REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Second report on the implementation of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law
Date: 2022-09-16
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: criminal law, fraud against the EU, general budget (EU), judicial cooperation in criminal matters in the EU, offence, penalty, sanction (EU)

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.9.2022  COM(2022) 466 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Second report on the implementation of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law  
 
 
1.  INTRODUCTION  

1.1. Background  

Directive  (EU)  2017/1371  of  the  European  Parliament  and  of  the  Council  on  the  fight  against 
fraud  to  the  Union’s  financial  interests  by  means  of  criminal  law  (the  ‘PIF  Directive’)  was 
adopted  on  5 July 20171.  For  the  Member  States  bound  by  it2,  the  PIF  Directive  replaces  the 
1995  Convention  on  the  protection  of  the  European  Communities’  financial  interests  and  its 
protocols (the ‘PIF Convention’)3.  

The PIF Directive was adopted on the basis of Article 83(2) of the Treaty on the Functioning of 
the European Union  (TFEU) and  is  thus  part of the  legal  instruments  of the  Area of  Freedom, 
Security  and  Justice.  It  also  forms  part  of  the  Commission’s  overall  anti-fraud  strategy4. 
Moreover,  there  is  a  strong  interdependence  between  the  upholding  of  EU  common  values 
stipulated in Article 2 TEU and the protection of the EU’s financial interests. For example, the 
latter  requires  that  judicial  authorities  are  able  to  perform  their  tasks  in  an  independent  way, 
without interference from the executive5.  

The  PIF  Directive  sets  minimum  common  standards  for  Member  States’  criminal  laws.  These 
common  standards  seek  to  protect  the  EU’s  financial  interests  by  harmonising  the  definitions, 
sanctions,  and  limitation  periods  of  certain  criminal  offences  affecting  those  interests.  The 
harmonisation also affects the scope of investigations and prosecutions by the European Public 
Prosecutor’s Office (EPPO)6, because the EPPO’s material competence is defined by reference 
to the PIF Directive7, as implemented by national law.   

As  the  PIF  Directive  requires  the  Member  States  to  criminalise  offences  related  both  to  the 
revenue and expenditure of the Union budget, its transposition affects not only the own resources 
of the EU (customs duties and VAT) but also the substantive policies where EU expenditure is 
used for the achievement of these policy aims. A correct transposition of the Directive is thus not 

1 OJ L 198, 28.7.2017, pp. 29-41.  
2 In accordance with Protocol 22 to the Treaties, Denmark did not take part in the adoption of the PIF Directive and is therefore 
not  bound  by  it  or  subject  to  its  application.  However,  Denmark  remains  bound  by  the  PIF  Convention.  Ireland,  on  the  other 
hand, did exercise its right to take part in the adoption and application of the PIF Directive in accordance with Protocol 21 to the 
Treaties. 
3  Convention  drawn  up  on  the  basis  of  Article  K.3  of  the  Treaty  on  European  Union,  on  the  protection  of  the  European 
Communities’ financial interests, OJ C 316, 27.11.1995, pp. 49-57.  
4 Commission Anti-Fraud Strategy: enhanced action to protect the EU budget, COM (2019) 196 final, 29.4.2019. 
5  Court  of  Justice  of  European  Union,  Judgment  of  the  Court  (Grand  Chamber)  of  27  May  2019, Joined  Cases  C‑508/18  and 
C‑82/19 PPU,  Minister for Justice and Equality v OG and PI, ECLI:EU:C:2019:456; Court of Justice of the European Union, 
Judgement of the Court (Grand Chamber) of 24 November 2020, Case C-510/19, Openbaar Ministerie, ECLI:EU:C:2020:953; 
Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime 
of conditionality for the protection of the Union budget, OJ L 433I of 22.12.2020, pp. 1-10. 
6  Council  Regulation  (EU)  2017/1939  of  12  October  2017  implementing  enhanced  cooperation  on  the  establishment  of  the 
European Public Prosecutor’s Office (‘the EPPO’), OJ L 283, 31.10.2017, pp. 1-71. 
7 Article 22(1) of Regulation (EU) 2017/1939. 

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only key for the protection of the Union budget but also for all EU policies for which EU money 
is used, and is especially relevant in the context of the Recovery and Resilience Facility (RRF)8. 

a.  PIF Directive 

The criminal offences covered by Articles 3 and 4 of the PIF Directive (‘PIF offences’) are:  

(i) 

fraud, including cross-border value added tax (VAT) fraud involving total damage of 
at least EUR 10 million9; 

(ii)  money laundering10; 
(iii) 
(iv)  misappropriation12. 

active and passive corruption11; and  

Article  5  of  the  PIF  Directive  obliges  Member  States  to  criminalise:  (i)  incitement,  aiding  and 
abetting  of  any  of  these  offences;  and  (ii)  the  attempt  to  commit  fraud  and  misappropriation. 
Articles  6  and  9  of  the  PIF  Directive  furthermore  oblige  Member  States  to  provide  for  the 
liability of, and sanctions for legal persons for any of the criminal offences committed for their 
benefit:  

(i) 
(ii) 

by persons having a leading position within the legal person; or  
by any person under the authority of these persons having a leading position, due to 
the lack of supervision or control of the latter  

In  addition,  Article 7 of  the PIF Directive  establishes minimum  rules on criminal  penalties for 
natural  persons, including minimum-maximum  sanctions of at  least  four  years  for the  criminal 
offences involving considerable damage or advantage. 

