The European Union is losing €3,000 in VAT per second due to fraud – The Commission’s proposals

Proposals for the modernization and fight against fraud in the field of Value Added Tax (VAT) were presented today Thursday by the European Commission.

It is indicative that the EU is losing VAT of three thousand euros per second, with losses in 2020 for the bloc reaching a total of €93 billion in 2020, according to a Commission report.

In Greece, VAT losses were reduced from 23.4% of potential revenues to 19.7% with the budget losing 3.2 billion euros.

According to the Commission’s data, it is indicative that if the 93 billion euros lost from VAT were collected, it would be enough for the construction of 185 hospitals, or 1,700 kilometers of railway from Bucharest to Berlin.

The Commission proposes real-time digital reporting for VAT purposes based on e-invoicing. In this way, the Commission believes that Member States will be provided with the valuable information they need to strengthen the fight against fraud in the VAT sector. The move to e-invoicing will help reduce VAT fraud by €11 billion per year and reduce administrative and compliance costs for EU traders by more than €4.1 billion per year over the next decade.

It also ensures that existing national systems converge across the EU, paving the way for Member States wishing to set up national digital reporting systems for domestic trade in the coming years.

In addition, the Commission is proposing new VAT rules for passenger transport and platforms for short-term accommodation. Platform economy operators in these sectors will become responsible for collecting and remitting VAT to the tax authorities where service providers do not, for example because they are small businesses or individual providers. This approach, together with other clarifications, will ensure harmonization across Member States and help create a more level playing field between online and traditional short-term transport and accommodation services.

Finally, the Commission proposes to establish single registration in the VAT register across the EU. Building on the ‘one-stop shop VAT’ model that already exists for online shopping companies, businesses selling to consumers in another Member State will be allowed to register for VAT only once across the EU and fulfill their VAT obligations through a single online portal in a single language. According to estimates, businesses, and especially SMEs, could thus save around €8.7 billion in VAT registration and administrative costs over ten years.

The legislative proposals will be forwarded to the Council for approval and to the European Parliament and the Economic and Social Committee for consultation.

AMPE –

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