned  inability  to 
send 
requests  on  multiple 
connected/related  entities  as  a  drawback 
of current implementation. Chapter 0 lists 
possible  improvements  to  the  forms  used 
by Member States to send requests. 

To what extent do late replies to your requests for 
administrative cooperation negatively affect your ability 
to collect VAT ?  

integrated 

10 

6 

9 

2 

25  Member  States  noted  that  late  replies 
to  request  for  administrative  cooperation 
at  least  to  some  extent  have  negative 

0 

To a very high
extent

To a high extent To some extent To a low extent Late replies do
not have any
negative effect
on our ability to
collect VAT

Figure 5: Impact of late replies to request for administrative cooperation 

154 

 
 
 
 
 
impact on their ability to collect VAT (Figure 6). A number of Member States mentioned that due to 
domestic  deadlines  for  conducting  audits,  replies  often  arrive  past  such  a  deadline  making  the 
information  useless.  However  it  was  also  noted  that  quick  but  of  poor  quality  replies  are  useless  as 
well.  Member  States  also  mentioned  that  the  need  to  send  reminders  when  the  reply  is  late  creates 
additional  burden  for  liaison  officials.  One  Member  State  (CZ)  noted  that  sending  and  treatment  of 
reminders  varies  from  amongst  Member  States  as  this  procedure  is  not  covered  by  the  Regulation 
(EU)  904/2010.  Another  Member  Stated  (IE)  noted  the  complexity  of  the  forms  used  for  sending 
requests and lack of awareness of the existence of the tool admitting though that it is up to Member 
States themselves to educate their staff and popularise the tools. 

Member  States  note  that  often  there  are  difficulties  with  obtaining  the  feedback  which  can  be 
explained that under current rules providing feedback in not obligatory. Chapter 0 describes Member 
State views on what can be changed in relation to feedback mechanism. 

2.1.2. Exchange of information without prior request 

Member  States  consider  automatic  and  spontaneous  exchanges  of  information  to  be  effective  and 
relevant for collection of VAT from intra-EU transactions. 

16 

 Does the fact that some Member States abstain from exchanging 
information without prior request affects your ability to collect VAT?  

However  under  current  rules  Member  States  can  abstain  from  such  exchange  of  information  where 
collection of necessary information would require imposition of new obligations on persons liable for 
VAT or would impose a disproportionate administrative burden on the Member State. More than half 
of the Member States are affected by Member States abstaining from exchanging information without 
prior  request  at  least  to  some  extent  (Figure  7)  which  negatively  affects  Member  States'  ability  to 
collect  VAT.  Member  States  note  that  the  impact  on  VAT  collection  of  Member  States  abstaining 
from  exchanging  information  is  hard 
to  evaluate  as  Member  States  do  not 
know  precisely  what  is  not  being 
exchanged.  A  number  of  Member 
States (BG, LV, HR, LT, PT and UK) 
insist  that  all  Member  States  should 
participate  in  automatic  exchanges  of 
information  and  provide  complete, 
targeted 
accurate 
information.  Some  Member  States 
non-participation 
note 
to 
information  hinders 
exchange  of 
administrative  cooperation.  However 
two  Member  States  (AT  and  LU) 
believe that automatic exchange of information is hardly useful and the cost/benefit ratio is low. One 
Member State (FI) noted that when Member States send information spontaneously once year in bulk, 
it can decrease the usefulness of such information for the receiving Member State. Another Member 
State (UK) stressed the importance of participation in such information exchange claiming  that non-
participation  to  automated-exchange  of  vehicle  information  has  a  greater  negative  impact  than  non-
participation to non-established taxable person (NETP) information exchange.  

Figure  6:  Impact  of  Member  States  abstaining  from  exchanging  information 
without prior request.  

Member States
abstaining from
exchanging
information without
prior request does
not affect your
ability to collect VAT

To a very high
extent

properly 

To a high extent

To some extent

To a low extent

that 

and 

1 

2 

7 

1 

2.1.3. Request for administrative notification 

Request for administrative notification seems to be the least relevant and effective tools for ensuring 
Member States' ability to collect VAT. One Member States (SI) notes that it is not used much and has 

155 

 
 
 
a  limited  impact  on  VAT  assessment  due  to  differences  in  procedures  within  the  EU.  The  only 
problem mentioned in relation to use of this tool is linguistic as requests often must be translated. 

2.1.4.  Presence  in  administrative  offices,  presence  during  administrative  inquiries  and  simultaneous 
controls 

Member  States  note  that  the  presence  in  administrative  offices  and  presence  during  administrative 
inquiries  (PAOE)  are  rarely  used  due  to  language  barriers  and  lack  of  awareness  as  regards  to  the 
usefulness of the tool. Absence of common rules in relation to usage of those tools hampers their use. 
As a consequence, each Member State approaches these tools differently which creates confusion for 
auditors. To deal with these issues, one Member State suggests creating a separate CCN mailbox for 
PAOE’s. Some Member States are of the opinion that these tools should be promoted more actively in 
particular at national levels. At EU level workshops could be held to promote these tools, similarly to 
those organised for simultaneous controls.  

One  Member  State  (UK)  noted  that  currently  presence  in  administrative  offices  is  used  by  Member 
States  to  examine  records  relating  to  one  of  their  businesses  that  are  held  in  another  Member  State. 
This approach seems to be beneficial as it speeds up the audit and therefore reduces the administrative 
burden.  However  in  such  cases  the  requested  Member  State  is  not  conducting  an  audit  itself  and 
therefore  the  official  from  the  requesting  Member  State  is  not  present  during  the  administrative 
enquiry. It was suggested that this practice can be harmonized by allowing a Member State to conduct 
and  audit  in  another  Member  State  (with  the  consent  of  the  business  and  the  other  Member  State 
administration) if the records of the first Member State business are held in the second Member State. 

In  relation  to  simultaneous  controls  Member  States  are  of  the  opinion  that  the  tool  is  relevant  for 
control  intra-EU  transactions  and  effective  in  ensuring  their  ability  to  collect  VAT.  However  two 
Member States (LV and NL) note that procedure for simultaneous control is ineffective and needs to 
be  provided  with  more  resources.  Mismatches  in  national  legislation  create  further  obstacles  for  the 
effectiveness of this tool. It was also noted that such controls often take too long which decreases their 
efficiency. One Member State (LV) mentioned that the option of combining simultaneous controls and 
PAOE should be foreseen.  

2.2. VIES 

Member  States  generally  find  the  data  shared  through  VIES  system  rather  useful  (Figure  8) 
mentioning that such data is necessary to guarantee the correct application of VAT exemption in intra-
EU supplies, to identify potential VAT risks, to minimize the number of information  requests and to 
make  those  requests  more  targeted.  Some  Member  States  mention  that  usefulness  of  VIES  data  is 
undermined  by  retroactive  changes  and  complain  about  not  being  able  to  view  the  history  of  those 
changes.  All  Member  States  either  strongly  agree  or  agree  that  inaccurate  VIES  data  has  a  negative 
impact  on  their  ability  to  collect  VAT.  Member  States  mention  that  inaccurate  data  creates 
administrative  burden  as  tax  administration  have  to  conduct  additional  checks  and  send  request  for 
information that could have otherwise been avoided. 

156 

 
 
 
How useful do you find the data (art. 17 para a, b & c) 
exchanged/made available through the VIES system ?:  

Very useful

Useful

Somewhat useful

Not very useful

Not at all useful

To what extent do you agree that 
inaccurate VIES data have a negative 
impact on the work of your Tax 
administration and your ability to collect 
VAT?  

Data on the identity, activity, legal form
and address of the VAT registered person

16 

10 

14 

13 

 Data on Intra-Community supplies

 Data on the dates when the VAT number
was issued or became invalid

23 

21 

4 

6 

VAT identification numbers

24 

3 

0 

0 

0 

Strongly
agree

Agree

Neither
agree nor
disagree

Disagree

Strongly
disagree

Figure 7: Usefulness of data exchange over VIES and impact of inaccurate data in VIES 

Member States are split on the question if data available through VIES system meets all their needs 
(Figure  11).  Member  States  made  a  number  of  suggestions  on  what  additional  data  could  be  made 
available through VIES that are further explained in Chapter 0. 

 How effective is automated access to the 
information exchanged through VIES as provided 
for in Article 21 for control of intra-EU 
transactions and efficient collection of VAT?  

13 

14 

Do you find that the information made 
available through VIES system meets 
all your needs ?  

No; 13 

Yes; 14 

0 

0 

0 

Very
effective

Effective

Somewhat
effective

Not very
effective

Not at all
effective

Figure 9: Effectiveness of automated access to VIES 

Figure  10:  Data  available  through  VIES  and  the  needs  of 
Member States 

All  Member  States  find  automated  access  to  VIES  to 
be  effective  (Figure  10)  and  agree  to  a  very  high  or  high  extent  that  it  is  relevant  (Figure  4)  for 
controlling  intra-EU  transactions  and  collecting  VAT.  However  multiple  Member  States  mentioned 
that  current  restrictions  to  send  so-called  "third  Member  State  requests"  into  VIES  listed  in  article 
21.2(e)  of  the  Regulation  (EU)  904/2010  create  additional  complications  (see  Chapter  0  for  more 
details).  

More  than  half  of  the  Member  States  have 
received  complaints  from  traders  in  relation  to 
Vies-on-the-Web  data  (Figure  9)  which  are 
generally related to accuracy, completeness, and 
availability  of  information  provided  by  the 
system. Three Member States (SE, LT and CZ) 
mention  that  retroactive  deregistration  from 
VAT registers can cause problems for business 
too.  Few  Member  States  report  discrepancies 
between  data  reported  by  VoW  and  national 
databases.  For  example  in  one  Member  State 

Do (did) you receive complaints from traders in 
relation to the data communicated through Vies-
on-the-Web?  

Yes; 13 

No; 14 

Figure 8: Complaints received in relation to VoW data 

157 

 
 
 
(LV) VoW reported the VAT number to be valid despite it being deregistered from national database. 
One Member State (UK) brings to attention the fact that a business not having notified administration 
that it has engaged in intra-EU supplies does not appear in the system after registration. 

2.3. Eurofisc 

A majority of Member States agree that Eurofisc has a positive impact on the collection of VAT on 
intra-EU transactions (Figure 12) although not all Member States participate in all working fields. It 
seems  that  the  Working  Fields  where  all  Member  State  participate  (Working  Field  1  and  4)  are 
considered to be the most effective by Member States. 

To what extent do you agree that Eurofisc is an effective early warning tool that improves the 
collection of VAT on intra-EU transactions?  

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree We do not participate in this Working Field

 Working Field 1 – Missing Trader Intra-Community (MTIC) fraud 

 Eurofisc (in general)

10 

12 

17 

15 

Working Field 2 - Cars[1]

5 

18 

4 

Working Field 2 - Boats and planes

15 

3 

9 

Working Field 3 – Customs Procedure No 42 (CP42[2]) 

2 

18 

2 

 Working Field 4 - Observatory

11 

14 

2 

2 

Figure 11: Effectiveness of Eurofisc in relation to collection of VAT on intra-EU transactions 

Some Member States mention that the quality, swiftness and targeting of information should be further 
improved, in particular in relation to Working Field 2 and 3. Member States also note that the current 
medium  for  information  exchange  –  online  portal  CircaBC  –  is  not  user  friendly.  A  number  of 
Member  States  made  suggestions  on  how  Eurofisc  can  be  improved  that  are  further  described  in 
Chapter 0. 

of 

fraudulent 

To what extent do you agree that the extended right to 
consult VIES for Eurofisc officials (art 21.2.e) is useful 
and contributes to Eurofisc being an effective early 
warning tool that improves the collection of VAT on 
intra-EU transactions?  

Member States mainly agree that extended right to consult VIES for Eurofisc officials is useful and an 
tool  positively 
effective  early  warning 
impacting  collection  of  VAT  on  intra-EU 
transactions for it enhances fast and accurate 
cross-border 
detection 
transactions  chains  (Figure  13).  The  only 
Member  State  that  disagrees  that  extended 
rights  of  Eurofisc  officials  to  consult  VIES 
(FI)  explains  its'  assessment  with  limitations 
contained in article 21 paragraph 2 point "e" 
mentioning  that  such  limitations  are  out-of-
date,  old-fashioned  compromise  by 
the 
Member  States  and  do  not  support  fight 
against  fraud  (see  Chapter  0  for  more 
details). 

Neither agree
nor disagree

Strongly
disagree

Strongly agree

Disagree

Agree

14 

11 

1 

0 

1 

Figure 12: Eurofisc officials' rights to consult VIES 

158 

 
 
 
 
 
3. Burden and costs associated with participating in administrative cooperation 

A  majority  of  Member  States  agree 
that 
participating  in  administrative  cooperation  is 
not  very  burdensome – to some extent at least 
(Figure  15:  Burden  in  relation  to  participating  in  administrative 
cooperation.Figure  15).  Most  Member  States 
strongly  agree  or  agree  that  costs  associated 
with 
administrative 
cooperation  are  proportionate  to  the  benefits 
(Figure 14). 

participating 

in 

To what extent do you agree that the costs of 
participating in administrative cooperation as 
provided by Regulation (EU) 904/2010 are 
proportionate to the benefits achieved?  

16 

9 

2 

0 

0 

When it comes to assessing burden in relation to 
particular  tools  offered  by  Regulation  (EU) 
904/2010  it  seems  that  the  largest  burden  is 
associated  with  tools  that  require  manual  work  on  individual  cases:  dealing  with  request  for 
administrative  enquiries,  replying  to  request  for  feedback  and  participating  in  multilateral  controls 
(Figure 15).  

Figure  13:  Costs 
administrative cooperation. 

in  relation  to  benefits  of  participating 

in 

Neither agree
nor disagree

Disagree

Strongly
disagree

Strongly agree

Agree

How burdensome do you find participating in administrative cooperation when you are the requested 
Member State or providing information without prior request ?: 

Very burdensome

Burdensome

Somewhat burdensome

Not very burdensome

Not at all burdensome

Replying to the requests for information and for administrative enquiries
(art 7)

Exchanging (sending) information without prior request in automated
manner (art 14)

1 

1 

5 

5 

Exchanging (sending) information without prior request in spontaneous
manner (art 15)

3 

5 

15 

18 

18 

5 

1 

3 

1 

 Replying to the requests for feedback (16)

1 

4 

11 

Replying to the requests for administrative notification (art 25)

3 

3 

14 

Allowing officials from other Member States to be present in administrative
offices (art 28)

1 

2 

4 

Allowing officials from other Member States to be present during
administrative enquiries (art 28)

2 

3 

3 

16 

15 

11 

7 

4 

4 

 Taking part in simultaneous controls/MLCs (art 29)

5 

8 

13 

1 

Informing the requesting authority about being late (art 12)

2 

8 

12 

5 

Figure 14: Burden in relation to participating in administrative cooperation. 

