The Brief, powered by Eni: VAT, the silent robbery member states do not want to see

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Sometimes it’s dangerous to put all your eggs in one basket. People try not to: if you are a family you try to have more than one income, and many clients if you are a company. EU member states rely on VAT for more than half of their total revenues.  It’s a great deal for the taxman: companies collect it for them; citizens pay it without grumbling.

But let’s not rejoice too soon. For the last 25 years, fraudsters have had their hands in the coffers. Setting up a company, buying goods VAT-free across the border to sell with VAT in your home country is an easy game – if you follow a few basic rules: hire a strawman, buy expensive goods, sell them and disappear quickly before the tax authorities catch on.

The business is so good the mafia have joined in. Italy loses more than €20bn a year to this fraud, France, Germany and the UK around €10bn each. Back in 2009, the VAT fraud on CO2 even showed patterns: French-Israeli fraudsters “worked” in the south of the EU, Indian-Pakistani fraudsters in the north. Terrorists even used Danish VAT to fund Islamist attacks.

And the bill is piling up: €1,000 billion have been stolen from citizens’ pockets in the last 20 years, €100 for every citizen, every year. French fraudsters have been laundering the money through housing in Florida, luxury bags at Vuitton and Dior, while driving Rolls-Royces and partying in Saint Tropez.

Six people linked to the scam have been killed since 2009 in Paris. And most of them have also invested in some other criminals business. EURACTIV has learned that a French-Israeli fraudster was arrested in Kyiv last August, while buying masks to organise new scams on Skype…

It may be 25 years too late, but at last the European Commission launched a new proposal to change the VAT system on Wednesday, forbidding businesses to buy VAT-free abroad.

Until now, when their resources are at stake, member states have always played solo. Germany at first did not want VAT to be included in the European public prosecutor’s office. France won’t even accept it has a VAT issue.

Not one member state agrees to share its precious VAT information. “We can’t trust Romania, and look at Italy” a diplomat said. Well, maybe – but it’s about time to stop the EU feeding organised crime.

This Brief is powered by Eni – We have invested half a billion euros to turn old, unprofitable refineries into modern, cutting-edge biorefineries, securing jobs and contributing to local development. We are now helping the EU to deliver on its clean transport ambitions by producing sustainable biofuel – a practical example of circular economy: turning ideas into actions.

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Look out for…

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Views are the author’s

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