Moreover, Article 11 of the PIF Directive obliges Member States to:  

(i) 

(ii) 

establish their jurisdiction over PIF offences where the offence is committed in whole 
or in part within their territory or the offender is one of their nationals, and where the 
offender is subject to the Staff Regulations at the time of the criminal offence13; and  
avoid  making  the  exercise  of  jurisdiction  over  PIF  offences  committed  abroad  by 
their nationals subject to certain conditions.14  

8 Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and 
Resilience Facility,OJ L 57, 18.2.2021, pp. 17–75. 
9 PIF Directive, Article 3. 
10 PIF Directive, Article 4(1). 
11 PIF Directive, Article 4(2). 
12 PIF Directive, Article 4(3). 
13 In accordance with Article 11(2) of the PIF Directive, Member States may refrain from applying this rule, or may apply it only 
in  specific  cases  or  only  where  specific  conditions  are  fulfilled,  and  must  inform  the  Commission  if  they  take  this  course  of 
action. 
14 PIF Directive, Article 11. 

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Furthermore, Article 12 of the PIF Directive obliges Member States to:  

(i) 

(ii) 

prescribe  limitation  periods  for  a  sufficient  period  of  time  after  committing  PIF 
offences in order for those criminal offences to be tackled effectively, with minimum 
limitation  periods  applying  to  those  offences  that  are  punishable  by  a  maximum 
sanction of at least 4 years of imprisonment; and  
take the necessary measures to enable penalties to be enforced15.  

Finally, the PIF Directive  aims at  facilitating the recovery of misused EU funds16 by means of 
criminal law17. 

b.  Transposition, including infringement proceedings 

The  deadline  for  transposition  of  the  Directive  into  national  law  expired  on  6 July 2019.  In 
accordance  with  Article  18(1)  of  the  PIF  Directive,  the  Commission  was  required  to  submit  a 
first  implementation  report  to  the  European  Parliament  and  the  Council  two  years  after  the 
transposition  deadline.  The  relevant  report  was  adopted  in  September  202118.  This  report 
concluded that all Member States have transposed the PIF Directive’s main provisions. However, 
it  also  highlighted  the  need  for  the  transposition  of  the  Directive  to  be  improved,  notably  to 
ensure  the  consistent  transposition  of  the  definitions  of  criminal  offences  and  the  liability  of  – 
and sanctions for – legal persons and natural persons. Finally, the report highlighted the need to 
properly transpose the provisions on the exercise of jurisdiction and limitation periods. 

As regards the criminal offences, with respect to fraud, the conformity issues identified included 
the  narrower  scope  of  national  legislation.  Moreover,  in  several  Member  States,  an  additional 
aspect – “breach of duties” – is required for both active and passive corruption. This additional 
aspect significantly narrows the scope of the PIF Directive’s definitions of corruption and makes 
its  prosecution  dependent  on  proving  such  a  breach  of  duty.  In  addition,  as  regards 
misappropriation, conformity issues concerned a narrower transposition of this offence or a lack 
of transposition altogether. 

With respect to the liability of and sanctions for legal persons, conformity issues concerned:  

  a lack of transposition of Article 6(1) related to criminal offences committed by persons 

having a leading position within the legal person;  

  only covering the criminal acts of persons committed within the scope of the activities of 

the legal person; and  
the exclusion of corporate liability in case of some predicate offences. 

 

15 PIF Directive, Article 12. 
16 PIF Directive, Article 13. In this regard, the number of irregularities reported as fraudulent (which includes cases of suspected 
or established fraud) and the associated amounts are not a direct indicator of the level of fraud affecting the EU budget. They are, 
first and foremost, an indication of the level of detection and reporting of potential fraud by Member States and EU bodies.  In 
2020, 1 056 irregularities were reported as fraudulent, involving EUR 374 million (Report from the Commission to the European 
Parliament  and  the  Council,  32nd  Annual  Report  on  the  protection  of  the  European  Union’s  financial  interests  –  Fight  against 
fraud – 2020, COM(2021) 578 final, 20.09.2021, pp. 33-34. 
17 PIF Directive, Article 13. 
18 Report from the Commission to the European Parliament and the Council on the implementation of Directive (EU) 2017/1371 
of  the  European  Parliament  and  of  the  Council  of  5  July  2017  on  the  fight  against  fraud  to  the  Union's  financial  interests  by 
means of criminal law, COM (2021) 536 final of 6.9.2021. 

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In reference to Article 9, the Commission emphasised that corporate liability should not be made 
dependent  on  the  final  conviction  of  a  natural  person,  as  is  the  case  in  one  Member  State, 
because  this  undermines  the  possibility  to  impose  “effective,  proportionate  and  dissuasive” 
sanctions on legal persons. 