Member  States  note  that  incomplete,  inaccurate  and  unclear  request  and  replies  as  well  as  multiple 
requests for a same taxpayer in a short period of time cause additional burden for tax administrations.  

Although  a  large  part  of  Member  States  does  not  consider  that  replying  to  feedbacks  is  excessively 
burdensome, some of them note that feedbacks are deprived of any additional value as regard to the 
resources  it  requires.  Some  Member  States  note  that  simultaneous  controls  as  well  as  presence  in 
office  and  during  enquiries  can  be  burdensome  for  they  require  more  organisation  and  operational 
work than using usual request for information tool.  

Some  Member  States  report  lack  of  internal  resources  and  not  very  effective  national  procedures 
which  impact  quality  and  timeliness  of  their  replies  and  limits  their  scope  of  action.  One  Member 

159 

 
 
 
States (SK) suggested  that European  Commission could support those Member States that face high 
number of request though the content of such support was not specified.  

Member States mentioned additional issues that increase the burden of participating in administrative 
cooperation:  

 

language barrier, need to translate enquiries and often poor quality of those translations, 

  difference  in  national  tax  procedure  within  the  EU  is  an  issue  that  should  be  addressed  to 

facilitate administrative cooperation, 

 

Insufficient capacity at domestic level to collect data for automatic exchange of information, 

  Multiple  requests  concerning  the  same  taxpayer  (e.g.  request  in  relation  to  different  taxable 

periods) create additional complications. 

Unfortunately  very  few  Member  States  provided  monetary  estimations  of  the  costs  and  benefits  in 
relation  to  participation  in  administrative  cooperation.  Member  States  note  that  costs  and  benefits 
resulting from the use of each specific tool can hardly be estimated as many of tax auditors and tax 
officials deal with both European and national  enquiries. Only Estonia  managed to provide a break-
down on (salaries) costs by a specific tool offered by Regulation (EU) 904/2010. Based on the costs 
estimations provided by Estonia it can be concluded that the biggest costs are associated with requests 
for information and administrative inquiries with second being multilateral controls and third Eurofisc.  

More Member States have managed to quantify benefits of administrative cooperation. However most 
estimations  cover  multiple  years  and  periods  vary  across  Member  States.  Substantial  differences  in 
amounts  also  hint  that  Member  States  seem  to  be  using  different  methodologies  in  estimating  those 
benefits.  Different  sizes  of  Member  States  also  make  data  submitted  incomparable.  Therefore  for 
evaluation  of  proportionality  of  costs  in  relation  to  benefits  of  administrative  cooperation  the  data 
reported in Figure 16 will be used. 

Costs per tool offered in the framework of administrative cooperation and fight against fraud in VAT 

To what extent the costs of participating in administrative cooperation provided by Regulation (EU) 904/2010 are 
proportionate to the benefits achieved as regards the following instruments?: 

To a very high extent

To a high extent

To some extent

To a low extent

The tool is not at all cost efficient

Request for information and for administrative enquiries (art 7)

9 

Automatic exchange of information without prior request (art 14)

2 

12 

Spontaneous exchange of information without prior request (art 15)

1 

18 

Feedback (16)

 Request for administrative notification (art 25)

2 

13 

Presence in administrative offices (art 28)

Presence during administrative enquiries (art 28)

5 

4 

11 

11 

 Simultaneous controls/MLCs (art 29)

Eurofisc (art 33)

10 

9 

15 

9 

7 

16 

17 

9 

10 

11 

7 

2 

3 

6 

3 

1 

1 

1 

1 

1 

1 

1 

Automated access to information through VIES (art 21)

18 

7 

2 

Figure 15: Proportionality of costs and benefits in relation to participation in administrative cooperation 

are considered to be proportionate to the benefits achieved to a very high or high extent by at least half 
of the Member States. Automated access to information through VIES scores particularly high with 18 
Member  States  noting  that  cost-benefit  ratio  is  proportionate  to  a  very  high  extent.  Eurofisc, 

160 

 
 
 
simultaneous controls and request for information and administrative enquiries also score high. Other 
tools do not rank as high with feedback being the least proportionate tool when looking at the cost-
benefit ratio. 

4. Possible modifications to the regulatory framework for administrative cooperation and fight 
against fraud in the field of VAT 

4.1. Possible modifications to currently existing tools for administrative cooperation 

4.1.1. Standard forms 

Most  Member  States  agree  that  standard  SCAC 
request form should be redesigned (Figure 17). Some 
of the remarks that were made in relation to possible 
updates: 

  allowing  request  based  on  more  than  one 
company,  in  order  to  deal  with  cases  of 
suspected  fraud  networks  in  the  requested 
Member State. (IE)  

Do you see the need to update the standard 
forms used for request for administrative 
cooperation?  

No; 11 

Yes; 16 

 

 

identifiers  other  than  VRN  such  as  business 
name,  contact  details,  website  should  be 
supported. (IE) 

Figure 16: Need to update standard forms 

forms should support exchange of import/export data, which are more and more often related 
to VAT MTIC fraud. (FI) 

  mandatory use of one language in filling the forms should be implemented. (NL) 

 

forms should be made  more user friendly e.g. by allowing  corrections without having to fill 
the whole form from the start (NL), simplifying the form by showing only the field that are 
relevant to a particular request (IE). 

A  number  of  Member  States  (AT,  CY,  EL,  LT,  PT,  SK  and  SI)  suggested  that  a  section  specific  to 
MOSS should be added. However one Member State (UK) thought that questions in relation to MOSS 
can  be  addressed  using  free  text  fields  and  mentioned  that  forms  should  be  kept  simple  without 
excessive  amount  of  pre-defined  questions.  Regarding  technical  issue,  one  Member  State  (EL) 
suggests to implement an automatic system to cover sensitive data for cases when forms are requested 
by the Prosecutor’s Office for instance. Member States have high expectations towards future central 
application (eFCA) and believe that it is going to be a more convenient tool for sending requests. 

4.1.2. Automatic and spontaneous exchange of information 

161 

 
 
 
could 

liaison  officials 

Do you find that the automatic and spontaneous exchange 
of information (art 14-15) could be replaced by some other 
mechanism (e.g. direct access granted to tax officials from 
other Member States  or Eurofisc liaison officials)?  

Member  States  are  split  on  the  question 
whether  automatic  and  spontaneous  exchange 
of information could be replaced by some other 
mechanism (Figure 18). Those Member States 
that  could  support  an  alternative  approach 
mention that granting direct access either to tax 
officials  from  other  Member  States  or  to 
reduce 
Eurofisc 
administrative  burden  for  tax  administrations 
and  improve  the  quality  of  the  information 
exchanged.  One  Member  State  (SE)  suggests 
that  this  new  tool  could  rely  on  an  online 
platform  –  such  as  TNA  for  instance  – 
providing  direct  information  to  designated 
officials  both  in  requested  and  requesting 
countries  and  while  other  Member  State  (IE)  would  like  to  have  an  automated  response  tracking, 
statistics  gathering  and  an  analysis  dashboard.  In  addition  to  information  currently  being  exchanged 
without prior request, Member States mentioned legal persons' registration data as well as information 
relevant to control of VAT refunds as potentially interesting categories for exchange of information. 

Figure  17:  Replacing  automated  and  spontaneous  exchange  of 
information with other mechanism 

Yes; 14 

No; 13 

13  Member  States  disagree  with  the  proposition,  mainly  because  they  believe  that  granting  direct 
access  to  national  database  could  increase  the  risk  of  missing  relevant  fraud-related  information  by 
impeding  possibility  of  cross-checking  received  information  with  data  held  by  national  tax 
administration  of  the  requesting  Member  State.  Technical  issues  were  also  mentioned  as  a  potential 
obstacle  as  national  databases  were  not  designed  to  allow  external  access.  In  addition  official 
accessing information  held  in another Member State directly would  have to  understand the data and 
language of that Member State.  

Do you find that the list of categories for automatic exchange of information should be modified? 

Agree

Disagree

No opinion

Car registration data should be added

Payment data held by financial institutions should be added

14 

Ecommerce data (IDs of vendors and clients, data on transactions, etc.)
held by Internet Platforms (intermediaries) should be added

Drop information on the allocation of VAT identification numbers to
taxable persons established in another Member State

Drop information on VAT refunds to taxable persons not established in
the Member State of refund but established in another Member State

Drop information on supplies exempted of new means of transport by
persons regarded as taxable persons who are identified for VAT purposes

Drop information on supplies exempted of new vessels and aircraft by
taxable persons identified for VAT purposes to persons not identified for…

Drop information on supplies exempted of new motorised land vehicles
by taxable persons identified for VAT purposes to persons not identified…

2 

2 

1 

1 

7 

4 

12 

20 

20 

16 

16 

17 

17 

2 

5 

9 

3 

4 

9 

8 

9 

9 

9 

 Other type of information should be added

8 

2 

17 

Figure 18: Modifying categories for automatic exchange of information 

162 

 
 
 
When it comes to categories for automatic exchange of information then most Member State do not 
support dropping already existing categories or have no opinion on the matter (Figure 19). However 
Many  Member  State  would  support  adding  categories  to  the  list  of  categories  of  information 
exchanged without prior request. In particular car registration data could be added (see Chapter 0) as 
well  as  data  relevant  for  control  of  e-commerce  held  by  Internet  Platforms.  Payment  data  held  by 
financial  institutions  seems  to  be  less  relevant.  When  it  comes  to  other  data  then  the  following  was 
mentioned:  data  on  whether  the  threshold  for  distance  sales  was  exceeded,  data  held  by  Payment 
Service Providers, data on intra-EU acquisitions for those Member States that collect such data, legal 
persons'  registration  data  and  business  activity  indicators  such  as  turnover  amounts,  employees  and 
VAT payment information. 

4.1.3. Feedback 

Yes; 9 

and 

No opinion; 1 

another  Member  State 

 Do you think that replying to a feedback (art 16) 
request should be made compulsory?  

Most  Member  States  do  not  support  mandatory 
replying  to  the  feedback  request  (Figure  20).  To 
improve  Member  States  ability  to  provide  feedback 
on  request  for  administrative  cooperation  some 
Member  States  would  like  to  see  a  more  automated-
system  with  feedbacks  sent  via  e-forms  central 
application and automatic reminders transmitted until 
the  feedback  is  submitted.  One  Member  State  (FI) 
asks  for  more  guidelines  and  training  for  EOI 
(UK) 
functions 
recommends  that  Member  States  should  use  Fiscalis 
working  visits  to  learn  on  how  other  Member  States 
implement  feedbacks  internally.  One  Member  State 
(IE)  insists  that  feedbacks  are  mandatory  and  replies 
are  due  within  normal  deadlines.  Another  Member  State  (NL)  asks  for  introduction  of  deadline  for 
providing  feedbacks.  Two  Member  States  (BE  and  UK)  believe  that  feedbacks  are  useful  but  can 
hardly be made mandatory (disproportionate workload for CLO, Member State often have nothing to 
pass on as they rarely collect relevant information from their own officers). One Member State (DK) 
specifies  that  feedback  is  manageable  as  far  as  it  relies  only  on  informing  whether  the  information 
provided was useful. It was suggested that feedbacks must be provided if a Member State requires it, 
even if the reply is “we do not have a result yet” (UK) and that a mandatory motivation field in the 
request for feedback could be added in order to explain why this information is needed (NL). 

Figure 19: Making replying to feedback mandatory 

No; 17 

4.1.4. VIES 

When it comes to adding categories of information to be exchanged over VIES then it seems that most 
Member States would like to see data necessary for control of Customs Procedure 42 as well as data 
on car registration to be exchanged over VIES (Figure 21). 14 Member States would also like to be 
able to check over VIES validity of so-called domestic VAT numbers139.  

139 Such numbers do not permit the trader to make VAT exempt Intra-EU supplies. 

163 

 
 
 
                                                            
Data on imports using the Custom
Procedure No 42

Data on the identity, activity, legal form
and address of taxable persons who have
not been allocated a EU VAT…

Do you think that the following additional data should 
be shared via VIES?  

Majority  of  Member  States  believe  that 
data  in  relation  to  Customs  Procedure 
42 could enhance the detection of risky 
imports.  One  Member  States  (BG) 
suggested  to add  an index box  in VIES 
to  indicate  whether  the  transaction  was 
preceded  by  Customs  Procedure  42. 
Such  solution  would  require  minimum 
changes to VIES. According to the same 
Member State a more complete solution 
would  see  VAT  identification  number 
value, 
of 
commodity code to be made available over VIES. However another Member States (UK) noted that 
adding Customs Procedure 42 information to VIES would be very complex. It recommended having 
customs system checking the validity of VAT number at the time of importation and then having the 
customs system supply relevant information to Member States involved via automatic monthly supply 
of information.  

Figure 20: Adding categories of information to be exchanged over VIES 

Other type of Information should be added

EUCARIS data on cars and owners

importer, 

client, 

the 

12 

14 

19 

19 

If EUCARIS data to be shared through VIES one Member State (SE) would like information exchange 
to be clearly defined and closely controlled. In addition experts such as liaison officials from Eurofisc 
Working  Field  2  should  be  consulted  before.  Another  Member  State  (UK)  believes  that  such 
information should not be shared through VIES. 

One  Member  State  (EE)  welcomed  the  idea  of  sharing  data  on  the  identity,  activity,  legal  form  and 
address of taxable persons who have not been allocated an EU VAT identification number mentioning 
that  such  data  could  be  very  useful  in  order  to  identify  the  person  when  no  EU  VAT  number  is 
available.  However  another  Member  State  (UK)  noted  that  it  could  not  be  able  to  provide  this 
information at it does not keep this kind of information in any database.  

12 Member States would like to see other types of information to be exchanged over VIES. There are 
Member States that require traders to provide detailed reports on intra-EU acquisitions. Few Member 
States  (BG,  CR,  RO,  EE)  suggest  that  such  information  should  be  shared  through  VIES  in  order  to 
cross-check  them  with  the  information  on  intra-EU  supplies.  It  was  also  suggested  to  share 
information  on  shareholders  and  managers  (LV),  NETP  registration  (CZ),  information  in  relation  to 
margin scheme (PT), NACE code should be added to Level 2 enquiries (UK), EU-MOSS registration 
number  for  third  country  company  (NL)  and  invoice  registers  data  (LT).  One  Member  States  (LT) 
noted that it would be valuable to see VAT registration number of a particular company in all Member 
State in order to verify correct tax compliance. One Member State (BG) suggests sharing information 
on  the  allocation  of  VAT  identification  numbers  to  taxable  persons  established  in  another  Member 
State (Regulation 79/2012 (Art 3.1)). Another Member States (BE) also suggested to add information 
regarding the total amount of sales towards a Member State in the field of e-commerce. One Member 
States (DK) mentioned that if harmonized excise duty is involved, than it could be indicated in VIES 
(for instance a tick box). One Member State (IE) noted that all Member States should be required to 
show  standardised  data  i.e.  name,  address,  activity,  registration  number  and  date  and  also  names  of 
officers of the company or sole trade wherever available.  

