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Taxation and Customs Union

Cooperation between Businesses and Tax Administrations

Guidelines for cooperation between businesses and tax administrations in the EU

Cooperation between Businesses and Tax Administrat

Businesses have a prominent role in the administration of the EU Value Added Tax system. They collect the tax on behalf of tax administrations; they know the market, its stakeholders and business models; and they hold the information necessary for tax administrations to assess VAT liabilities. 

Therefore, fast and efficient dialogue and cooperation between tax administrations and legitimate businesses is essential when it comes to combatting VAT fraud.

Guide on administrative cooperation

In February 2016, the VAT Forum approved a ‘Guide on administrative cooperation between Member States and Businesses’. 

The purpose of the guide is to facilitate and encourage increased administrative cooperation between EU countries and businesses to effectively combat fraud without further complicating the EU VAT system. 

Each EU country can find the most suitable way to implement the recommendations of the guide according to its own national legal, economic, political and social environment. Therefore, the guide also includes recommendations for a proper follow-up. 

Guide on Administrative Cooperation between Member States and Businesses 

Aims

The Guide should facilitate: 

  • better and more pro-active interaction with legitimate businesses to evaluate impacts on legitimate business, before new anti-fraud measures are introduced 
  • concrete actions to be taken by various stakeholders, both nationally and on a pan-European level, to share understanding of how businesses and markets operate, and to identify and jointly work on measures where the market is vulnerable to VAT fraud, thus fostering timely and efficient cooperation 
  • the implementation of these actions through recommendations of national measures that can be taken  
  • increased development and exchange of best practices across the EU, particularly around cooperative compliance between legitimate business and tax administrations, know your counterparty-procedures (KYC) and know your taxpayer-procedures (KYT) 

When implementing anti-fraud measures, it is important that EU countries cooperate closely with businesses and learn from the experiences of other EU countries. Measures that require businesses to report more data to tax administrations should be carefully designed to not increase administrative burden. 

To fight VAT fraud, many EU countries collect transactional data through so-called VAT listings. 12 EU countries that have introduced such a system have shared their experiences in the report ‘VAT listings – implementation in EU Member States’.