As regards criminal penalties for natural persons, conformity issues were identified in a quarter 
of the Member States. The legislation of several  Member States contains  provisions that allow 
individuals to escape criminal liability or the imposition of sanctions if they report the crime or 
repay  the  damage  caused  to  the  Union’s  financial  interests  at  various  stages  prior  to  or  during 
criminal proceedings. Such provisions could make sanctions ineffective  and prevent them from 
being dissuasive. Yet other conformity issues related to the national legislation’s failure to meet 
the sanctions’ threshold of four years. 

As for the establishment of jurisdiction on the basis of territoriality, a particular conformity issue 
concerned  the  fact  that  certain  Member  States  impose  the  condition  that  prosecution  for  PIF 
offences  can  be  initiated  only  following  a  report  made  by  the  victim  in  the  place  where  the 
criminal  offence  was  committed  or  require  a  complaint  from  the  injured  party  (if  such  a 
complaint  is  required  for  prosecution  under    the  law  of  the  Country  where  the  offence  was 
committed). A specific transposition issue related to limitation periods concerns the provision of 
a limitation period for the execution of a judgment that is shorter than the five years required by 
Article 12. 

Without prejudice to further action against other Member States, following the adoption of the 
first implementation report, Letters of Formal Notice have so far been sent to seventeen Member 
States: to eight Member States in December 202119; to a further five Member States in February 
202220;  and  to  another  four  Member  States  in  May  202221.  The  Commission  is  currently 
assessing the replies to the Letters of Formal Notice received so far in view of potential further 
action.  

1.2. Scope and methodology of this second implementation report 

In accordance with Article 18(4) of the PIF Directive, the Commission is adopting this second 
implementation  report  in  order to assess, with  regard to  the general  objective to  strengthen the 
protection of the Union's financial interests, whether: 

(a) 

the VAT threshold indicated in Article 2(2) is appropriate; 

the  provisions  relating  to  limitation  periods  as  referred  to  in  Article  12  are  sufficiently 

(b) 
effective; 

(c) 

the PIF Directive effectively addresses cases of procurement fraud. 

19 December infringements package: key decisions, available at: 
https://ec.europa.eu/commission/presscorner/detail/en/inf_21_6201  
20 February infringements’ package: key decisions, available at: 
https://ec.europa.eu/commission/presscorner/detail/en/inf_22_601 
21 May infringement package: key decisions, available at: 
https://ec.europa.eu/commission/presscorner/detail/en/inf_22_2548 

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In  accordance  with  Article  18(5)  of  the  PIF  Directive,  this  report  also  assesses  the  need  for  a 
revision of the PIF Directive, notably to include a specific provision on procurement fraud.  

This  report  is  primarily  based  on  the  information  that  Member  States  provided  to  the 
Commission  through  their  notification  of  national  measures  transposing  the  PIF  Directive, 
followed by systemic exchanges with  the Member States, including those in  the context  of the 
ongoing infringement proceedings.  

Furthermore, it is based on annual statistics on the PIF offences, including the incitement, aiding 
and abetting of any of these offences and attempt to commit fraud or misappropriation, submitted 
by  Member  States  to  the  Commission  pursuant  to  Article  18(2)22.  These  statistics  notably 
concern:  

(a) the number of criminal proceedings initiated, dismissed, resulting in an acquittal, resulting in 
a conviction and ongoing; and  

(b) the amounts recovered following criminal proceedings and the estimated damage.  

However, for 2021, the Commission only received statistics from about one third of the Member 
States,  and  only  incomplete  statistics  from  another  third  of  Member  States.    In  a  majority  of 
Member States, statistics are generally not collected at central level.  

Furthermore, not all offences are covered by the statistics submitted and, very often, they relate 
to broader criminal offences rather than referring to the specific criminal offences covered by the 
PIF Directive. In addition, Member States’ data does not differentiate between offences affecting 
the EU’s or Member States’ financial interests.  

Moreover, in the majority of Member States, there is no separate data available regarding aiding 
and abetting of any of these offences and attempt to commit fraud or misappropriation.  

In  addition,  data  regarding  criminal  proceedings  initiated,  dismissed,  resulting  in  an  acquittal, 
resulting in a conviction and ongoing is not uniform across the Member States.  

Finally, information regarding amounts recovered and the estimated damage is available only in 
a limited number of Member States. 

The  EPPO’s  2021  Annual  Report  provides  relevant  –  even  if  limited  -  data,  relating  to  the 
EPPO’s first 7 months of operational activities23. According to the Report, 31.8% of the EPPO 
investigations  concerned  suspected  non-procurement  fraud  (313  investigations)  in  the  form  of 
the use or presentation of false, incorrect or incomplete statements or documents, which has, as 
its effect, the misappropriation or wrongful retention of funds or assets from the Union budget or 
budgets  managed  by  the  Union,  or  on  its  behalf.  This  type  of  fraud  is  to  be  found  mainly  in 
agricultural  subsidies  and  direct  payment,  rural  development,  maritime  and  fisheries 

22 In accordance with Article 18(2), each Member State is required to submit such statistics,  if they are available at the central 
level of the Member State concerned. 
23 It ought to be noted that, at the time of writing, 22 Member States participate in the enhanced cooperation on the establishment 
of the EPPO, while the PIF Directive is binding on 26 Member States.  