In view of one Member State (HR) VIES should be modernized before implementing any changes to 
the  system.  Otherwise,  additional  information  must  be  shared  through  other  channels.  Another 
Member  State  (FI)  notes  that  VIES  might  not  be  the  best  tool  for  exchange  of  information  and  that 
Eurofisc should be enhanced.  

164 

 
 
 
At least 13 Member States would like to see rules for automated access to VIES changed (Figure 22). 
According to the comments a number of Member States (LV, SE, EL, PT, LT, HU, IE) would like to 
have  restrictions  mentioned  in  Art  21  para  2  p  "e"  sub  points  "i",  "ii"  and  "iii"  revised.  Those  sub 
points  restrict  access  to  so  called  "3rd  Member  State  inquiry"  –  a  right  to  consult  VIES  on  intra-EU 
supplies  where  neither  the  supplier  nor  customer  is  registered  in  the  Member  State  of  the  official 
making an enquiry. Currently such access is restricted to Eurofisc liaison officials who hold personal 
user identifications for the electronic systems allowing access to this information. Access must be in 
connection  with  an  investigation  into  suspected  fraud  and  is  only  granted  during  general  working 
hours.  In  addition  two  Member  States  (SE  and  RO)  mentioned  that  the  requirement  for  Eurofisc 
liaison  official  to  hold  personal  user  identification  for  the  electronic  systems  to  gain  access  to  "3rd 
Member State inquiry" should be clarified as presently Member States have different views on what is 
meant  by  this  requirement  allowing  some  Member  State  not  to  grant  such  access.  Furthermore  one 
Member State (FR) thinks that broader access to VIES data should be allowed, in particular for social 
security  agency.  Another  Member  State  (NL)  thinks  that  all  competent  authorities  for  VAT  should 
have access to VIES.  

As to other improvements to VIES Member States suggested the following: 

Do you encounter problems with getting 
automated access to the information exchanged 
through VIES as provided for in Article 21?   

No answer; 1 

In your opinion should the rules for automated 
access to VIES data (Art 21(2)) be changed?  

No; 12 

Yes; 14 

Figure 21: Automated access to VIES 

No 
opinion; 5 

No; 9 

Yes; 13 

- 

It  seems  that  retroactive  deregistration  and  registration  create  problems  for  Member  States. 
One Member State (CZ) suggested that retrospective registration could be harmonised in the 
EU  while  another  three  Member  States  (PT,  LT  and  UK)  would  like  to  prevent  or  forbid 
retroactive  deregistration.  Should  there  be  changes  to  registration  information  then  one 
Member States (CZ) would like to see what those changes were. Another Member State (UK) 
mentioned that all VAT Registered businesses should be automatically entered on VIES when 
they are registered for VAT. 

-  Accuracy  of  data  should  be  ensured.  In  that  context  one  Member  State  (EE)  suggested  that 
there  should  be  regular  monitoring  of  VIES  and  VAT  declaration  data  for  discrepancies. 
Another Member State (IE) mentioned that corrections and adjustments to VIES values made 
by the trader should always be reflected correctly in the data. 

-  According  to  one  Member  State  (CZ)  the  rules  for  declaring  supplies  in  recapitulative 
statement  should  be  more  unified.  Some  commodities  e.g.  investment  gold  are  declared 
differently in some Member States and therefore there are discrepancies between VIES  data 
and declared acquisitions of goods. 

165 

 
 
 
 
4.1.5. Eurofisc 

Eurofisc is a  network of liaison officials for swift  and targeted exchange of information  to facilitate 
multilateral cooperation in the fight against VAT fraud. The legal base for Eurofisc was introduced in 
2010. According to the replies to the questionnaire after 7 years of Eurofisc functioning in its current 
format most Member States would like Eurofisc to evolve.  

Most  Member  State  support  developing  common  risk  analysis  in  Eurofisc  (Figure  23).  Out  of  3 
Member  States  (CZ,  UK  and  MT)  that  would  not  like  to  develop  a  common  risk  analysis  within 
Eurofisc only one (CZ) provided a follow up comment explaining that already existing common risk 
indicators that are used in Eurofisc Working Field 1, 2 and 3 are sufficient. 

Those  Member  States  that  support  common  risk 
analysis within Eurofisc mentioned that: 

Should the tax administrations develop a 
common risk analysis within Eurofisc?  

-  Common  risk  analysis  could  significantly 
improve  Eurofisc  network  as  compared  to 
current  decentralized  approach  where  each 
Member  States  develop  their  own  risk 
criteria  to  select  cases  to  be  put  under 
monitoring in Eurofisc. (LV) 

-  One  Member  State  would  like  to  see 
common analytical team on EU level. (PL) 

-  One  Member  State  would  like  Eurofisc  to 
more  actively  monitor  possible  threats, 
possibly in real time. (FI) 

No; 3 

Yes; 24 

Figure 22: Developing common risk analysis in Eurofisc 

When commenting on common risk analysis within Eurofisc most Member States refer to TNA as a 
tool that can facilitate such an approach. Transaction Network Analysis – or TNA – is a tool currently 
being  developed  by  the  Commission  to  support  information  exchange  within  Eurofisc.  It  will  use 
relevant  VAT  information  (data  on  intra-EU  supplies)  and  Eurofisc  data  to  build,  visualise  and 
prioritize on the level of risk potentially fraudulent cross-border networks. According to the replies to 
the  questionnaire  most  Member  States  are  strongly  in  favour  of  TNA  and  support  its'  development 
(Figure 24). Most Member States also agree that TNA should be managed by Eurofisc and are willing 
to participate in information exchange by using TNA. Most Member States also support TNA having 
access  to  data  necessary  to  build  networks  (UK  against).  Majority  of  Member  States  also  support 
creating  an  explicit  legal  base  for  TNA.  The  only  country  that  does  not  support  creating  such  legal 
base commented that according to their interpretation current rules are already sufficient to implement 
TNA and therefore no further action is necessary. TNA is supposed to be developed and hosted by the 
Commission  with  Eurofisc  officials  as  users  of  the  system.  Under  current  legal  arrangements  the 
Commission  cannot  have  access  to  Eurofisc  operational  data  which,  in  case  of  the  Commission 
hosting  TNA,  will  require  complicated  organisational  arrangements  and  possibly  additional 
development  costs.  To  simplify  hosting  arrangements  the  Commission  could  get  access  to  Eurofisc 
data in so far as it is necessary for care, maintenance and development similarly to those that currently 
exist for CCN/CSI that is also facilitated by the Commission. Most Member States support granting 
the  Commission  such  access.  Out  of  two  Member  States  (BE  and  UK)  that  do  not  support  the 
Commission having such rights only one (UK) clarified that such access could be only in relation to 
the volumes of exchanges whilst taxpayer specific information should not be accessible. 

166 

 
 
 
In  the  replies  to  the  open  question  in  relation  to  TNA  a  number  of  Member  States  expressed  their 
support  to  the  project.  Some  Member  States  mentioned  that  current  legal  base  in  their  view  is 
sufficient  for  implementation  of  TNA.  At  least  one  (RO)  Member  State  mentioned  that  in  case  the 
Commission  will  make  a  proposal  for  an  explicit  legal  base,  then  the  proposal  should  not  be  too 
inflexible not to make impossible future improvements to TNA. 

In relation to the development of TNA  

Yes

No

No opinion

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

Do you support the development of TNA tool to improve Eurofisc capacity?

Do you agree that TNA should be managed by Eurofisc?

Are you willing to participate in exchange of information through TNA?

Do you agree that TNA should have automated access to data on cross-border
supplies exchanged through VIES?

Do you agree that TNA should have access to data exchanged through and gathered
by Eurofisc (early warning signals on suspicious traders and qualifications provided to
those traders)?

 Do you support creating a clear legal basis for TNA in Regulation (EU) 904/2010?

 Do you agree that the Commission IT services could get access to data exchanged
through TNA only in so far as it is necessary for care, maintenance and development
of TNA (similarly to the current arrangements for care, maintenance and…

26 

26 

25 

26 

26 

24 

24 

1 

1 

1 

1 

1 

1 

1 

2 

2 

1 

Figure 23: Member States' opinions on TNA 
In relation to other possible improvement to Eurofisc for it to better serve the needs of the Member 
States the following points were mentioned: 

-  Current arrangements for exchanging information via Excel spreadsheets uploaded to CircaBC 
are not optimal (LT, LU). Better IT solutions that would check the validity of data exchanged 
by Eurofisc officials (AT, LV) would improve the quality of data and the speediness of data 
exchanged  eliminating  the  need  for  the  working  field  coordinators  to  compile  into  one  filed 
data uploaded by different Member States. 

-  The feedback should be provided quicker (UK, HR). 

-  Eurofisc  reports  should  focus  more  on  demonstrating  the  benefits  of  Eurofisc  instead  of 

describing the volumes of information exchange (UK). 

- 

- 

It should be clarified if the external organisation (e.g. Europol, Eurojust) or non-EU countries 
could participate in Eurofisc meetings where no sensitive information is exchanged. (SE) 

In addition sharing information with non-EU countries should be clarified when information is 
received through the administrative cooperation (SE) where traders in that non-EU country are 
involved in fraud. 

-  Customs  could  participate  in  Working  Field  on  e-commerce  to  monitor  distance  sales  from 

non-EU countries. (FR) 

167 

 
 
 
-  Working Field 1 could use data on intra-EU supplies that follow importation to better detect 
MTIC fraud with the interposition of non-EU transactions (FR) and Eurofisc in general could 
also exchange information on imports and exports (PT). 

4.2. Collaboration with law enforcement authorities  

The VAT action plan, the European Parliament, the European Court of auditors and the Council stress 
the  need  for  deeper  cooperation  between  different  authorities  to  prevent  and  fight  VAT  fraud.  In 
particular  customs  and  tax  administrations  lack  access  to  each  other's  data.  Customs  has  often  no 
access to VIES data when carrying out checks and tax administrations do not have systematic access 
to  information  on  imports  using  the  customs  42  procedure.  Fighting  organised  crime  networks 
engaged in carrousel fraud requires joint efforts between tax administrations, law enforcement bodies 
in the Member States and at EU level. 

Member States have different experiences regarding exchange of VAT-related information with other 
authorities. A large part of them however do not exchange information at all with OLAF, Europol, and 
Social Security Agencies, unless for cases falling within their abilities. Such information can be shared 
sometimes with other financial and criminal national authorities but only if they have expertise in the 
relevant field.  

From the comments to the open question the following replies stand out: 

Do you encounter problems for exchanging VAT related information (VIES data, etc.) with other 
authorities?:   

To a very high degree

To a high degree

Somewhat

To a low degree

To a very low degree

Not applicable (e.g. we do not exchange information with ….) 

Europol

 OLAF

Customs

3 

3 

3 

 Police

1 

2 

1 

2 

4 

4 

9 

19 

19 

16 

4 

3 

8 

4 

9 

6 

8 

 Prosecutors office

 Social Security Agency

1 

6 

4 

3 

3 

16 

Other (please explain below)

1 

1 

3 

22 

Figure 24: Problems in information exchange with law enforcement authorities 

  One  Member  State  (ES)  has  a  special  regulation  for  this  purpose,  few  problems  are 
encountered.  Another  Member  State  (LU)  has  no  legal  basis  for  cooperation  with  these 
entities. 

  Another  Member  State  (DK)  notes  that  all  information  can  be  shared  with  foreign  police 

authority only through the justice department.  

  Another  Member  State  (FI)  notes  that  VAT-related  cases  often  might  come  up  often  with 
other non-tax issues that require permission from the competent authority of the other Member 
State. As definition of crime differs within the EU, permission could be refused sometimes. It 
would  be  advisable  thus  to  allow  the  use  of  the  information  of  some  of  the  most  common 
purposes without special permission.  

168 

 
 
 
According  to  the  replies  tax  administration  in  most  Member  States  do  not  exchange  VAT  related 
information with Europol. Neither do most Member States provide Europol access to data exchanged 
over  VIES  not  think  that  Europol  should  have  access  to  VIES  citing  the  lack  of  legal  basis  and  tax 
secrecy. Member States that are encountering problems with information exchange with Europol to a 
very  high  or  high  degree  (BE,  AT,  ES,  DK  and  LU)  further  explained  that  information  exchange 
happens  through  the  police  or  justice  department  meaning  that  also  in  those  cases  there  is  no  direct 
information  exchange  between  tax  administration  and  Europol.  Replies  on  cooperation  with  OLAF 
largely  follow  the  same  pattern.  Most  Member  States  do  not  exchange  information  with  OLAF  and 
think that OLAF should not have access to VIES. 

Do you think that any of the authorities listed 
below should be given access to data exchanged 
through VIES in order to fight tax and other 
frauds?:  

Do you provide access to data exchanged through 
VIES to any of the authorities listed below?:  

Yes

No

Europol

 OLAF

Customs

 Police

Yes

No

5 

6 

13 

10 

 Prosecutors office

 Social Security Agency

5 

Other (please explain below)

8 

22 

21 

24 

3 

14 

17 

22 

19 

Europol

 OLAF

2 

2 

Customs

 Police

 Prosecutors office

 Social Security Agency

Other (please explain below)

25 

25 

23 

4 

11 

10 

5 

6 

16 

17 

22 

21 

Figure 25: Allowing law enforcement authorities access to data exchanged over VIES 
12 Member States agree, 4 disagree and 11 have no opinion on the question whether Europol should 
receive  targeted  intelligence  from  Eurofisc  (Figure  27).  When  it  comes  to  providing  OLAF  with 
intelligence  from  Eurofisc  then  8  Member  States  would  agree  with  such  arrangement,  7  are  against 
and 12 have no opinion. In case such intelligence is shared with Europol and OLAF 14 Member States 
agree that those entities should provide Eurofisc feedback on the use of this information. However it 
seems that tax administrations are largely unaware of what information Europol and OLAF have and 
could not specify what sort of feedback they would expect. One Member State (CZ) mentioned that 
such exchange could be useful but the absence of legal base is an obstacle. Should there be some form 
of  exchange  of  information  between  OLAF  and  Europol  on  the  one  hand  and  Eurofisc  on  the  other 
then Member State would like to see a step by step approach with information exchange happening on 
a case by case basis.  

