VAT. Carousel Fraud in the European Union

Abstract

In the EU, VAT fraud schemes evolve rapidly, and Member States are sometimes confronted with situations whereby the EU VAT law in force does not provide a legal base for countering the offenders. Fraud is in many ways the craft of deceit and therefore seemingly difficult to perceive correctly.

The present study aims to treat the phenomenon of the missing trade intra Community fraud and the related carousel fraud with VAT in the European Community.

Over the past years, the regulations on VAT have fluctuated and, in the end, the European legislator has decided to exempt for payment of the VAT intra-community transactions of goods. This decision has been made in the context of creating a single market in the European Union. In this regard, some contributors took advantage of these regulations and decided not to pay the taxes they collect from VAT in the context of running intra-community transactions.

Thereby, we appreciate that the most successful instrument adopted to combat this phenomenon is Directive (EU) 2017/1371 of the European Parliament and the Council on the fight against fraud to the Union's financial interests by means of criminal law.

Considering this, the article will treat the forms in which carousel fraud appears and the possible countermeasures, both domestically and at European level.