The Regulation provides with the following VAT cooperation tools to tax administrations:
- Spontaneous exchange of information takes place if a country discovers information on VAT transactions that may be relevant to another country.
- Exchange of information on request occurs when additional information on VAT transactions is needed from another country.
- Automatic exchange of information is used when the information is relevant for other countries, for example on new means of transport or non-established traders.
- Joint audits and simultaneous controls allow officials from national tax authorities to form international audit teams to control multinational companies.
- Eurofisc network for the swift exchange, processing and analysis of targeted information on cross-border VAT fraud between Member States and for the coordination of any follow-up actions
Eurofisc network
The Eurofisc network, comprised of liaison officials from all the Member States and Norway, was launched in 2010 to combat cross-border VAT fraud.
Based on the information shared within the Eurofisc network and after analysis of the available data, Eurofisc liaison officials can take appropriate action at national level, such as proceeding with requests for information, audits or deregistration of VAT numbers.
Eurofisc is mandated to work on the:
- joint processing and analysis of data;
- coordination of follow-up actions;
- the possibility to exchange information directly with Europol and OLAF.
The European Commission provides Eurofisc with technical and financial assistance, including support for two technological tools to rapidly exchange and jointly process VAT data. The Transaction Network Analysis (TNA) tool exploits information on intracommunity transactions, VAT registration, customs data on VAT exempted importations, etc. The Central Electronic System of Payment information (CESOP) exploits information on cross border payments submitted by Payment Service Providers as of 2024. These tools enable Eurofisc to detect suspicious networks earlier and more efficiently.
At operational level, this multilateral early warning mechanism is organized in working fields (WF) that deal with specific types of VAT fraud.
- WF1 uses TNA to fight against VAT fraud abusing the exemption scheme of the intracommunity transactions (the so called “Missing Trader Intra-community (MTIC) fraud”). As from 2021, WF1 also processes with TNA customs information to fight against the abuse of exemptions granted to imported goods immediately transported to another MS in which the VAT should be paid (the so called “Customs Procedure 42 fraud”).
- WF2 fights against VAT fraud in the sector of means of transports. In 2023 WF2 has started to use TNA.
- WF5 fights against VAT fraud in the sector of eCommerce. This year WF5 will start to use CESOP.
| TNA statistics (Eurofisc annual reports) WF1 (MTIC, and as from 2021 CP42) WF2 (means of transports. It uses TNA as from 2023) | ||||
| 2020 | 2021 | 2022 | 2023 | |
| Amount of fraudulent or suspicious transactions uncovered (in millions EUR) WF1 | 3,300 | 8,100 | 10,874 | 12,735 |
| Amount of fraudulent or suspicious transactions uncovered (in millions EUR) WF2 | 1,899 | |||
| Amount of fraudulent or suspicious transactions uncovered (in millions EUR) TOTAL | 14,634 | |||
| Amount of CP42 identified fraudulent transactions (in billions EUR) | 1.5 | 1.2 | 2.0 | |
| Number fraudsters identified WF1 | 2,093 | 2,161 | 2,907 | 3,492 |
| Number fraudsters identified WF2 | 1,679 | |||
| Number fraudsters identified TOTAL | 5,171 | |||
| Number of suspicious fraudsters deregistered for VAT WF1 | 495 | 775 | 1,942 | 2,352 |
| Number of suspicious fraudsters deregistered for VAT WF2 | 643 | |||
| Number of suspicious fraudsters deregistered for VAT TOTAL | 2,995 | |||
| Number of missing trader fraud cases identified WF1 | 1,953 | 2,296 | ||
| Number of missing trader fraud cases identified WF2 | 1,086 | |||
| Number of missing trader fraud cases identified TOTAL | 3,382 | |||
| Number of networks of trading companies considered at high-risk of fraud (at least 5 fraudsters) WF1 | 116 | 121 | ||
| Number of networks of trading companies considered at high-risk of fraud (at least 5 fraudsters) WF2 | 79 | |||
| Number of networks of trading companies considered at high-risk of fraud (at least 5 fraudsters) TOTAL | 200 | |||
| Number of companies linked to fraudulent activities in the EU WF1 | 632 | 582 | ||
| Number of companies linked to fraudulent activities in the EU WF2 | 109 | |||
| Number of companies linked to fraudulent activities in the EU TOTAL | 691 | |||
Ongoing initiatives to amend the Regulation on Administrative Cooperation
On 8 December 2022, the European Commission proposed the VAT in the Digital Age package which will make the EU's Value-Added Tax (VAT) system more resilient to fraud by embracing and promoting digitalisation. It introduces real-time digital reporting for VAT purposes based on e-invoicing that will give Member States valuable information they need to step up the fight against VAT fraud. Cooperation between the tax administration is also significantly reinforced through the introduction of a new central VAT Information Exchange System (central VIES).
- Proposal to amend Council Regulation on VAT administrative cooperation
- Proposal to amend the VAT Directive
- Further information on the VAT in the Digital Age package
The Standing Committee on Administrative Cooperation
The Standing Committee on Administrative Cooperation (SCAC) is composed of officials from national tax administrations and Ministries of Finance. It supports the Commission in the implementation of the legal framework governing administrative cooperation in the field of VAT (Council Regulation (EU) No 904/2010). It is essential for the smooth functioning of the key elements of VAT administrative cooperation:
- Eurofisc
- Electronic systems such as:
- VAT Information Exchange System (VIES),
- electronic Forms Central Application (eFCA),
- One Stop Shop, the import One Stop Shop,
- VAT Refund,
- the VAT scheme for Small businesses
The first meeting of SCAC took place on 20 and 21 January 1992 and prepared the VAT arrangements for cross-border transactions that entered into force along the Internal Market in 1993.
More information on the achievements of the European Union in this field over almost 30 years of cooperation in this presentation.
Central Electronic System of Payment information (CESOP)
On 18 February 2020, the Council adopted a legislative package to request payment service providers to transmit information on cross-border payments originating from Member States and on the beneficiary (“the payee”) of these cross-border payments.
More information on the implementation of CESOP is available here.