12  Member  States  agree  that  it 
would  be  useful 
if  Europol 
in  Eurofisc  Working 
participate 
Field  meetings  with  4  Member 
States  against  such  participating 
and  8  having  no  opinion.  10 
Member  States  would  agree  with 
OLAF  participation 
in  Eurofisc 
meeting,  8  are  against  and  9  have 
no  opinion  on  the  matter.  Member 
States  further  clarified  that  such 
cooperation  should  be  limited  to 

Do you think that it would be useful if Europol and/or OLAF 
participated in relevant Eurofisc Working Fields and whether 
Europol and/or OLAF got access to intelligence on organised crime 
structures exchanged through Eurofisc in order to assist Member 
Stat 

Agree

Disagree

No opinion

OLAF should receive targeted Eurofisc
intelligence.
 It would be useful if OLAF participated
in Eurofisc Working Fields work.
Europol should receive targeted Eurofisc
intelligence.
 It would be useful if Europol
participated in Eurofisc Working Fields…

8 

7 

12 

10 

12 

12 

8 

4 

9 

11 

7 

8 

Figure 26: Possible collaboration between Europol, OLAF and Eurofisc 

169 

 
 
 
 
OLAF's and Europol's participation in Working Field 4 meetings and not operational Working Fields. 
One country saw a problem in such participation as in their view there cannot be a direct cooperation 
between Europol and Eurofisc as Eurofisc officials are from tax administrations. 

exchange 

low  degree 

Do you think that the information on imports using the 
Customs Procedure No 42 (e.g. VAT identification number 
of the importer and/or of the customer, type of 
commodities, value) collected by the customs should be 
made available to the tax authorities of  

According  to  the  replies  most  Member 
States 
information  with 
Customs.  In  most  cases  Member  States 
encounter problems either to a very low or 
to  a 
(Figure  25)  when 
exchanging  information  with  customs  but 
Member States did not specify the nature of 
those problems. Member States note that as 
often their tax and customs administrations 
authority,  VAT-related 
are 
a 
to  customs. 
is  available 
information 
Customs  administration  in  most  Member 
States  also  have  access  to  data  exchanged 
over VIES (Figure 26). Tax administrations 
think  that  information  on  imports  where 
Customs procedure 42 is used should be made available to them by customs authorities. Most Member 
States would like to have automated access to such data. 

Figure 27: Exchange of information in relation to CP42 imports 

No 
opinio
n; 4 

single 

Yes; 22 

No; 1 

4.3. Administrative cooperation with 3rd countries 

is 

currently  negotiating 

There  is  evidence  that  fraudsters  are  utilizing 
non-EU  countries  to  enable  VAT  frauds.  The 
ECA's  report  states  that  cooperation  with  non-
EU  countries  should  be  strengthened.  The 
Commission 
an 
agreement  on  administrative  cooperation  in  the 
field  of  VAT  with  Norway.  To  understand 
further  needs  the  Commission  asked  Member 
States to list countries where similar agreements 
could be beneficial. According to the replies top 
five  countries  are  Switzerland,  China,  US, 
Russia and Norway. 

Which non-EU countries do you consider to 
be the most relevant to create a structured 
cooperation with? Top 10 replies 

Switzerland

US

Norway

UAE

FYROM

Montenegro

12 

10 
10 

9 

8 

7 

6 

5 

3 
3 
3 

Figure 28: Administrative cooperation with non-EU countries 

4.4. EUCARIS 

The potential use of the EUCARIS system has been discussed several times during the meetings of the 
Standing Committee on Administrative Cooperation Expert Group (SCAC-EG). In this context it was 
agreed  to  make  an  in-depth  study  on  the  technicalities  and  related  costs  of  some  options  to  access 
EUCARIS  data  on  cars.  This  should  be  considered  as  a  new  form  of  automated  access  to  specific 
information stored in national databases.  

All Member States consider that access to the EUCARIS database on cars for tax authorities would be 
useful to control the VAT treatment of vehicles. Member States mentioned that having access to such 
data would help to detect of tax frauds with vehicles, in particular the abuse of margin scheme.  

All Member States but one (RO) agree that having access to such data would reduce the administrative 
burden of tax administrations in exchanging information without prior request and simplify the work 

170 

 
 
 
 
of Eurofisc Working Field 2. Member States further explained that direct access to such data should 
increase  the  speediness  of  the  detection  of  fraud  and  could  decrease  the  amount  of  requests  for 
administrative cooperation. 

Most Member States would like to see an automated access to EUCARIS data. A number of Member 
States (BG, CZ, FR) mentioned the VISTA application as the preferred solution – a central application 
that can be developed by the Commission. 

A number Member States (BG, CZ, SI, PT, AT, RO, FI, UK, IE, NL) would also like access to such 
application  not  to  be  limited  only  to  Eurofisc  officials.  Four  Member  States  (BE,  IT,  MT,  LU) 
however would like access to be limited to Eurofisc officials. 

In terms of necessary data then those can be split in the following categories: 

-  Data that allows to identify the vehicle: VIN, license plate number; 

-  Data  that  allows  to  identify  the  owner:  name  (surname),  driving  license  number  and  for  the 

companies VAT number, Member State of registration; 

-  Registration  history:  information  on  former  owners  with  dates  of  registration  and 

deregistration. 

4.5. Joint audits 

The joint audit is an instrument through which a taxable person is subject to a coordinated audit by a 
single  audit  team  made  up  of  tax  officials  of  two  or  more  jurisdictions.  Regulation  (EU)  904/2010 
does not provide for joint audits but for only the passive presence of officials from another Member 
State during an administrative enquiry in the taxpayer premises. 

According to the replies only 4 Member States have 
experience with joint audits. Out of those 4 Member 
States  2  specified  that  this  experience  relates  to 
direct  taxes.  According  to  the  replies  none  of  the 
Member  State  have  experience  with  joint  audits  in 
relation to VAT. Member States are largely split as 
to  whether  there  where  cases  in  their  work  where 
joint  audits  would  have  been  a  more  useful  tool  as 
compared  to  the  tools  currently  offered  by  the 
Regulation (EU) 904/2010 (Figure 30).  

Have you had cases where joint audits would 
have been a more useful tool to audit a taxpayer 
for VAT purpose comparing to the list of tools 
currently provided by Regulation (EU) 904/2010?  

Yes; 9 

No opinion; 10 

No; 8 

Figure 29: Member States experience with joint audits 

171 

 
 
 
When it comes to possible benefits of joints audits around half of the Member States either strongly 
agree or agree that joint audit would be a useful and cost effective tool to audit cross-border trader as 
well  as  that  an  audit  by  a  single  team  of  auditors  would  provide  more  legal  certainty  and  would  be 
more cost efficient for the businesses as to being audited multiple times by different countries (Figure 
31). A number of Member States had no opinion on this question.  

Those Member States that are sceptical towards joints audits further explained that: 

To what extent do you agree that:  

Strongly agree

Agree

No opinion

Disagree

Strongly disagree

Neither agree nor disagree

Joint audits would be a useful tool to audit cross border activities
(in particular e-commerce)?

6 

9 

8 

2 

2 

 Joint audits would be a cost effective tool for tax
administrations to audit cross-border activities?

4 

10 

8 

2 

3 

 Being audited by a single team of auditors in a joint audit would
contribute to provide more legal certainty for the businesses
involved as compared to being audited multiple times by
auditors in different countries?

Being audited by a single team of auditors in a joint audit would
be more cost efficient for the businesses involved as compared
to being audited multiple times by auditors in different
countries?

Figure 30: Member States' opinion on joint audits 

6 

9 

4 

11 

8 

8 

1 

3 

4 

  The  absence  of  a  national  and  European  legal  base  for  joint  audits  is  a  concern  as  well  as 
differences  in  approach  towards  audits  in  Member  States  might  hamper  setting  up  of  joint 
audits (BE). 

  One Member State did not see a difference between asking a Member State of establishment 
to collecting the information at the request of another Member States and sending a team of 
auditors to the Member State of establishment. In view of that Member State the cost-benefit 
of  joint  audits  would  not  be  any  different  from  currently  existing  simultaneous  controls  and 
Member States already have an option to be passively present in other Member States during 
audits activities. In addition  legal certainty for companies is not evident  as it is not clear on 
how to proceed in case of appeals to tax assessments. (AT)   

Some Member States are not completely sure of the extent to which the report produced within joint 
audits  is  binding  (FI,  EE,  UK).  If  it  is  not  binding  then  it  does  not  increase  the  legal  certainty  for 
companies  (FI).  There  must  be  clear  rules  of  procedures  for  acting  during  joint  audits  according  to 
which  officials  can  act  in  other  Member  States  (SI).  Participating  in  joint  audits  should  be  on 
voluntary basis (FI) and auditors should opt for this solution only when currently existing tools are not 
sufficient (EE). One Member State mentioned there should be a clear legal base for joint audits (EE). 
When talking about creating a legal base at least one Member State (FI) would like to see a legal base 
for joint audits both in VAT and in the field of direct taxation as not aligned legal base for different 
types of taxes could impede the use of the tool. Few Member States commented that the tool is likely 
to be useful (UK) in particular for the e-commerce sector (EE). One Member State (UK) would like to 

172 

 
 
 
see  a  gradual  approach  towards  joint  audits  remarking  that  there  will  be  a  list  of  issues  to  solve,  in 
particular questions in relation to national competences: use of information powers, powers to assess 
outside of the Member State of an auditor, permissions for a joint audit team to operate and whether 
the  presence  of  the  home  auditor  is  necessary.  One  Member  State  (IT)  expressed  a  clear  support  to 
introduction of joint audits into the list of tools for administrative cooperation in the field of VAT. 

173 

 
 
 
 
9.5. Annex 5: Consultation of stakeholders other than Member States 

PUBLIC CONSULTATION ON THE FUNCTIONING OF THE ADMINISTRATIVE 
COOPERATION AND FIGHT AGAINST FRAUD IN THE FIELD OF VAT 

SUMMARY OF THE REPLIES 

1. Background 

In March 2017, the Commission (Directorate General Taxation and Customs Union) launched an open 
public consultation on the functioning of the administrative cooperation and fight against fraud in the 
field of Value Added Tax (VAT). 

This  administrative  cooperation  in  the  field  of  VAT  is  governed  by  Council  Regulation  (EU)  No 
904/2010 of 7 October 2010. 

The purpose of the consultation was:  

 

 

 

 

to  gather  views  from  stakeholders  about  their  experience  of  the  current  rules  governing 
administrative cooperation and fight against cross-border fraud in the field of VAT; 

to bring new insights for the on-going evaluation of Regulation (EU) 904/2010; 

to provide information about possible improvements including ‘VIES on-the-web’; and 

to  collect  data  on  possible  reduction  or  increase  of  regulatory  costs/benefits  (administrative 
burden and/or compliance costs) for businesses (in particular SMEs) although in practice, such 
information was actually not provided in the answers received. 

This report gives an overview of the responses to the public consultation. 

2. Respondents 

The Commission received 58 individual replies through  the on-line survey tool which was available 
until 31 May 2017. Though the public consultation was announced in several fora, publicly announced 
on  Commission  websites  including  ‘VIES  on  the  web’  page  and  being  made  available  in  all  EU 
official  languages  bar  the  Gaelic,  there  was  only  a  limited  number  of  responses  to  this  public 
consultation (58). Respondents were mainly professionals responding on behalf of their organisation 
(74%). These professionals generally worked for a private enterprise (75%) and were established in 12 
different Member States.  

It is important to note that since only 58 replies from 12 Member States were received over the course 
of  the  open-public  consultation,  these  responses  are  not  statistically  representative  of  the  target 
population. Answer ratios must therefore be interpreted with care without any possibility to draw any 
general conclusions from these replies.  

174 

 
 
 
 
 
 
 
3. Replies 

3.1. General remarks  

49  respondents  agreed  or  strongly  agreed  that  there  should  be  EU  common  rules  for  cooperation 
between Member States in the field of VAT. 54 respondents considered that there is a role for the EU 
to assist Member States in their cooperation in the field of VAT and 50  

considered that the role of the EU should go beyond support and assistance and should make sure that 
the cooperation takes place to the largest extent possible. 

 The EU is the best placed to provide Member States with common rules to 
allow them to work more closely together in order to monitor intra-EU trade for 
VAT purpose and ensure the correct application of VAT.  

61% 

27% 

9% 

2% 

2% 

I strongly agree

I agree

I do not agree nor disagreeI strongly disagree

I don't know

 The EU should assist the Member States so that they use these tools to the 
largest extent possible.  

52% 

43% 

2% 

2% 

2% 

I strongly agree

I agree

I do not agree nor disagree I strongly disagree

I don't know

 The EU should ensure that the Member States use these tools to the largest 
extent possible.  

41% 

48% 

7% 

2% 

2% 

I strongly agree 

I agree 

I do not agree nor disagree 

I strongly disagree 

I don't know 

27 respondents considered that the current instruments against VAT fraud are not effective. As regards 
the fight against VAT fraud perpetrated by criminal organisations, 29 respondents considered that the 
current instruments are not effective. 

The current instruments are effective to prevent cross-border VAT fraud.  

5% 

16% 

16% 

31% 

18% 

13% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

The current instruments are effective to fight serious VAT fraud organised by 
criminal organisations.  

7% 

13% 

20% 

33% 

20% 

7% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

175 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28  respondents  considered  that  the  current  instruments  are  not  adapted  to  the  new  business  models 
such as e-commerce or the collaborative economy. At the same time 14 respondents did not have an 
opinion.  

 The current instruments are sufficient to fight VAT fraud occurring in new 
business models such as in the collaborative economy or ecommerce.  

7% 

9% 

25% 

33% 

18% 

7% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

23 respondents considered that the costs for cooperation can be justified by additional VAT revenues 
against 9 who disagreed. At the same time 15 respondents did not have an opinion.  

 The administrative costs borne by the Member States to cooperate at EU level 
are justified by additional VAT revenues.  

13% 

30% 

13% 

15% 

2% 

28% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

13  respondents  considered  that  manual  exchange  should  remain  the  main  way  of  cooperation  in  the 
field of VAT against 22 who disagreed. 47 respondents were in favour of sharing more  data through 
VIES when only 4 disagreed. 

 Non-automated exchanges of information should remain the main way of 
administrative cooperation in the field of VAT.  

7% 

16% 

31% 

25% 

15% 

5% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

 The scope of information directly accessible in VIES should be extended when 
relevant.  

44% 

42% 

5% 

4% 

2% 

4% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

In particular, 29 respondents considered that tax authorities should have automated access to data on 
cars  registration  from  other  Member  States.  41  respondents  considered  that  the  automated  access 
should cover also exempted importation. 

176 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tax administrations should have automated access to information related to 
cars registration from other Member States.  

22% 

31% 

24% 

4% 

4% 

16% 

I strongly agree

I agree

I do not agree nor disagreeI strongly disagree

I disagree

I don't know

 The tax administrations should have automated access to information on 
exempt importations from customs authorities.  

31% 

44% 

13% 

6% 

6% 

I strongly agree

I agree

I do not agree nor disagree I strongly disagree

I don't know

36 respondents were in favour of sharing VAT data with other national authorities. 

 National law enforcement authorities such as customs, social security agencies 
and the police should have access to or could use relevant VAT information held 
or exchanged by tax authorities.  

