Strategic Meeting on VAT Fraud

31 March 2011
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On 28 March, Eurojust hosted a strategic meeting on VAT fraud, co–organised with Europol. This meeting examined existing problems in the fight against VAT fraud, the current legal framework and possible measures to prevent and combat this common crime type.

The purpose of the meeting was to improve co-operation between the law enforcement authorities and prosecutorial bodies in the Member States when fighting cross-border VAT fraud. Eurojust and Europol highlighted the need for a common approach to make that co–operation more effective and enable the authorities of the Member States to combat VAT fraud more effectively. Participants included attendees from the European Commission, the Council Secretariat, and representatives from the Member States’ judiciary systems. Meeting attendees discussed the problems they encountered during the intelligence, investigation and prosecution stages of VAT fraud cases, as well as the creation of potential European solutions to these problems.

The meeting was opened by Mr Aled Williams, President of Eurojust and National Member for the UK, and Mr Rob Wainwright, Director of Europol. The meeting was chaired by Ms Ritva Sahavirta, National Member for Finland and Chair of the Financial and Economic Crimes Team at Eurojust.

During his introduction, Mr Williams noted that "for the amount of money siphoned from the EU’s economy each year, you can build hundreds of hospitals and schools", making ordinary citizens the true victims of VAT fraud, no matter how "bloodless" the actual offense may be.

Europol Director Rob Wainwright said, in his opening speech, that VAT fraud is more serious than it first appears to be. It is challenging, because it can be established quickly and there is no physical evidence of any crime. With very little effort, fraudsters can create a huge opportunity for financial gain – but taxpayers’ money is lost. He said that more exchange of information at EU level will ensure better co–operation, leading to a better recovery of assets.

This strategic meeting on VAT fraud comes at the conclusion of Eurojust’s strategic project on enhancement of exchange of information and mutual legal assistance between judicial authorities of the Member States in the area of VAT fraud. The aim of this project, initiated in 2009 by the Eurojust Financial and Economic Crimes Team, is to strengthen Eurojust’s role in facilitating the exchange of information and requests for mutual legal assistance in cross–border VAT fraud cases.

BACKGROUND

Alarmingly, large–scale VAT frauds have become established industries, and the use of VAT fraud schemes in most Member States has increased in both frequency and sophistication. These VAT frauds have negatively affected Member States’ VAT revenues, resulting in reduced income for the EU's institutions.

Missing trader fraud and carousel fraud are the forms of VAT fraud that appeared in 1992, when cross–border transactions within the Member States were zero–rated for VAT. Organised criminal groups have been exploiting the VAT–free regime, moving goods from one Member State to another without remitting VAT to the appropriate revenue authorities.