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training  services,  construction,  research  and 

development programmes, infrastructure, human resources development programmes, Covid-19 
related  recovery  funds, 
local 
infrastructure  development,  care  services,  youth  and  unemployed  integration  into  the  labour 
market,  water  infrastructure  and  support  for  small  to  medium-sized  enterprises.  In  the  case  of 
agricultural  subsidies  in  particular,  the  EPPO  investigates  fraud  based  on  false,  incorrect  or 
incomplete  statements,  false  declarations  concerning  the  size  of  cultivated  land  and/or  the 
amount  of  cattle  (‘ghost  cattle’),  as  well  as  the  activity  of  criminal  groups  submitting  false 
documents for fictitious farming businesses of all kinds.  

innovation, 

Procurement expenditure fraud accounted for 11.2% of the EPPO investigations (110 cases). The 
fraud  was  committed  usually  through  the  use  or  presentation  of  false,  incorrect  or  incomplete 
statements  or  documents.  This  type  of  fraud  was  mainly  found  in  construction,  waste  and 
wastewater  infrastructure  subsidies,  technology  (green  waste,  recycling)  and  human  resources 
development programmes. 

Given  the  limited  amount  of  information  available,  it  is  difficult  to  assess  the  appropriateness 
and effectiveness of the PIF Directive’s provisions and the need for a revision of the Directive on 
this basis. The Commission urges the Member States to collect and submit the data in a timely 
manner, in line with the requirements provided for by Article 18(2) of the PIF Directive.   

The  information  obtained  from  the  Member  State  and  other  sources  for  the  first  transposition 
report was complemented by further external research. This research consisted of:  

  a  more  in-depth  analysis  of  the  Member  States’  transposition  of  the  articles  of  the  PIF 
Directive  concerning  the  VAT  threshold,  public  procurement  fraud  and  limitation 
periods;  

  additional data collection on relevant criminal proceedings and their outcome; and  
 
interviews with key stakeholders, including practitioners at EU and national level. 

2. SPECIFIC POINTS OF ASSESSMENT IN ACCORDANCE WITH ARTICLE 18(4) OF 
THE PIF DIRECTIVE 

2.1. VAT threshold (Article 2(2))  

Article 2(2) sets a threshold for the applicability of the Directive to revenue arising from VAT 
own resources. The PIF Directive only applies in cases of serious offences against the common 
VAT system. Offences against the common VAT system must be considered serious where:  

1.  they concern intentional fraudulent acts or omissions laid down in Article 3(2)(d) of the 

PIF Directive24;  

24 PIF Directive, Article 3(2)(d): “(d) in respect of revenue arising from VAT own resources, any act or omission committed in 
cross-border fraudulent schemes in relation to:(i)the use or presentation of false, incorrect or incomplete VAT-related statements 
or  documents,  which  has  as  an  effect  the  diminution  of  the  resources  of  the  Union  budget;(ii)  non-disclosure  of  VAT-related 
information in violation of a specific obligation, with the same effect; or(iii) the presentation of correct VAT-related statements 
for the purposes of fraudulently disguising the non-payment or wrongful creation of rights to VAT refunds.” 

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2.  they are connected with the territory of two or more Member States of the Union; and  
3.  they involve total damage of at least EUR 10 million.  

This notion is mostly aimed at capturing carousel fraud, VAT fraud through missing traders, and 
VAT fraud committed within a criminal organisation, all three of which create serious threats to 
the common VAT system and thus to the Union budget.  

Damage  

Member States’ approaches in relation to the amount of the damage caused by cross-border VAT 
fraud can be categorised as follows:  

  Member States requiring the damage to reach at least EUR 10 million;  
  Member States requiring a threshold that is lower than EUR 10 million; 
  Member States not defining a financial threshold.  

Due to the EUR 10 million-threshold, a significant amount of fraudulent activity which concerns 
the territory of two or more Member States but with a total damage of less than EUR 10 million 
(e.g. the majority of tobacco smuggling and diesel  laundering cases)  is  not  covered by the PIF 
Directive. 

The threshold is one of the most important factors impacting the EPPO’s activities with regard to 
VAT fraud cases. In particular, recurrent questions arise on the calculation of the total damage, 
depending on the different interpretations of the Member States on the method to apply (notably 
whether the damage occurring in several Member States should be aggregated) and the minimum 
number of countries involved (are at least two participating Member States required? Or are two 
Member States - not necessarily participating in the EPPO - enough?).  

