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MEPs back measures to cut VAT fraud in e-commerce

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MEPs back measures to cut VAT fraud in e-commerce

E-commerce - Image by Varun

(STRASBOURG) - The European Parliament gave its approval Tuesday to measures designed to fight e-commerce VAT evasion that would help cut some of the EUR 137 billion lost each year across the EU to VAT fraud.

According to Commission estimates, online sales in the EU are worth EUR 550 billion a year – €96 billion of which is cross-border. The new rules are expected to raise EUR 7 billion in VAT revenues for member states.

The measures, contained in two pieces of legislation spearheaded through the Parliament by Lídia Perreira MEP and debated on Monday, require payment service providers to collect cross-border e-commerce payment records. A new central electronic storage system would be created so that anti-fraud authorities in member states can process payment information better.

Administrative cooperation among the member states' tax authorities and payment service providers will also be strengthened.

MEPs proposed various improvements to the texts, in a bid to make information-sharing and prosecution more effective. More specifically, some of these improvements include:

  • Setting up a common system for collecting comparable statistics on intra-Community VAT fraud and requiring national estimates of VAT fraud losses to be published;
  • Creating a mandate for the European Public Prosecutor's Office, in collaboration with national judicial authorities, to ensure that fraudsters are effectively prosecuted in national courts;
  • Member states investing in technology-led tax collection, notably by automatically linking corporate cash registers and sales systems to VAT returns;
  • Improving communication and interoperability between tax-related databases at European Union level;
  • Requiring that payment service providers retain records of payment transactions for a three-year period to assist member states in fighting e-commerce VAT fraud and detecting fraudsters.

The regulation on measures to strengthen administrative cooperation in order to combat VAT fraud was adopted with 590 votes to 19 and 81 abstentions.

EU member state ministers must now adopt the two pieces of legislation.

Further information, European Parliament

Adopted text (17.12.2019)

Procedure file: Directive - requirements for payment service providers

Procedure file: Regulation - administrative cooperation in order to combat VAT fraud

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