25% 

40% 

15% 

2% 

4% 

15% 

I strongly agree

I agree

I do not agree nor disagreeI strongly disagree

I disagree

I don't know

28  respondents  considered  that  a  more  intense  exchange  of  personal  data  would  be  justified  by  the 
fight  against  VAT  fraud.  At  the  same  time,  45  respondents  considered  that  this  exchange  should  be 
strictly proportionate to the objectives. 

The swifter and more intense exchange of personal data between national tax 
administrations and with other law enforcement authorities that these 
measures could trigger would be justified by the general objective of fighting … 

20% 

31% 

13% 

11% 

9% 

16% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

 The swifter and more intense exchange of personal data between national tax 
administrations and with other law enforcement authorities that these could 
trigger should be strictly proportionate to their specific objectives.  

43% 

41% 

2% 

7% 

2% 

6% 

I strongly agree

I agree

I disagree I do not agree nor disagreeI strongly disagree

I don't know

Open text comments 

Additionally, respondents frequently emphasised that the exchange of information should be highly-
secured, framed and used only for the purpose of fighting VAT fraud. Apart from this objective, the 
exchange of information would be irrelevant and unwanted. On possible improvements and extensions 
of  the  current  system,  respondents  insisted  that  EU  should  concentrate  on  making  existing  systems 
efficient  and performant  before  thinking  of  creating  new  entities.  Respondents  also  frequently  noted 
that  all  improvements  should  be  designed  with  a  great  carefulness  taking  into  consideration  their 
impact on businesses. 

177 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Respondents  widely  approve  the  idea  that  VAT  fraud  is  an  international  issue  that  must  be  dealt 
jointly. Administrative cooperation is thus valuable in their opinion.  

Although automated exchange of information is very useful as it helps reducing delays in processing 
VAT information, a majority of respondent believes that some improvements should be made. A large 
part of respondent asks for more harmonization between Member States of the information collected 
and provided. Respondents also report a lack of information available in VIES on-the-web and suggest 
that  at  least  name  and  address  of  businesses  could  be  provided.  Some  of  them  also  suggest  making 
local  tax  numbers  together  with  EU  VAT  numbers  in  other  Member  States  if  applicable  and  their 
validity period available in VIES and VIES on-the-web. 

On  services  proposed by VIES  on-the-web,  respondents  suggest  to  add  a  storage  option  of  previous 
VAT number checks and a report functionality in case of invalid VAT check – in order to report easily 
potential fraudsters.  

One respondent  suggest to  link VIES to other existing  channels such as registrations in professional 
order or at Chamber of commerce in order to provide more complete and accurate information.  

Nonetheless, respondent recall that exchange of information should be closely controlled, in order to 
guarantee  data  protection  and  human  right  of  privacy.  Two  respondents  also  observed  that  although 
the  exchange  of  information  in  the  field  of  the  fight  against  VAT  fraud  is  valuable,  other  data 
exchanges could be irrelevant.  

Some respondents also pointed out that EU should be working on improving the current system before 
considering  creating  a  new  database  or  increasing  the  number  of  requests  sent  -  and  by  doing  so 
should be careful not to increase burdens for businesses.  

3.2. Joint audits  

21 respondents agreed that auditors from other Member States should be involved only  in a passive 
way during an audit. At the same time, 12 disagreed and 22 did not have an opinion. 

The passive presence in the premises of the taxpayers during on-the-spot audits 
should remain the only way to involve tax officials from other Member States.  

15% 

24% 

29% 

20% 

2% 

11% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

19 respondents agreed and 17 disagreed that an active participation of foreign auditors would make it 
more efficient. 19 respondents could not decide. 

 It would be more efficient to also authorise an active participation of tax 
officials in audits carried out by other Member States.  

13% 

22% 

24% 

27% 

4% 

11% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

19 respondents considered that the international audits for VAT purposes are burdensome.  

178 

 
 
 
 
 
 
 
 
 
 
 
In case your business operates in several Member States and your transactions 
Being audited by a single team of auditors from different Member States in 
were controlled for VAT purpose simultaneously in several of these countries, 
which you carry out economic transactions and controlling your operations 
did you find the process burdensome?  
taxable therein would be less burdensome?  
30% 

44% 

35% 

15% 

5% 

6% 

2% 

20% 

15% 

6% 

24% 

I strongly agree

I strongly agree

I agree

I agree

I do not agree nor disagree I disagree

I do not agree nor disagree

I disagree

I strongly disagree

I don't know

I don't know

In comparison, 21 respondents consider that a joint audit would be less burdensome.  

40 respondents considered that having a single report at the end of the audit would provide taxpayers 
with more legal certainty.  

 Having a single report at the end of the audit signed by all the tax 
administrations involved would give taxpayers more legal certainty.  

26% 

48% 

6% 

7% 

4% 

9% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

Open text comments 

Respondents  widely  agreed  that  joint  audits  would  constitute  a  step  forward  in  administrative 
cooperation  regarding  fight  against  VAT  fraud  and  would  prevent  duplication  of  tax  audit  which  is 
burdensome for both tax administration and businesses.  

However,  some  respondents  observed  that  joint  audits  could  be  useful  as  long  as  a  common  unique 
procedure is clearly defined and relies on a legal basis. Joint audits outcomes should be directly shared 
with other Member States as well.  

It was emphasized that as the expertise of tax officials matters more than their nationality, joint audits 
could  be  valuable  if  they  are  led  by  highly-qualified  auditors  knowing  all  Member  States’  tax 
regulation.  

Respondents also observed that language barriers are an issue to be considered.  

Few  respondents  disapprove  the  idea  as  they  believed  that  cooperation  should  rely  on  mutual  trust. 
Thus, national audits should be sufficient.  

Two  respondents  insisted  that  joint  audits  could  be  very  useful  in  the  field  of  transfer  pricing,  by 
preventing double taxation and legal disputes. 

3.3. Eurofisc 

47 respondents considered that an automated joint risk analysis would help in the fight against VAT 
fraud.  

 The fight against cross-border VAT fraud would benefit from an EU wide 
automated joint risk analysis system.  

44% 

42% 

5% 

4% 

5% 

I strongly agree

I agree

179 
I do not agree nor disagree

I disagree

I don't know

 
 
 
 
 
 
 
 
 
36 respondents considered that Eurofisc is the right structure to coordinate and carry out the joint risk 
analysis against VAT fraud. 

Eurofisc would be the right structure to coordinate and carry out this joint risk 
analysis.  

22% 

44% 

15% 

2% 

18% 

I strongly agree

I agree

I do not agree nor disagree

I disagree

I don't know

43 respondents saw a role for Eurofisc to coordinate cross-border administrative enquiries. 

Cross-border administrative enquiries of fraudulent networks would benefit 
from a coordination at Eurofisc level. 

29% 

49% 

4% 

2% 

16% 

I strongly agree

I agree

I do not agree nor disagree

I disagree

I don't know

32 respondents considered that the current arrangements for cooperation between tax authorities and 
law enforcement bodies are not effective. Only 9 considered them as being effective. 

 The current cooperation between tax administrations and other law 
enforcement bodies at EU level is effective to fight VAT fraud.  

44% 

7% 

9% 

13% 

15% 

13% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

34  respondents  considered  that  the  cooperation  between  tax  authorities  and  law  enforcement  bodies 
should be changed.  

The current cooperation between tax administrations and other law 
enforcement bodies at EU level should remain unchanged 

45% 

5% 

9% 

9% 

16% 

15% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

42 respondents considered that Eurofisc should share relevant information on serious VAT fraud with 
OLAF. 

Eurofisc should share relevant information on serious VAT fraud with OLAF to 
combat criminal organisations behind it. 
42% 

35% 

4% 

4% 

16% 

I strongly agree

I agree

I do not agree nor disagree

I disagree

I don't know

180 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45 respondents considered that Eurofisc should share relevant information on serious VAT fraud with 
Europol. 

 Eurofisc should share relevant information on serious VAT fraud with Europol to 
combat criminal organisations behind it.  
46% 

37% 

4% 

2% 

11% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I don't know

In  this  context,  24  respondents  considered  that  the  fight  against  VAT  fraud  would  justify  more 
exchange of personal data between tax authorities and law enforcement bodies. 

45 respondents considered that these exchanges should be proportionate to the objectives. 

Open text comments 

Some  respondents  insisted  on  the  need  for  cooperation  between  Eurofisc  and  other  EU  authorities 
(Commission,  OLAF  and  Europol)  in  order  to  ensure  correct  collection  of  EU  revenues  and  to 
exchange on the best practices to do so.  

Cooperation  between  Eurofisc  and  national  financial  administrations  would  also  promote  legal 
certainty of Intra-EU transactions.  

It  was  also  suggested  by  some  respondents  to  develop  contact  points  between  tax  authorities  and 
businesses, as they usually possess very useful information and have a common interest to collaborate 
in order to reduce fraud risk.  

Respondents agreed that having an efficient risk analysis tool is necessary to fight against VAT fraud. 
However,  few  respondents  believed  that  making  the  current  system  more  efficient  and  transparent 
would allow better control and enforcement possibilities without creating another body – which would 

181 

13%32%17%13%8%17%I strongly agreeI agreeI do not agree nordisagreeI disagreeI strongly disagreeI don't knowThe automatic processing of personal data at EU level and the swifter and more intense exchange of personal data between national tax administrations and with EU law enforcement authorities that these measures (3.3.1, 3.3.6 and 3.3.7) could trigger would be justified by the general objective of fighting VAT fraud.37%46%7%9%I strongly agreeI agreeI do not agree nor disagreeI don't knowThe automatic processing of personal data at EU level and the swifter and more intense exchange of personal data between national tax administrations and with EU law enforcement authorities that these measures (3.3.1, 3.3.6 and 3.3.7) could trigger should be strictly proportionate to their specific objectives. 
 
 
 
 
 
 
 
 
 
 
 
 
generate unnecessary burdens for legitimate businesses. In that perspective, one respondent suggested 
to  think  about  a  European  SAF-t  regulation  common  to  all  Member  States  in  order  to  create  more 
transparency. 

Automatic  processing  of  personal  data  at  EU  level  should  be  framed  and  used  only  to  serve  the 
objectives of fighting VAT fraud.  

Respondents  also  insisted  on  the  need  for  harmonization  of  the  way  information  is  collected  by  all 
Member States and for greater cooperation between Member States in this field.  

Respondents often observed that collection of personal data at EU level should be goal-oriented and 
only serve the objectives of fighting VAT fraud.  

3.4. VIES on-the-web  

41 respondents considered that VIES on-the-web is a useful tool for businesses carrying out intra-EU 
transactions. 

VIES on-the-web is a useful tool for businesses carrying out intra-EU 
transactions.  

32% 

45% 

15% 

2% 

2% 

4% 

I strongly agree

I agree

I do not agree nor disagree I disagree

I strongly disagree

I don't know

43 respondents considered that the tool is at least satisfactory for their needs. 

How do you rate your general experience with the consultation of the VAT 
identification number of your customers through VIES on-the-web?   
42% 

19% 

21% 

13% 

6% 

Very positive

Positive

Satisfactory

Unsatisfactory

Not at all adequate

47 respondents considered that their information was correctly recorded in VIES on-the-web system. 
36respondents found correct information on their customers in the VIES on-the-web system.  

 Your VAT identification data was correctly reflected in the VIES on-the-web 
system?  

No 
10% 

Yes 
90% 

182 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 The VAT identification data of your customers were correctly reflected in the 
VIES on-the-web system?  

No 
28% 

Yes 
72% 

33 respondents considered that the availability of VIES on-the-web was adequate.  

The availability of the ‘VIES on-the-web’ server is good.  

11% 

49% 

22% 

9% 

4% 

5% 

I strongly agree

I agree

I do not agree nor
disagree

I disagree

I strongly disagree

I don't know

35  respondents  would  like  to  have  an  automated  notification  system  that  would  inform  them  on 
technical issues with VIES on-the-web. 

Do you consider that a system of e-mail notification to inform users about 
technical issues with VIES on-the-web would be useful?  

No 
36% 

Yes 
64% 

46 respondents would prefer to be informed on the changes in their customers VAT details rather than 
checking them themselves. 

Do you consider that the current way of checking VAT numbers should be 
replaced with a system that inform you about the changes to your clients VAT 
data such as the validity of their VAT  

No 
13% 

Open text comments 

Yes 
87% 

A  lot  of  respondent  seems  to  have  confused  VIES  and  VIES-on-the-web.  Therefore,  answers  under 
this section are quite similar with the one made in the first section.  

A large majority of respondent believed that VIES-on-the-web lacks of data available. They suggested 
that at least the name and address of the legal entity concerned should be added. The period of validity 
of the VAT number could also be provided in the system.  

183 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regarding the services proposed by VIES, respondents asked for a batch processing for VAT checks 
with  download  possibility  and  for  a  report  functionality  in  case  of  invalid  VAT  check,  in  order  to 
report potential fraudsters. One respondent also suggested that validity check of VAT number could be 
made for past dates.  

More  generally,  respondents  pointed  out  that  the  accuracy  and  timeliness  of  information  should  be 
improved. The information provided by each Member State should also be further harmonized.  

One respondent complained about incoherency about Spanish VAT numbers (some valid numbers are 
not  recognised  in  the  VIES-on-the-web  system).  One  respondent  regretted  that  the  identification 
process is too slow.  

Few respondents suggested possible IT improvements: provide information under several types of data 
(json,  html,  xml),  integrate  more  local  language  (issues  with  Greek  alphabet)  and  exchange  of 
documents rather than email exchange information in order to enhance the security of the system.  

184 

 
 
 
 
 
9.6. Annex 6: Who is affected by the initiative and how?  

If  the  initiative  is  accepted  by  the  Member  States,  the  new  instruments  that  would  be  implemented 
would  improve  the  use  and  dissemination  of  already  existing  information  on  the  one  hand,  and 
relationships between administrations and authorities involved in the fight against VAT fraud on the 
other  hand.  Additional  burdens  that  may  be  imposed  on  national  administrations  and  private 
stakeholders are rather limited or non-existent as regards the latter while positive effects on the level 
of VAT fraud and the functioning of the single market can be expected. Citizens will not be affected 
by these changes. They might be indirectly be affected through lower consumer prices since the fight 
against  fraud  will  eliminate  businesses  that  abuse  the  VAT  system  and  can,  consequently,  propose 
under-priced goods to consumers.  

Businesses 

Businesses, including SMEs are unlikely to be directly affected by the initiative. None of the options 
this initiative covers would entail additional administrative burdens or additional compliance costs for 
businesses.  The  initiative  would  implement  new  exchanges  or  a  better  use  of  already  existing 
information. All this would be neutral for businesses, including SMEs.  

Compliant  businesses  could  indirectly  gain  from  the  fact  that  national  tax  administrations  would  be 
able to better target their checks, audits and reporting obligations. That could mean that the compliant 
businesses  would  have  to  provide  less  information,  documents  and  evidences  to  the  tax 
administrations and face less audits and controls undertaken by tax authorities.  