Furthermore, those Member States with smaller economies have a higher number of cases with 
amount  of  damages  that  does  not  reach  the  EUR  10  million-threshold.  This  may  lead  to  an 
imbalance  between  the  Member  States  in  the  number  of  cases  that  the  EPPO  is  competent  to 
pursue.  

In addition, there is  a significant amount of fraudulent activity related to VAT which concerns 
the territory of two or more Member States but with a total damage of less than EUR 10 million. 
The  threshold  is  also  not  dissuasive,  as  the  EPPO  handles  only  the  grand  scale  VAT  fraud, 
potentially allowing perpetrators to seek for the weakest jurisdictions to evade the grasp of both 
national authorities and the EPPO. 

Moreover, competent investigative authorities do not often have a full picture of the nature of the 
criminal  activity  at  the initial  stage of the investigation  (i.e., whether it is a carousel  fraud and 
therefore connected with the territory of two or more Member States) and of the amount of the 
damage  concerned.  Waiting  until  the  EUR  10  million  threshold  has  been  reached  may  have  a 
detrimental  effect  on  the  investigation.  Finally,  the  threshold  might  create  lack  of  clarity  on 

7 

 
 
 
whether national  authorities or the EPPO should take up a VAT  fraud  case and  when the  case 
would need to be transferred to the EPPO.   

Most Member States that  apply  a financial  threshold  apply  a cumulative approach in  line with 
Recital  4  to  the  PIF  Directive25,  taking  into  account  the  overall  damage  caused  in  several 
Member  States  by  the  same  VAT  fraud  scheme.  However,  authorities  in  some  Member  States 
only calculate the damage on a per Member State basis.  

However, the Commission currently does not have sufficient information and data to arrive to a 
definitive view on this question, which will be reconsidered in the future. 

2.2. Limitation periods (Article 12)  

In  accordance  with  Article  12(1)  of  the  PIF  Directive,  Member  States  must  take  the  necessary 
measures to provide for a limitation period that enables the investigation, prosecution, trial and 
judicial decision of criminal offences referred to in Articles 3, 4 and 5 of the PIF Directive for a 
sufficient  period  after  the  commission  of  those  criminal  offences,  in  order  for  those  criminal 
offences to be tackled effectively.  

For crimes that are punishable by a maximum sanction of at least four years of imprisonment, the 
limitation  period  must  be  at  least  five  years  from  the  time  when  the  offence  was  committed 
(Article 12(2)). Article 12(3) gives Member States the option to provide for a limitation period 
shorter than five years but not less than three years if the period may be interrupted or suspended 
in  the event  of specified acts.  The term  ‘specified acts’ leaves a wide margin  of interpretation. 
Thus, Member States may adopt shorter limitation periods (no less than three years in any case) 
in relation to the offences for which the PIF Directive requires a maximum sanction of at least 
four  years  imprisonment,  as  long  as  it  provides  for  interruption  and  suspension  causes.  The 
Directive  also  provides  limitation  periods  for  the  enforceability  of  penalties  following  a 
conviction for a criminal offence referred to in Articles 3, 4 and 5 (Article 12(4)).  

An  assessment  of  whether  the  provisions  on  limitation  periods  are  ‘sufficiently  effective’  first 
requires an appreciation of what this notion means. On the basis of the case law of the Court of 
Justice  one  may  deduce  the  limitation  period  should  be  long  enough  to  ensure  effective  and 
dissuasive enforcement in cases concerning PIF offences26. It should also be noted that by their 
nature limitation periods are required to balance effectiveness with the fundamental right to, inter 
alia, a fair trial. Recital 28 to the PIF Directive expressly notes this, and states that it “seeks to 
ensure  full  respect  for  those  rights  and  principles  and  must  be  implemented  accordingly”.  Of 
course,  what  Article  18(4)  requires  is  not  an  assessment  of  whether  the  limitations  themselves 
are  sufficiently  effective,  but  whether  the  provisions  related  to  the  limitation  periods  are 
sufficiently effective.  

25 PIF Directive, Recital 4: “The notion of total damage refers to the estimated damage that results from the entire fraud scheme, 
both to the financial interests of the Member States concerned and to the Union, excluding interest and penalties.” 
26 Court of Justice of the European Union, Judgement of the Court (Grand Chamber) of 8 September 2015,  C-105/14, Taricco 
and Others, ECLI:EU:C:2015:555, paragraphs 49-58, Judgment of the Court (Grand Chamber) of  5 December 2017, C-42/17, 
M.A.S. and M.B., paragraphs 39, 41, 59 and 62, ECLI:EU:C:2017:936. 

8 

 
 
 
                                                           
Therefore,  one  may  rephrase  the  question  ‘are  the  provisions  related  to  limitation  periods  as 
referred to in Article 12 sufficiently effective?’ to ‘are the provisions related to limitation periods 
as referred to in Article 12 sufficiently effective to ensure the proper investigation, prosecution, 
trial and judgment of the offences covered by Articles 3, 4 and  5 of the PIF Directive?’.  If the 
answer  would  be  that  PIF  offences  are  less  likely  to  be  investigated,  prosecuted,  tried  and 
punished  in  some  Member  States  than  others  due  to  the  application  of  limitation  periods,  this 
might be regarded as an indication that the provisions are not sufficiently effective. 

