Sven Giegold

VAT reform: Tackling VAT fraud would generate billions for investment

The European Commission is set to launch its new VAT package. Included in the proposals are plans to harmonise the system so that VAT is paid in the country where the goods or services are consumed, at the VAT rate of that Member State. This would help curb VAT fraud, which currently amounts to about €50bn annually in the EU.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

“It’s a relief that the European Commission is taking action to close the loopholes that permit staggering amounts of VAT fraud. The abuse of the VAT system by criminals and fraudsters is as big a challenge as the more high-profile corporate tax dodging. Every year, EU countries lose out on tens of billions that could be invested in public services, environmental transformation, and vital infrastructure.

Member States need to work together to make these proposals work in practice. The Commission’s plans will only work if national tax authorities trust each other to collect and send VAT revenues on behalf of one another. So long as unanimity is required in the European Council on taxation, there is a risk that this reform will never see the light of day. If we want to move forward, and deliver the much needed billions of euros of investment which tackling fraud could generate, it may be time to end the unanimity principle. Allow for decisions to be made by majority voting is possible already within the current treaty.

Special attention needs to be paid to SMEs. The digital marketplace can open up the world of cross-border trade for SMEs but only if VAT rules are not too complicated or cumbersome for them to make use of this opportunity. We hope the Commission will listen to the needs of SMEs when they publish their second VAT package in November.”

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