If  the  initiative  is  successful  in  tackling  fraudsters,  businesses  would  also  benefit  from  better  level 
playing field and functioning of the single market.  

Member States 

The initiative would trigger limited additional costs to Member States. Some of these implementation 
costs  could  be  borne  by  the  Fiscalis  programme.  This  would  be  in  particular  the  case  for  the 
implementation of  the  transaction  network  analysis  (TNA)  that  is  already  underway.  Member  States 
would only bear the employment costs of liaison officials involved in the new Eurofisc working field 
dedicated  to  TNA.  These  costs  in  most  instances  are  already  dedicated  to  the  fight  against  carousel 
fraud and it is not certain  that ultimately, Member States' tax  administrations will bear new costs to 
implement  TNA.  On  the  other  hand,  tax  administrations  would benefit  from  new  and  more  targeted 
tools to combat VAT fraud. 

As for the other options, they would mostly rely on better exchanges of already available information. 
This would be the case for exchange of information with EU law enforcement authorities and customs 
administrations,  and  access  to  EUCARIS  data.  Accessing  this  information  would  entail  some  IT 
developments the costs of which would be difficult to correctly evaluate since different options would 
be made available to Member States. Nevertheless, considering the level of VAT fraud and the help 
these  new  exchanges  of  information  would  provide  in  detecting  fraudsters,  it  is  expected  that  the 
benefits derived from these exchanges would exceed the costs associated to these new developments. 

185 

 
 
 
9.7. Annex 7: Methodology 

The revision of Regulation (EU) 904/2010 takes place in the context of the Action Plan140 presented by 
the EU Commission in April 2016 and further endorsed by the EU Council in May 2016141 and the EU 
Parliament in November 2016.142 

No  specific  tool  or  methodology  were  developed  for  the  assessment  of  the  options.  No  independent 
study  could  neither  be  launched.  However  a  number  of  evaluations  of  the  current  EU  VAT 
administrative cooperation framework were previously made:  

  Previous assessments in relation to the functioning of Regulation (EU) 904/2010 were 
made as provided for in Article 59 of the Regulation143 and Article 12 of Regulation 
(EC)  No 1556/1999 144  .  These  assessments  were  carried  out  on  the  basis  of 
information provided by tax administrations on the practical arrangements and use of 
the instruments of administrative cooperation by and between the Member States; 

  The March 2015 ECA special report on the effectiveness of the EU in tackling intra-
EU  VAT  Fraud145 described  the  lack  of  effective  cross-checks  between  customs  and 
tax  data  within  the  Member  States,  the  problems  of  accuracy,  completeness  and 
timeliness of data exchanged between the tax authorities and the lack of cooperation 
between administrative, judicial and law enforcement authorities within and between 
the Member States; and 

  A new report drafted in accordance with Article 12 of Regulation (EC) No 1556/1999 
is underway although its conclusions are not finalised yet and have not been endorsed 
by  Member  States.  Nevertheless,  its  preliminary  outcomes  have  been  taken  into 
consideration  when  drafting  the  amending  Regulation  on  VAT  Administrative 
Cooperation. 

In  addition,  a  questionnaire  was  sent  out  to  the  Member  States  and  their  replies  are  summarised  in 
Annex  4.  Furthermore,  an  open  public-consultation  was  launched  and  its  results  are  summarised  in 
Annex 5. 

Finally, several studies to quantify VAT fraud were also used: 

  CASE, 2016, Study Reports on the VAT Gap in the EU-28 Member States146; 

  EY, 2015, Implementing the "destination principle" to intra-EU Member States147; and 

  CASE, 2015, Sudy to quantify and analyse the VAT Gap in the EU Member States148. 

140 https://ec.europa.eu/taxation_customs/sites/taxation/files/com_2016_148_en.pdf  
141 http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-vat-action-plan/  
142 http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0453  
143 COM(2014) 71, 12.2.2014 
144 COM (2014) 69, 12.2.2014 
145 European  Court  of  Auditors  2015,  Special  report  no  24/2015:  Tackling  intra-EU  VAT  fraud:  More  action 
needed http://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf 
146 https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-report_final.pdf 
147 https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/ey_study_destination_principle.pdf 
148http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/common/publications/studies/va
t_gap2013.pdf 

186 

 
 
 
                                                            
9.8. Annex 8: Additional information about the functioning of administrative cooperation in the 
field of VAT 

1) The functioning of administrative cooperation in the field of VAT, as provided by Regulation (EU) 
904/2010 can be summarised as showed below:  

2) Two specific multilateral tools are made available to the Member States: 

  VIES  (VAT  Information  Exchange  system)  is  an  electronic  system  under  which,  Member 
States exchange information on traders registered for VAT purposes and on intra-EU supplies. 
Member  States  are  responsible  for  ensuring  the  quality  and  reliability  of  the  information 
included in VIES and they should implement procedures for checking this data following their 
risk assessment. These checks should be carried out, in principle, prior to issuing identification 
numbers  for  VAT  purposes  or,  where  only  preliminary  checks  are  conducted  before  such 
identification,  no  later  than  6  months  from  such  identification.  This  instrument  is  made 
available  

o 

to Member States that can check online, upon the provision of a VAT number, what 
are  the  contact  details  of  an  enterprise.  It  also  allows  the  tax  administrations  of  the 
Member  States  to  exchange  VAT-related  data,  i.e.  recapitulative  statements  from 
businesses  making  intra-EU  supplies.  These  statements  list  the  aggregate  value  of 
supplies  of  goods  and  services  made  to  VAT  registered  customers  elsewhere  in  the 
EU. Member States tax administrations use and exchange among each other this data 
to ensure that intra-EU VAT has been correctly accounted for; 

o 

to  the  business  by  way  of  VIES-on-the  Web  (VoW).  With  this  software,  businesses 
can check online, upon provision of the VAT number of their customers, whether this 
VAT number is valid or not (Member States can decide whether they agree to disclose 

187 

 
 
 
 
the contact details of the enterprise owning this VAT number). Nevertheless, intra-EU 
sales  and  acquisitions  are  not  made  available  to  stakeholders  other  than  tax 
administrations. 

  Eurofisc: In 2010, the EU Member States initiated “Eurofisc” - a mechanism to enhance their 
administrative  cooperation  in  combating  organised  VAT  fraud  and  especially  carousel 
fraud/MTIC149 fraud. The Eurofisc network was set up as a network of tax officials to serve as 
an  early  warning  system  in  the  fight  against  MTIC  fraud  (in  particular  by  strengthening  the 
Member  States’  national  tax  fraud  detection  systems.  It  allows  for  quick  and  multilateral 
exchanges of targeted information on VAT fraud. Eurofisc comprises several Working Fields 
(WF), each concentrating on a specific area of interest: 

o  WF1 – Missing Trader Intra-Community Fraud (MTIC); 

o  WF2 – Cars, boats and planes; 

o  WF3 – Customs Procedures 42 and 63; 

o  WF4 – VAT Observatory that identifies and examines new risks, trends and issues of 
general      interest  impacting  on  the  fraud  environment;  it  does  not  exchange  data  on 
specific traders; 

o  WF5 - e-Commerce. This working field was set up in 2016, considering the fast and 

growing development of electronic commerce; 

o  WF6 – Transaction network analysis, set up in 2017 with the view to implementing, at 
a  later  stage,  this  new  tool,  for  Member  States  wishing,  on  a  voluntary  basis  to 
participate (further explanations about the Transaction Network Analysis programme 
are given under section 5 of this impact assessment). 

While  all  EU  Member  States  are  represented  in  Eurofisc,  each  individual  Member  State  decides  to 
contribute to a Working Field on a voluntary basis. 

149 Missing trader intra community fraud, see above box 3.  

188 

 
 
 
 
                                                            
9.9.  Annex  9:  Transitional  and  definitive  VAT  system  –  Origin-based  and  destination-based 
VAT system 

As from 1 January 1993, the borders and the corresponding export/import schemes between Member 
States have been abolished and replaced by a system of exempt supplies in the Member State of origin 
and  taxed  'intra-EU  acquisitions150'  (a  new  taxable  event)  in  the  Member  State  of  destination  thus 
mirroring,  without  customs  procedures,  the  previous  scheme.  As  customs  documentation  no  longer 
guaranteed the follow-up of the physical flow of the goods, a new reporting system was put in place: 
the VAT Information Exchange System (VIES) (see annex 8). Via a system of listings, submitted by 
the  supplier  in  the  Member  State  of  origin  (Member  State  1)  and  subsequently  sent  to  the  Member 
State of destination (Member State 2), the latter is informed that goods have arrived on its territory at 
destination of D, a business registered for VAT purposes in Member State 2 that has the obligation to 
declare  this  intra-EU  acquisition  in  its  VAT  return.  Preceding  supplies  (A  to  B  and  B  to  C)  and 
subsequent supplies (D-E) are, as in the previous system, domestic supplies taxed with VAT. Both the 
VAT charged on the supplies made by A to B, by B to C and by D to E and the VAT due by D on the 
intra-EU acquisition are in the general case deductible (as regards C through a refund since there is no 
output  VAT  on  the  supply  made  by  C  against  which  the  deductible  VAT  of  30  can  be  offset).  In 
particular VAT on the intra-EU acquisition is due and deductible for D in the same VAT return; the 
result is therefore nil. 

150 The VAT Directive still refers to the "Community" instead of the "European Union" (EU). In the rest of the 
document,  it  is  referred  to  "intra-EU  acquisitions  of  goods"  but  the  term  used  in  the  VAT  Directive  is  "Intra-
Community acquisitions of goods". 

189 

 
 
 
 
 
 
                                                            
9.10. Annex 10: Technical fiche on concrete examples of VAT fraud 

The  following  concrete  examples  illustrate  how  VAT  frauds  are  concretely  set  up  across  EU 
Member  States  and  how  proceeds  of  crime  are  evaded  and  laundered  to  offshore  places  or  tax 
havens outside the EU.  

These  examples  also  highlight  how  VAT  fraudsters  have  now  reached  an  industrial  scale  in  the 
perpetration of this fraud, contaminating whole sectors of the traditional economy (e.g. electronic 
devices;  second-hand  cars)  and  invading  new  more  confidential  sectors  where  they  succeeded  in 
imposing  themselves  as  key  players  interoperating  with  institutional  operators  (e.g.  carbon 
certificates; precious metals). 

These cases are the results of judicial investigations carried out these last years in France (Service 
National  de  Douane  Judiciaire  -  SNDJ)  and  in  Belgium  (Office  Central  de  lutte  contre  la 
Délinquance Economique et Financière – OCDEFO). 

1. MTIC fraud on electronic devices dismantled through European response: 

This  case  was  subject  of  judicial  investigations  on  basis  of  transmission  of  information  from  tax 
administration.  Damage  for  tax  administration  was  assessed  at  roughly  EUR  25  million  in  a  two 
years period of time. This case illustrates very well the following points: 

  Close complicity of all participants to the trade chain (from suppliers to final beneficiary). 

  Compartmentalisation  of  the  three  flows:  physical  flow  of  goods;  documentary  flow  of 
invoices;  financial  flow  of  money  deriving  from  the  fraud  to  other  Member  States  and 
Third-countries. 

  European dimension of the phenomenon and swift adaptation of the fraudsters to isolated 

measures taken by one or two Member States. 

  Evasion of proceed of crime to off shores places outside the EU. 

  Only  use  of  intrusive  judicial  powers  enabled  public  authorities  to  collect  all  relevant 
evidence for demonstrating the fraud and the criminal intentionality of the fraudsters. 

First phase of the fraud:  

The supplier in the United Kingdom provided instructions to a German wholesaler, accomplice in 
this fraudulent scheme, for intra-EU supply of the purchased electronic devices (free of VAT) to a 
logistical platform located in France for its customer (the missing trader). These products were then 
resold (VAT included) by the missing trader to the buffer company without any physical movement 
of  the  products  (just  invoicing  activity  at  this  stage).  The  buffer  company  then  invoiced  and 
supplied the products to the beneficiary company (VAT included but at a much lower price than the 
normal level playing field price, due to tax evasion in the trade chain). At the end, money earned by 
the  criminal  network  was  shared  via  bank  transfers  from  the  beneficiary  company  to  the  other 
companies upstream in the trade chain holding bank accounts in other Member States for avoiding 
any easy recovery actions in France. Proceed of crime ended on bank accounts held by the criminal 
network in Hong-Kong. 

190 

 
 
 
 
Isolated national measures were useless:  

At  a  certain  moment,  Tax  administration  in  France  requested  from  the  British  authorities  the 
suspension  of  the  VAT  number  of  the  supplier  in  order  to  stop  the  fraudulent  scheme.  As  a 
consequence,  the  criminal  network  swiftly  adapted  to  this  measure  by  creating  a  new  supplier 
company in Cyprus controlled by well-known VAT fraudsters in France. Therefore, the trade chain 
continued  with  a  new  supplier  located  in  another  Member  State  with  the  same  missing  trader, 
buffer and beneficiary companies. 

Only  a  European  response  was  relevant  for  stopping  the  fraud,  identifying  and  arresting  the 
fraudsters: 

Operational phase steered and coordinated at EUROJUST level took place in several EU Member 
States  at  the  end  of  the  investigations  which  enabled  the  investigators  to  arrest  the  main 
perpetrators  of  the  fraud,  to  seize  more  than  EUR  1  million  on  bank  accounts  and  electronic 
devices. However, it is worth noting that due to the time gap between the facts and the end of the 
investigation, most of proceed of crime was not recovered. 

2. For speeding up the fraudulent process: real physical flows are more and more replaced by 
virtual operations covered by fake invoicing 

This case was subject of judicial investigations and the damage for tax administration was assessed 
at roughly EUR 5 million in a two years period of time. This case is a variant of the previous one 
and illustrates how the current VAT regime is likely to be easily defrauded. Indeed, VAT can be 
evaded by non-remittance of the tax by the missing trader, but also by undue application for VAT 
credit based on artificial intra-EU supplies and forged invoices. 

191 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First aspect of the fraud:  

It exactly corresponds to the situation described above. The damage deriving from this aspect of the 
fraud amounted to EUR 4 million. 

Additional aspect of the fraud:  

At  the  level  of  the  beneficiary,  in  addition  to  the  declared  sales  below  the  normal  price  on  the 
market  (due  to  tax  evasion  in  the  trade  chain),  the  economic  operators  also  sold  products 
undeclared  on  the  black  market.  In  order  to  cover  those  operations,  the  beneficiary  company 
declared  virtual  inter-community  supplies  (VAT  free)  to  Portugal  with  false  invoices.  Thus,  the 
company applied for VAT credit generated by these virtual trade operations. The damage deriving 
from this aspect of the fraud (undue payment of VAT credit) amounted to EUR 1.4 million. 