However, Member States were only obliged to transpose the PIF Directive three years before the 
present report was written, which is a shorter time period than the limitation periods provided by 
Article 12 of the PIF  Directive. Thus,  at  this stage it  is  difficult  to  tell  the extent to  which the 
provisions in the PIF Directive concerning limitation periods have had an actual effect.  

Furthermore,  as  mentioned  above,  only  limited  statistical  data  have  been  provided  by  Member 
States pursuant to Article 18(2). Thus, it is not possible at this stage to  compare the number of 
criminal  proceedings  initiated,  dismissed,  resulting  in  an  acquittal,  resulting  in  a  conviction 
among  Member  States,  nor  link  these  findings  to  the  length  of  the  limitation  periods  in  the 
Member States. 

Therefore,  this  assessment  is  based  primarily  on  the  legal  situation  in  the  Member  States  (as 
shown  from  the  national  measures  transposing  the  provisions  on  limitation  periods)  and  the 
practical situation in the Member States. 

In this regard, it may be considered desirable to lengthen the limitation periods, due to the time-
consuming  nature  of  investigations  of  PIF  offences.  Certain  offences  may  take  years  to  detect 
and may require significant efforts to be investigated due to their cross-border nature.  

Nonetheless, since the limitation periods provided for in the PIF Directive were, in any event, set 
at the lower limit of the limitation periods provided for at national level for similar offences, the 
effect of the PIF Directive on the limitation periods at national level has been relatively small.  

This does not suggest that the relevant provisions of the PIF Directive are as such ineffective. At 
least,  the  provisions  of  the  Directive  ensure  a  certain  minimum  level,  thus  providing  legal 
certainty, by guarding against subsequent reductions of limitation periods in any Member States.  

2.3.Public Procurement Fraud (Article 3(2)(b)) 

Article  3  of  the  PIF  Directive  states  that  Member  States  must  take  the  necessary  measures  to 
ensure  that  fraud  affecting  the  Union’s  financial  interests  constitutes  a  criminal  offence  when 
committed  intentionally.  For  that  purpose,  it  sets  out  four  categories  of  conduct  constituting 
fraud affecting the Union’s financial interests. These four categories relate to acts or omissions 
concerning:  

(i) 
(ii) 
(iii) 

non-procurement-related expenditure (Article 3(2)(a));  
procurement-related expenditure (Article 3(2)(b));  
revenue other than revenue arising from VAT own resources (Article 3(2)(c)); and  

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(iv) 

revenue arising from VAT own resources (Article 3(2)(d)). 

a.  Notion of ‘procurement-related expenditure’ 

However, the notion of ‘procurement-related expenditure’ is not further defined in  Article 3(2) 
(b)  of  the  PIF  Directive.  Recital  6  does  provide  that:  “For  the  purposes  of  this  Directive, 
procurement-related  expenditure  is  any  expenditure  in  connection  with  the  public  contracts 
determined  by  Article  101(1)  of  Regulation  (EU,  Euratom)  No  966/2012  of  the  European 
Parliament and of the Council”. The external research conducted for the Commission has found, 
in  several  instances, that this has led to an inaccurate interpretation  of the law, in  the sense of 
excluding from the scope of Article 3(2)(b) the situations at national level where EU funds are 
allocated by national agencies/administrations contracting with national/private actors.   

As Regulation No 966/2012 is no longer in force, the reference to it is to be read as “determined 
by  Article  2(51)  of  Regulation  (EU,  Euratom)  2018/104627”.  It  follows  from  Article  2(51)  of 
Regulation  2018/1046 
in 
connection with public contracts such as building contracts, supply contracts, works contracts, or 
service contracts between economic operators and the EU contracting authority.  

that  procurement-related  expenditure  covers  any  expenditure 

Taking into account the provisions of Article 325 TFEU as interpreted by the Court of Justice of 
the European Union, and in particular the meaning of the wording ‘any illegal activity’28 (which, 
given  the  importance  of  the  protection  of  the  financial  interests  of  the  Union,  cannot  be 
interpreted in a restrictive manner), it is to be considered that procurement fraud committed by 
national authorities and affecting the Union’s financial interests falls within the scope of the PIF 
Directive. 

b.  Impact of the requirement “at least when committed in order to make an unlawful 
gain  for  the  perpetrator  or  another  by  causing  a  loss  to  the  Union’s  financial 
interest” 

Article 3(2)(b) of the PIF Directive provides for the following procurement fraud offences: 

1.  the  use  or  presentation  of  false,  incorrect  or  incomplete  statements  or  documents, 
which has as its effect the misappropriation or wrongful retention of funds or assets 
from the Union budget or budgets managed by the Union, or on its behalf;  

2.  non-disclosure  of  information  in  violation  of  a  specific  obligation,  with  the  same 

effect; or 

3.  the  misapplication  of  such  funds  or  assets  for  purposes  other  than  those  for  which 

they were originally granted, which damages the Union's financial interests. 

