Major EU VAT fraud : estimated amounts for 2023
Published on 01/03/2024, the annual report of the European Public Prosecutor’s Office (EPPO) estimates €11.5 billion financial damage linked to the cross-border EU VAT fraud, with 339 active investigations.
This amount represents a significant increase compared to €6,6 billion VAT fraud reported for 2022.
Operating since 2021, the EPPO is an independent EU justice body investigating fraud involving EU funds of over €10 000, and cross-border VAT fraud involving damage above €10 million. With its headquarters in Luxembourg and offices across 22 participating EU member states, the EPPO reported 1.927 active investigations for 2023, with a total damage amount of €19.2 billion, allocating 59% to VAT fraud. The highest VAT investigating activity of the EPPO was registered in Italy, with 121 cases for € 5,22 billion VAT fraud.
According to the 2023 report, the main sectors concerned by the EU VAT fraud are : automotive sector, tyres for motor vehicles and car dealing, electronic and textile merchandise, VoIP services, heavy machinery, energy and pharmaceutical products, IT hardware and software, platinum coins, e-bikes, alcoholic and non-alcoholic beverages.
The most common fraud typologies investigated by the EPPO are :
- Carousel fraud
- False origin of imported goods
- Abuse of Customs Procedure 42 (both in the member state of importation and in the member state of final destination)
- VAT fraud committed by private persons using invoices issued for non-existent operations in connexion to the EU imports
- VAT fraud below €10 million detected within the customs duty fraud investigations
The increasing EU VAT fraud confirms the necessity of the continuous VAT reforms both at the national level (e-invoicing and e-reporting) and at the European level (multiple measures of the VIDA package).
In the meantime, companies involved in cross-border operations should carefully verify the status of their business partners and the fulfilment of the VAT exemption conditions for preventing fraud and for minimising the related tax risks.