Money laundering pattern: 

Proceed  of  crime  was  evaded  through  money  transfers  from  the  companies  involved  in  the 
fraudulent scheme in France to bank accounts held in the United Kingdom. The money ended on 
bank accounts held by companies registered in Virgin Islands and Hong-Kong.  

Only  a  European  response  was  relevant  for  stopping  the  fraud,  identifying  and  arresting  the 
fraudsters: 

All the aspects of the fraudulent scheme were revealed thanks to close operational cooperation at 
European  level  (creation  of  a  Joint  Investigation  Team  under  EUROPOL  and  EUROJUST 
umbrella). 

192 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Another very similar case revealed a MTIC fraud exclusively based on virtual trade operations with 
fake invoices:  

In this case, without any kind of economic logic, the only purpose for the fraudsters was to create 
an undue VAT credit at the level of the beneficiary company. There were no physical movements 
of goods, just issuance of false invoices by the companies involved in the fraudulent scheme. 

3.  Massive  operations  conducted  by  well-known  VAT  fraudsters 
institutional partners have contaminated new economic sectors 

interoperating  with 

Judicial  investigations  conducted  these  last  years  have  highlighted  that  the  criminal  networks 
involved  in  classic  VAT  carousel  fraud  have  now  penetrated  very  specific  markets  and  have 
imposed themselves as key players in front of institutional operators which became their suppliers 
or customers (e.g. carbon certificates; precious metals). 

Massive  operations  carried  out  by  well-known  VAT  fraudsters  onto  the  carbon  certificates 
market (2008 – 2009): 

Parties  with  commitments  under  the  Kyoto  Protocol  (entered  into  force  in  2005)  have  accepted 
targets  for  limiting  or  reducing  emissions.  These  targets  are  expressed  as  levels  of  allowed 
emissions,  or  “assigned  amounts,”  over  the  2008-2012  commitment  period.  Greenhouse  gas 
emissions  are  capped  and  then  markets  are  used  to  allocate  the  emissions  among  the  group  of 
regulated sources. 

Emissions  trading  allows  economic  operators  to  sell  excess  capacity  to  other  economic  operators 
that are over their targets. Thus, a new commodity was created in the form of emission reductions 
or  removals  (called  "carbon  certificates").  Since  carbon  dioxide  is  the  principal  greenhouse  gas, 
people  speak  simply  of  trading  in  carbon.  Carbon  was  tracked  and  traded  like  any  other 
commodity,  and  was  also  subject  to  VAT.  This  is  known  as  the  "carbon  market."  Buyers  and 
sellers  can  also  use  an  exchange  platform  to  trade,  which  is  like  a  stock  exchange  for  carbon 
credits. 

In this context, the economic operators had to open a "carbon  account"  in a Member State and a 
bank  account  so  that  they  can  trade  carbon  certificates  and  carry  out  the  corresponding  financial 
transactions as the counterpart of this trade operation. For example, in France the carbon accounts 
were  opened  at  the  level  of  the  Caisse  des  Dépôts  et  Consignations  and  only  the  brokers  had  to 
hold  a  bank  account  at  the  Caisse  des  Dépôts  et  Consignations.  All  transactions  are  registered 
under a European registry (EU Emissions trading system). 

The  fraudsters  rapidly  imposed  themselves  as  key  players  on  this  new  trading  market.  The  fraud 
constituted in buying carbon certificates free of VAT from a European trader in order to sell them 
VAT included to a missing trader in France (which never remitted VAT to the tax administration). 
These carbon certificates were then traded VAT included from carbon accounts to carbon accounts 
between fraudsters before being finally sold to an official broker on the BlueNext market.  

In the trade chain, VAT is evaded and proceed of fraud is channelled to bank accounts held by the 
missing  trader  in  other  Member  States  (in  particular  in  Latvia  and  Cyprus),  before  being  rapidly 
transferred outside the EU (in particular to bank accounts held in Hong Kong). 

193 

 
 
 
 
An actual criminal network:  

On the above chart, the missing trader and the missing broker were put in place by criminals in the 
only  purpose  to  evade  VAT  in  France.  There  was  a  double  failure  to  remit  the  VAT  to  the  tax 
administration from the missing trader (company B) and from the missing broker (company C). At 
the end, huge volume of carbon certificates were purchases VAT free and resold VAT included to 
the final beneficiary broker (company D). There was various situations possible ranging from the 
single criminal involvement of company B and C to complicity of all companies all along the trade 
chain from A to E. 

Payments from the beneficiary D (including VAT) were channelled to bank accounts held by the 
missing trader in other Member States, and the money ended on bank accounts held in Hong Kong. 

The  natural  persons  having  set  up  the  fraudulent  scheme  were  well-known  VAT  fraudsters 
associated  with  other  persons  well-known  members  of  Parisian  and  Marseille's  organised  crime 
networks. 

In this context, four persons involved in this VAT carousel were assassinated in Paris, very likely 
due  to  the  attractiveness  for  organised  crime  for  the  gains  generated  by  this  large-scale  VAT 
fraud151. 

151 Cf. Le Monde, 4 April 2016, Article entitled: « Les quotas de carbone, un « casse » facile mais dangereux ». 

194 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
The industrial scale of the fraud in the given sector:  

This specific fraudulent scheme generated a damage amounting to EUR 1.7 billion at the detriment 
of  French  national  budget,  while  it  would  represent  EUR  5  billion  of  lost  for  national  and  EU 
budget at European level in 2008-2009. 

It is worth mentioning that in June 2016, the decision to apply an exemption of VAT onto carbon 
certificates trading triggered a 90% drop of the volume of exchanges onto the market place.  

Same money laundering patterns as those used by traditional organised crime networks:  

Proceed of crime was partially reinvested in the carbon VAT carousel, and partially laundered via 
bank accounts held by the missing trader or by natural persons in Hong Kong. 

Funds  were  finally  put  at  the  disposal  of  the  criminals  via  a  specific  money  laundering  scheme 
consisting in banking transfers from the missing trader bank accounts to companies which were in 
charge  of  disbursing  cash  money  to  be  remitted  to  the  fraudsters  in  compensation.  These  money 
laundering commercial entities located in Latvia, China, Hong Kong and Liechtenstein charged a 
2% fee for this service. 

Another money laundering pattern was detected with the use of a legal entity registered in Panama 
holding a bank account in Turkey on which EUR 38 million coming from the VAT carousel fraud 
were transferred. This amount was then transferred to bank accounts in United Arab Emirates and 
in Latin America to companies well-known for having been also used by Colombian drugs cartels 
for money laundering purposes. 

Results obtained:  

Out of EUR 1.7 billion, judicial investigations carried out by the French Judicial Customs Service 
brought about seizure of EUR 116 million and 100 indictments. The case considered as the biggest 
VAT  carousel  fraud  ever  dismantled  in  Europe  is  currently  pending  before  the  Tribunal 
Correctionnel de Paris (June 2017)152. 

VAT carousel fraudsters tend not only to contaminate new specific economic sectors, but also 
tend  to  involve  institutional  players  acting  onto  these  markets:  the  cases  of  precious  metals 
and plastic markets. 

VAT fraudsters contaminating the copper cathodes sector:  

Judicial investigations highlighted the great adaptability of these criminal networks for moving the 
VAT fraud from one economic sector to the other, and from one Member State to the other, always 
with the same missing trader located in France.  

In  this  respect,  one  investigation  demonstrated  that  the  same  company  was  successively  used  in 
fraud involving green certificates in Italy in 2010, in a carousel VAT fraud onto electricity sector in 
Slovakia and finally in a MTIC VAT fraud onto the copper market in France. 

152  http://www.liberation.fr/france/2017/05/28/arnaque-a-la-tva-itineraire-d-un-cerveau-carbonise_1572927  and 
http://www.liberation.fr/societe/2017/05/28/nouveau-proces-de-la-fraude-a-la-taxe-carbone-a-146-millions-d-
euros_1572823  

195 

 
 
 
                                                            
In the latter, the criminal network managed to impose the company as a key player onto the very 
specific  and  closed  copper  cathodes  market  where  only  well-known  professionals  are  acting.  A 
significant volume of copper was bought by a Swiss trader in Chili and stored in Rotterdam in line 
with  the  London  Metal  Exchange  (LME)  standards.  The  missing  trader  company  bought  several 
hundreds of thousands tons of copper VAT free from this trader and resold it VAT included at a 
loss  (at  a  very  competitive  price)  to  a  French  player  onto  the  market.  At  the  end,  the  copper 
cathodes were sold to a French large business. 

Sale  at  loss  to  its  French  client  was  largely  compensated  by  the  profit  derived  from  the  VAT 
evasion in the trade chain. In this case, EUR 1.2 million were not remitted to the tax administration 
in France. Proceeds of crime were laundered through international bank transfers from the missing 
trader to Chinese companies which took care of disbursing cash money remitted to the fraudsters 
via Chinese natural persons living in France. 

VAT fraudsters contaminating the plastic trading sector:  

A strong and persistent trend is the capacity of well-known VAT fraudsters to enter into business 
relations  with  institutional  commercial  partners.  Once  again,  a  judicial  investigation  highlighted 
that a well-known VAT carousel fraudster, also involved in arms trafficking, managed to enter into 
business relations with a key institutional player onto the plastic international trading market.  

In this case, the institutional trader located in Switzerland accepted to simulate trading transactions 
related to a huge stock of raw plastic products imported from Middle-East and stored under a VAT 
free  regime  in  a  warehouse  in  Antwerp  harbour  in  Belgium.  To  this  end,  the  Swiss  institutional 
trader (company A) acted through a Belgian fiscal representative. Although still a Swiss company, 
it  used  a  Belgian  VAT  number  for  its  activities  in  Belgium  (company  A1).  In  parallel,  the  VAT 

196 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
fraudster  created  two  subsidiary  companies  in  Belgium  (company  B1  and  B2)  of  his  mother 
company located in Spain (company B). These two subsidiary companies had also their own VAT 
numbers.  The  institutional  Swiss  trader  simulated  a  first  sale  VAT  free  from  company  A  to 
company B1 (EUR 55 million VAT free); then, company B1 sold the same products at loss (EUR 
56 million VAT included) to company B2; at last, company B2 resold the same products at loss to 
the  initial  company  A1  (EUR  49.8  million  VAT  included).  It  should  be  noted  that  company  B1 
compensated  VAT  collected  to  be  remitted  to  the  tax  administration  by  fake  invoices  reflecting 
virtual  purchases  of  goods  VAT  included  (in  doing  so,  company  B1  became  fiscally  artificially 
neutral). 

As a result, company A1 sold these products VAT free (EUR 55 million) and bought them at the 
end of the artificial trade chain VAT included (EUR 49.8 million). In doing so, it generated a VAT 
credit of EUR 10 million for which company A1 applied for to the Belgian tax administration. It is 
worth noting that the goods never moved from the warehouse in Antwerp. The only purpose of this 
scheme was to generate a VAT credit at the detriment of the Belgian national budget. 

Proceeds of crime were shared between the Swiss institutional trader and the VAT fraudster at the 
end of the process through bank transfers to bank accounts held in a Latvian bank. In a 6 months 
period, EUR 10 million of VAT were evaded out of which EUR 5 million were seized in the course 
of the judicial investigation. The recovery of the remaining EUR 5 million was secured by seizure 
of the stock of plastic products in Antwerp. 

4. More traditional sectors are extensively undermined by VAT fraud 

The industrial scale of VAT fraud in certain traditional economic sectors has deeply altered the fair 
competition. The abuse of certain specific VAT regime is so widespread that the level playing field 

197 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
onto  the  market  is  actually  undermined  between  the  compliant  economic  operators  and  the 
increasing number of fraudsters. 

The  widespread  abuse  of  the  specific  VAT  regime  for  second-hand  cars,  named  "VAT  on  profit 
margin": 

Under this specific regime mainly applicable to second hand cars, VAT is only due on the profit 
margin  and  not  on  basis  of  the  whole  price  of  the  second-hand  car  in  order  to  avoid  double 
taxation. 

Fraudsters abusively apply for this specific regime in order to cover tax-free purchases of cars in 
Germany,  followed  by  all  tax-included  re-sales  without  fully  repaying  the  VAT  to  the  tax 
administration  in  other  Member  States.  This  kind  of  typology  has  been  commonly  observed  for 
years  and  has  now  profoundly  altered  the  level  playing  field  between  legitimate  economic 
operators and fraudsters in this sector. 

Judicial  investigations  in  France,  and  set  up  of  a  Joint  Investigation  Team  with  Spanish  criminal 
investigators,  have  revealed  these  last  years  two  huge  VAT  fraud  cases  with  damage  amounting 
respectively to EUR 60 million over 5 years and EUR 30 million over 4 years. 

The fraudulent scheme is recurrently the same and follows this sequence: 

1- A trader in France selects ads for sale of luxury cars released by German suppliers (cars are sold 
free of VAT). 

198 

SUPPLY COMPANY MISSING TRADER SECOND HAND CARS VAT = 0 VAT INCLUDED  Only taxed on the profit margin realised TAX ADMINISTRATION Final Sale on the domestic market (below prices determined by level playing field due to VAT evasion in the trade chain) GERMANY MEMBER STATE 2 REAL TRADE CHAIN OPERATIONS DECLARED SUPPLY COMPANY SECOND HAND CARS VAT INCLUDED MEMBER STATE 3 SECOND HAND CARS VAT INCLUDED BENEFICIARY FAKE INVOICES ALL ALONG THE TRADE CHAIN DIRECT SUPPLY VAT = 0  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2- The French trader orders the selected cars to the German suppliers. 

3-  The  French  trader  has  previously  created  a  shadow  company  located  in  an  Eastern  European 
country, which is used as the virtual client of the German supplier for receiving the intra-EU supply 
of the purchased car (VAT = 0). 

4- The German supplier will be paid by the shadow company in Eastern Europe and will issue an 
invoice to this company for intra-EU delivery of the car (VAT = 0). 

5- The German supplier will accept to deliver the car to the French trader directly, and not to the 
official client having received the invoice in Eastern Europe. 

6- The shadow company in Eastern Europe will be used by the French trader for receiving a fake 
invoice (VAT included with the mention of "VAT on profit margin"). As a result, the French trader 
will then pay VAT only on the profit margin and not on the full price of the car.  

7-  This  fraud  enables  the  French  trader  to  increase  its  profit  margin  at  the  detriment  of  the  tax 
administration in France. He will be able to sell cars under normal fair prices resulting from level 
playing field at the detriment of the other legitimate economic operators in France.  

It  was  highlighted  that  in  certain  cases  where  German  suppliers  refused  selling  cars  to  obvious 
shadow  companies  created  by  French  traders  in  Eastern  Europe,  French  traders  could  take 
advantage of the services proposed by German intermediaries specialised in re-registering cars in 
the name of German natural persons against a fee of 500 to 1000 Euros per car. In doing so, the 
French dealers could buy and sell the cars under the "VAT on profit margin" regime. 