27 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules 
applicable  to  the  general  budget  of  the  Union,  amending  Regulations  (EU)  No  1296/2013,  (EU)  No  1301/2013,  (EU)  No 
1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision 
No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 
PE/13/2018/REV/1, OJ L 193, 30.7.2018, p. 1–222. 
28 Court of Justice of the European Union, judgment of 21 December 2021 in Joined Cases C-357/19, C-379/19, C-547/19, C-
811/19 et C-840/19, Euro Box Promotion and Others, EU:C:2021:1034, paragraph 184. 

10 

 
 
 
 
                                                           
It should be noted that similar offences are listed in relation to non-procurement related fraud in 
Article 3(2)(a). The offences under both Article 3(2)(a) and 3(2)(b) require intent (as per Article 
3(1))  and  an  act  or  an  omission.  However,  Article  3(2)(b)  contains  an  additional  qualification: 
“at  least  when  committed  in  order  to  make  an  unlawful  gain  for  the  perpetrator  or  another  by 
causing a loss to the Union’s financial interest”. The causal link to a loss to the Union’s financial 
interests  is  quite  apparent,  as  the  Directive  is  aimed  at  the  harmonisation  of  the  criminal  law 
protection  of  these  financial  interests  and  thus  dealing  with  the  PIF  offences.  In  other  words, 
procurement fraud comes into the scope of the Directive under the condition that it causes a loss 
to the Union’s financial interests.  

This requirement may raise the threshold significantly for prosecuting procurement fraud cases 
versus non-procurement cases. However, the words “at least”, also need to be taken into account.  
They  left a margin  of discretion to  the Member  States  regarding the definition  of procurement 
fraud.  

In  this  regard,  a  number  of  Member  States  require  evidence  of  loss  to  the  Union’s  financial 
interest  as  a  condition  for  prosecution.  Some  Member  States  require  the  identification  of 
unlawful  gain  for  the  perpetrator  or  another  person,  but  do  not  include  the  causal  link  to  loss. 
However,  a  majority  of  Member  States  criminalise  any  intentional  commission  of  an  act  or 
omission  of  the  offences  set  out  in  Article  3(2)(b)  or  transpose  them  by  broader  national 
provisions in conformity with the PIF Directive. Furthermore, a large number of Member States 
do not make any distinction between the Union’s and national financial interest.  

Therefore,  the  breadth  of  the  definition  of  procurement  fraud,  and  consequently  the  evidence 
requirements  to  comply  with  in  order  to  prosecute  such  offences,  varies  significantly  across 
Member States.   These  differences may lead  to  the uneven protection of the Union’s interests, 
where  certain  fraudulent  activities  are  not  being  investigated  or  prosecuted  in  certain  Member 
States, while being investigated and prosecuted in others.  

3. CONCLUSIONS 

The PIF Directive was adopted with the aim of strengthening protection of the Union’s financial 
interests. The Directive provides added value by setting: (i) common minimum rules for defining 
criminal offences; and (ii) sanctions for combating fraud and other illegal activities affecting the 
Union’s financial interests.  

All  Member  States  have  transposed  the  PIF  Directive’s  main  provisions.  However,  there  is  a 
need  for  the  transposition  of  the  Directive  to  be  improved,  notably  to  ensure  the  consistent 
transposition of the definitions of criminal offences and the liability of – and sanctions for – legal 
persons and natural persons. Member States also need to step up efforts to properly transpose the 
provisions on the exercise of jurisdiction and limitation periods.  This has led to the opening of 
infringement proceedings against 17 Member States so far. 

11 

 
 
 
 
The main focus of this second transposition report has been an assessment of whether: 

(a) 

the VAT threshold indicated in Article 2(2) is appropriate; 

the  provisions  relating  to  limitation  periods  as  referred  to  in  Article  12  are  sufficiently 

(b) 
effective; 

(c) 

the PIF Directive effectively addresses cases of procurement fraud. 

This  report  was  primarily  based  on  the  information  that  Member  States  provided  to  the 
Commission, including annual statistics on the PIF offences submitted by Member States to the 
Commission pursuant to Article 18(2). However, as mentioned, statistics submitted by Member 
States  do  not  currently  offer  sufficient  evidentiary  base  to  draw  definitive  conclusions. 
Moreover, information regarding amounts recovered and the estimated damage is available only 
in a limited number of Member States. In this context, it is difficult to assess the appropriateness 
and effectiveness of the PIF Directive’s provisions and the need for a revision of the Directive on 
this basis.  

The Commission urges the Member States to collect and submit the data in a timely manner, in 
line  with  the  requirements  in  Article  18(2)  of  the  PIF  Directive.    Where  necessary,  the 
Commission  can  provide  further  guidance  on  how  Member  States  should  report  statistics.  It 
could also follow up with tailor made request to the Member States, which have not submitted 
complete and comprehensive data according to Article 18(2). 

