kathimerini.gr
€89 Billion EU VAT Gap in 2022: Cross-Border Fraud Exploits Loopholes
The EU-27 experienced an €89 billion VAT gap in 2022, with €22.25 billion directly resulting from cross-border VAT fraud exploiting customs procedure 42 and the IOSS system through various manipulative practices.
- What is the extent of VAT fraud within the EU's cross-border trade, and what are its immediate financial consequences?
- In 2022, the EU-27's VAT gap, the difference between expected and actual VAT revenue, reached €89 billion. A quarter of this loss is directly attributed to VAT fraud in cross-border business transactions within the EU.
- How are the customs procedure 42 and the IOSS system exploited to facilitate VAT fraud, and what are the specific mechanisms involved?
- Cross-border VAT fraud significantly impacts EU finances. This is facilitated by processes like the customs procedure 42 and the Import One-Stop Shop (IOSS), where fraudulent actors exploit loopholes for tax evasion on imported goods.
- What systemic changes are needed within the EU VAT system to address the identified vulnerabilities and mitigate future revenue losses from cross-border fraud?
- The misuse of customs procedure 42 and the IOSS system, including splitting large shipments into smaller ones to avoid VAT, highlights vulnerabilities in the EU's VAT system. Future improvements require stricter enforcement and enhanced cross-border cooperation to combat this significant revenue loss.
Cognitive Concepts
Framing Bias
The narrative primarily frames VAT fraud as a problem stemming from the misuse of import procedures (regimes 42 and IOSS). While acknowledging that a quarter of losses are directly attributed to cross-border B2B transactions, the text doesn't delve into the details or mechanisms of this type of fraud. This emphasis on import procedures might lead readers to underestimate other contributing factors to VAT non-compliance.
Bias by Omission
The provided text focuses on VAT fraud within the EU, specifically concerning import procedures (customs regime 42 and the Import One-Stop Shop (IOSS)). However, it omits discussion of other potential sources of VAT non-compliance within the EU-27, such as domestic VAT evasion or fraud within specific sectors. This omission limits the scope of understanding regarding the overall €89 billion shortfall.
Sustainable Development Goals
The article highlights a significant VAT gap in the EU, with a substantial portion attributed to fraud. This loss of revenue disproportionately affects public services and may exacerbate inequalities. The fraudulent activities described hinder fair competition and create an uneven playing field for businesses, potentially increasing disparities.