5.  Customs  Regime  42  fraud:  When  large-scale  organised  VAT  fraud  can  be  conveniently 
combined with industrial customs fraud 

Description of the fraudulent scheme: 

The specific customs procedure 42 is subject to very general abuse combining various fraudulent 
tactics.  

Under  this  procedure  an  importer  can  obtain  a  VAT  exemption  when  the  imported  goods  are 
destined to be transported immediately or shortly after their importation to another Member State, 
i.e. where the import is followed by an intra-EU supply. As it is for an intra-EU supply, the VAT is 
normally due in the Member State of final destination. Since the customs duties are paid, there is 
no  longer  customs  supervision  for  those  goods  at  the  end  of  the  trade  chain.  Verifications  in  the 
Member State of destination are supposed to be carried out by the tax administration. Here again 
the  principle  of  taxation  in  the  Member  State  of  destination  creates  a  situation  at  risk  where  the 
fraudsters indicate shadow companies as official recipients of the goods in one Member State while 
those  goods  are  sold  on  the  black  market  in  other  Member  States.  They  can  also  steal  VAT 
numbers  of  official  companies.  In  practice  this  procedure  is  often  abused  with  a  combination  of 
various  fraudulent  manoeuvres:  (i)  under  evaluation  of  the  value  of  the  goods  at  the  import  for 
evading customs duties and related taxes; (ii) fraudulent use of customs procedure 42 for the intra-
EU supply of the imported goods in order to sell them on the black market without paying the VAT 
in the Member State of destination. 

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A recent concrete criminal case: 

A Chinese criminal network organised a massive regime 42 customs fraud between 2008 and 2016. 
There  was  a  first  fraudulent  scheme  involving  imports  of  clothes  from  China  to  the  EU  through 
Hamburg between 2008 and 2012. After arrest of the main responsible of the fraud in Germany, the 
network diverted its imports through Felixtowe in the United Kingdom (UK). 

As  the  first  step  of  the  fraud,  French  wholesalers  ordered  purchases  of  clothes  directly  to  their 
suppliers  in  China.  The  goods  were  exported  from  China  to  Europe  by  "Y"  a  freight  forwarder 
accomplice in the fraud (value of the goods = 100). The value declared for customs clearance in the 
UK  was  underestimated  up  to  96%  of  their  real  value  (declared  value  of  the  goods  =  4).  At  this 
stage, based on underestimated value customs duties are evaded but VAT is still to be paid in the 
Member State of destination under customs regime 42. 

As the second step of the fraud, the goods were placed under customs regime 42 in the UK under 
which shadow companies created by the fraudsters in Germany, Hungary and Poland were declared 
as final recipients of the goods. VAT was never paid in the Member States of destination and goods 
were  transported  and  delivered  to  a  warehouse  owned  by  "X"  the  accomplice  in  Europe  of  the 
Chinese freight forwarder "Y". Then, "X" delivered the goods to the French wholesalers which sold 
the  products  partially  on  the  black  market  and  partially  as  official  sales  registered  in  their 
accounting system. "X" was paid 900 Euros per container delivered to the wholesalers. 

200 

IMPORTER MISSING TRADER (« SHADOW COMPANIES ») UNDERESTIMATION OF THE GOODS VALUE (CUSTOMS DUTIES EVADED) VAT EVADED TAX ADMINISTRATION Final Sale on the domestic market (below prices determined by level playing field due to VAT evasion in the trade chain) MEMBER STATE OF IMPORT MEMBER STATE 2 REAL TRADE CHAIN OPERATIONS DECLARED SUPPLY COMPANY GOODS PUT UNDER PROCEDURE 42: VAT PAYMENT IS SUSPENDED MEMBER STATE 3 VAT NOT PAID IN THE MEMBER STATE OF DESTINATION BENEFICIARY FAKE INVOICES ALL ALONG THE TRADE CHAIN TRANSPORT TO ANOTHER DESTINATION  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Several money laundering schemes were set up by the criminal network: 

Three different money laundering typologies were used by the fraudsters ("X", "Y" and the linked 
wholesalers). 

Firstly,  cash  money  deriving  from  the  sales  onto  the  black  market  in  France  was  transferred  to 
Hong  Kong  and  China  via  money  transfer  agency  owned  by  "X".  Identity  of  numerous  people 
members of the Chinese community in France was usurped for proceeding with  cash  transfers to 
Hong Kong and China.  

Secondly,  cash  money  was  remitted  by  "X"  to  French  and  Portuguese  security  companies, 
accomplices  in  this  money  laundering  process.  These  companies  transferred  money  to  German 
companies  controlled  by  the  fraudsters.  The  German  companies  transferred  money  to  Chinese 
companies. 

At last, "Y" was also in charge of laundering cash money through purchases of luxury goods to be 
resold in China and through casinos. 

This VAT fraud is part of a more massive European fraudulent importation scheme highlighted by 
OLAF: 

This  concrete  example  illustrates  that  for  abuse  of  regime  42,  VAT  and  customs  fraud  are 
inseparably  interconnected,  set  up  by  the  same  criminal  network  and  with  financial  profit 
channelled via the same money laundering processes. 

In  this  respect,  it  is  worth  mentioning  that  in  parallel  to  this  judicial  investigation  carried  out  in 
France, OLAF has closed an investigation in 2017 that revealed a major pattern of customs fraud. 
The fraud was caused by the declaration at customs of falsely low values for textiles and footwear 
imported from China. This is an example of so-called undervaluation fraud, whereby the goods are 
declared  at  a  fictitiously  low  value  at  import  so  that  importers  can  derive  profit  from  evading 

201 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
customs duties and related taxes, paying much less than what is legally due. The most significant 
hub for this fraudulent traffic was found to be in place in the United Kingdom. OLAF investigative 
and analytical work in this case shew that between 2013 and 2016, fraudsters have evaded customs 
duties by means of using fictitious and false invoices and incorrect customs value declarations at 
importation  through  the  UK.  These  fraudsters  are  in  fact  organised  crime  groups  whose  actions 
affect  the  entire  EU;  they  operate  in  criminal  networks  active  across  the  EU.  The  OLAF 
investigation revealed that most of the imports arrive for customs clearance in the UK, but are in 
fact supplies destined for the black market traffic of textiles and footwear in other Member States 
across the EU. Upon concluding the investigation, OLAF calculated a loss of almost EUR 2 billion 
to  the  EU  budget  in  terms  of  lost  customs  duties  due  on  textiles and  shoes  imported  from  China 
through the UK in the period 2013-2016. These losses to the EU budget are still on-going since this 
fraud has not been stopped to date.  

The  investigation  also  revealed  that  there  is  substantial  VAT  evasion  in  connection  with  imports 
through the UK by abusing the suspension of the payment of VAT (so  called customs procedure 
42). As the goods are destined for the markets of other Member States, it is the revenues of those 
Member  States  (such  as  France,  Spain,  Germany  and  Italy),  and  not  of  the  UK,  that  are  mainly 
affected. These VAT losses are cumulatively in the range of EUR 3.2 billion for the period 2013-
2016. 

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9.11. Annex 11: Findings and recommendations of the 2015 European Court of Auditors report: 
Tackling VAT fraud: more action needed153 

1. Measuring the effectiveness of the system  

The lack of comparable data and the lack of adequate relevant indicators to measure Member States’ 
performance  adversely  affects  the  effectiveness  of  the  EU  system  to  tackle  intra-Community  VAT 
fraud. 

Recommendation 1  

The Commission should initiate a coordinated effort of Member States to establish a common 
system  of  estimating  the  size  of  intra-Community  VAT  fraud,  which  would  allow  Member 
States  to  evaluate  their  performance  in  terms  of  reducing  the  incidence  of  intra-Community 
VAT fraud, increasing detection of fraud and increasing tax recovery following the detection of 
fraud. This system could build upon the already-used practices in some Member States. 

2. Cross-checking customs with VAT data is crucial  

The audit showed that cross-checks between imports under CP 42 and VAT recapitulative statements 
is not possible because customs authorities do not send this data to tax authorities and traders are not 
obliged  to  report  separately  the  intra-Community  supplies  following  these  imports  in  the  VAT 
recapitulative statements. In addition not all Member States exchange data on risky imports under CP 
42 through Eurofisc working field 3. 

Recommendation 2  

Member States’ customs authorities should send data on imports under customs procedure 42 
to tax authorities and implement other measures of our control model on customs procedure 
42. 

Recommendation 3  

The  Commission  should  propose  legislative  amendments  enabling  effective  cross-checks 
between customs and tax data. 

3. Improving the Eurofisc early-warning system to better target high-risk traders  

Member  States  consider  Eurofisc  to  be  an  efficient  early-warning  system,  but  complained  that 
exchange of information is not user friendly, data exchanges are slow, and not always well targeted. 
The audit in selected Member States also found that data processing and access to information was a 
lengthy  and  cumbersome  process,  relying  on  Excel  spreadsheets  which  are  distributed  to  liaison 
officers of Member States, with risks of transmitting incomplete or wrong information. The feedback 
is often provided to the originating country with substantial delays. 

Recommendation 4  

The Commission should recommend to Member States to:  

153  

203 

 
 
 
                                                            
(a)  introduce  a  common  risk  analysis  including  the  use  of  social  network  analysis  to  ensure 

that the information exchanged through Eurofisc is well targeted to fraud;  

(b) improve the speed and frequency of these information exchanges;  

(c) use a reliable and user-friendly IT environment for these information exchanges;  

(d) set up relevant indicators and targets to measure the performance of the different working 
fields; and  

(e) participate in all Eurofisc working fields 

4. Improving the existing legal framework  

The proposal of the Commission about joint and several liability in cases of cross-border trade has not 
been  adopted  by  the  Council.  This  reduces  the  deterrence  against  doing  business  with  fraudulent 
traders.  The  implementation  of  the  VAT  directive  concerning  the  period  of  submission  of  re-
capitulative  statements  is  not  uniform  among  Member  States,  thus  increasing  the  administrative 
burden on traders operating in more than one Member State.  

Recommendation 5  

The Council should approve the Commission’s proposal on joint and several liability. 

Recommendation 6  

The Commission should propose to amend the VAT directive with a view to achieving further 
harmonisation of Member States’ VAT reporting requirements for intra-Community supplies 
of goods and services.  

Evidence  shows  that  upon  introduction  of  reverse  charge  in  one  or  more  Member  States,  fraudsters 
move to the Member State in which the reverse charge is not applied.  

Recommendation 7  

The  Commission  should  encourage  Member  States  to  better  coordinate  their  policies  on 
reverse charges, as already done, for example, in the emissions trading scheme. 

5. Improving the administrative cooperation arrangements  

The  Commission  has  proposed  several  legislative  measures  allowing  Member  States  to  set  up  an 
adequate  framework  for  exchanging  information  between  their  tax  authorities  to  fight  against  intra-
Community VAT fraud but their use among Member States is still poor and some of them need to be 
strengthened or more consistently applied. 

Recommendation 8  

The  Commission  in  the  context  of  its  evaluation  of  the  administrative  cooperation 
arrangements  should  carry  out  monitoring  visits  to  Member  States  selected  on  a  risk  basis. 
These monitoring visits should focus on improving the timeliness of Member States’ replies to 
information requests, the reliability of VIES, the speed of multilateral controls, and the follow-
up of the findings of its previous reports on administrative cooperation.  

204 

 
 
 
Recommendation 9  

Member  States  which  have  not  already  done  so,  should  implement  a  two-tier  VAT  ID  No 
(VAT  ID  No  allocated  to  traders  wishing  to  take  part  on  intra-Community  trade  which  is 
different  than  domestic  VAT  ID  No)  and  conduct  the  checks  foreseen  in  Article  22  of 
Regulation No 904/2010 while providing free advice to traders.  

Recommendation 10  

Member States should send letters of formal notice to traders involved in fraudulent chains to 
facilitate the application of the case-law of the Court of Justice of the EU (CJEU) in Cases Kit-
tel/Mecsek and refuse either the right to deduct input tax or the right to supply with zero rate 
on the basis that the trader knew or ought to have known its transactions were connected with 
fraudulent tax losses. 

Member  States  need  information  from  non-EU  countries  to  enforce  VAT  collection  of  e-commerce 
B2C services and intangibles supplied via internet.  

Recommendation 11  

To  strengthen  cooperation  with  non-  EU  countries  and  enforce  VAT  collection  on  e-
commerce B2C services and intangibles supplied from them, Member States should:  

(a) authorise the Commission to negotiate mutual assistance arrangements with the countries 
where  most  of  the  digital  service  providers  are  established  and  sign  these  arrangements; 
and  

(b)  for  those  Member  States  which  belong  to  the  OECD,  sign  and  implement  the  OECD’s 
Convention  on  Mutual  Administrative  Assistance  in  Tax  Matters  in  order  to  exchange 
information on digital services providers with third countries 

6. Improving cooperation between administrative, judicial and law enforcement authorities  

Intra-Community  VAT  fraud  is  often  linked  with  organised  criminal  structures.  This  calls  for  the 
adoption  of  a  better  common  and  multidisciplinary  approach  to  tackle  intra-Community  VAT  fraud. 
However, there are a number of authorities and bodies with overlapping competences to fight against 
intra-Community  VAT  fraud  who  are  not  fully  cooperating  and  exchanging  information  with  each 
other due to legal constraints.  

Recommendation 12  

The Commission and Member States should remove legal obstacles preventing the exchange 
of  information  between  administrative,  judicial  and  law  enforcement  authorities  at  national 
and EU level. In particular, OLAF and Europol should have access to VIES and Eurofisc data 
and Member States should benefit from intelligence information supplied by them. 

One of the existing elements of a multidisciplinary approach at EU level is the operational action plans 
(OAPs)  set  up  by  Member  States  and  ratified  by  the  Council  under  the  umbrella  of  the  Empact 
initiative, which cover the period 2014-2017. However, the viability and sustainability of the OAPs is 
at risk because of a lack of EU funding.  

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Recommendation 13  

The Commission should ensure the sustainability of the OAPs under the Empact initiative by 
providing sufficient financial resources.  

VAT fraud could go unpunished due to negative conflicts of jurisdiction if the PIF directive and the 
EPPO regulation do not include VAT within their scope (see paragraphs 110 to 111). VAT fraud can 
also go unpunished because of too short limitation periods, as emphasised by the Court of Justice in its 
judgment of 8 September 2015 (case C-105/14 Taricco). As ruled by the Court of Justice of the EU, 
VAT fraud affects the financial interests of the EU. 

Recommendation 14  

The European Parliament and the Council should:  

(a) include VAT within the scope of the proposed directive on the fight against fraud to 
the Union’s financial interests by means of criminal law (PIF directive) and the regulation 
on the establishment of the European Public Prosecutor’s Office; and  

(b) grant OLAF clear competences and tools to investigate intra-Community VAT fraud. 

206