VAT fraud 

Regarding the VAT threshold as set out in Article 2(2) of the PIF Directive the damage element 
was taken into consideration. It was found that due to the EUR 10 million-threshold, a significant 
amount of fraudulent activity is not covered by the PIF Directive.   Furthermore, those Member 
States with smaller economies have a higher number of cases with amount of damages that does 
not reach the EUR 10 million-threshold. In addition, there is a significant amount of fraudulent 
activity related to VAT which concerns the territory of two or more Member States but with a 
total damage of less than EUR 10 million.. Moreover, competent investigative authorities do not 
often  have  a  full  picture  of  the  nature  of  the  criminal  activity  at  the  initial  stage  of  the 
investigation  Waiting  until  the  EUR  10  million  threshold  has  been  reached  may  have  a 
detrimental  effect  on  the  investigation.  Finally,  the  threshold  might  create  lack  of  clarity  on 
whether national  authorities or the EPPO should take up a VAT  fraud  case and  when the  case 
would need to be transferred to the EPPO.   

In addition,  while most  Member States  take into account  the overall damage caused in  several 
Member States  by the same VAT fraud scheme (cumulative approach) in  line with recital  4 to 
the PIF Directive, some calculate the damage on a per Member State basis. Furthermore, among 
those Member States that apply the cumulative method some only consider the damage occurring 
in those Member States that have joined the EPPO. These practices are very difficult to reconcile 
with the wording of Recital 4 to the PIF Directive. 

12 

 
 
 
The  limits  exposed  above  regarding  the  amount  and  the  way  to  define  the  financial  threshold 
raise doubts as to whether the threshold is sufficiently effective and dissuasive in order to fight 
serious  fraud  against  the  common  VAT  system.  Decreasing  the  threshold  and  providing  for 
alternative  criteria  for  considering  the  serious  nature  of  the  crime  could  be  considered  in  the 
context of a future revision of the PIF Directive.  

Nonetheless, even though at this stage there is not enough data on the application of the EUR 10 
million  threshold  in  practice  to  assess  the  appropriateness  of  the  amount,  where  necessary, 
sufficient guidance should be provided on the calculation method of the threshold. 

Public Procurement 

The PIF Directive does not include any definition of procurement-related expenditure. While the 
intention of the legislator can be deduced from other provisions of the PIF Directive, the current 
cross-reference to another piece of EU legislation in the recitals might lead to a certain level of 
uncertainty regarding the scope of the definition of procurement fraud, when involving national 
contracting authorities managing EU funds. 

Additionally,  as  mentioned,  the  introductory  wording  of  Article  3(2)(b)  sets  a  special 
qualification  for  intent  (in  comparison  to  the  other  PIF  offences)  and  states  that  procurement 
fraud should be criminalised ‘at least’ when committed in order to make an unlawful gain for the 
perpetrator  or  another  by  causing  a  loss  to  the  Union’s  financial  interest.  The  margin  of 
interpretation  left  to  Member  States  regarding  the  intentional  element  with  the  terms  ‘at  least’ 
may  lead  to  issues  regarding  uneven  protection  of  the  Union’s  interests,  as  certain  fraudulent 
activities may not being investigated or prosecuted in certain Member States (due to the lack of 
proven intent), despite being investigated and prosecuted in others.  

Amendments to Recital (6) clarifying that procurement involving national contracting authorities 
managing EU funds indeed also fall within the scope of the Directive and amendments to Article 
3(2)(b),  reflecting  the  broader  requirement  on  intention  of  the  other  PIF  fraud  offences,  i.e. 
‘offences  committed  intentionally’,  might  be  considered  as  part  of  a  future  revision  of  the  PIF 
Directive. 

Limitation Periods 

Further issues in cross-border cases may stem from the lack of uniformity of the national rules 
applicable to limitation periods, leading to situations where economic operators involved in the 
same  fraudulent  activity  may  benefit  from  different  regimes,  depending  on  the  Member  States 
where their case is prosecuted. Hence, the minimum requirement provided in the PIF Directive 
may  not  be  sufficient  to  enable  the  investigation,  prosecution,  trial,  judicial  decision  and 
enforcement  of  penalties  of  all  PIF  offences  in  a  uniform  manner  in  all  Member  States  with 
regard to limitation periods. 

13 

 
 
 
 
However, not enough time has elapsed since the entry into force of the PIF Directive to enable 
the limitation periods prescribed by Article 12 to have expired in relation to a crime covered by 
the PIF Directive.  

Furthermore,  there  is  no  concrete  evidence  at  this  stage  that  PIF  offences  are  less  likely  to  be 
investigated, prosecuted, tried and punished in some Member States than others, due to limitation 
periods being too short. 

In  accordance  with  Article  18  of  the  PIF  Directive,  the  Commission  will  continue  to  assess 
Member States’  compliance with  the PIF Directive and will take every appropriate measure to 
ensure conformity with its provisions throughout the European Union. The Commission will also 
intensify its dialogue with the national authorities on the means to improve data gathering so as 
to be in a position to assess the implementation of the PIF Directive on a more informed basis. 

14