Friday, March 29

Brussels wants to put an end to the 93,000 million euros that are lost with VAT fraud


Brussels wants to put a stop to the black hole of VAT with which it estimates that collection fraud led to a loss of income of 93,000 million euros to the EU states in 2020. The figure reached 137,000 million in 2017. European Commission has proposed a series of measures to improve the system and try to prevent leaks. The intention is to move towards a kind of ‘one-stop shop’ for the management of this tax at the community level as well as to pursue digital platforms related to passenger transport and vacation rentals to take charge of the collection that often escapes.

Brussels figures the VAT lost in the EU at 137,000 million “due to cascading fraud and inconsistencies in the system”

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The claim of the European Commission is that platforms such as Aibnb or Uber have to pay VAT when the primary providers of the service do not. In a press release, the institution admits that sometimes they are small companies that do not need to be registered in the tax system or individuals. In the event that they do not pay the tax, it will be up to those intermediaries to assume it, in accordance with the Commission’s proposal, which now has to receive the approval of the Council, so it is not final.

The community executive is committed to a real-time VAT system based on electronic invoices from cross-border trade. “We calculate that the move to an electronic invoice system will help Member States to enter up to 11,000 million more euros in ten years,” explained the Commissioner for the Economy, Paolo Gentiloni. To that he adds a saving in administrative costs that amounts to 4,100 million annually.

The third measure is directed towards the “single window” in VAT management so that those who sell in more than one EU member state do not have to register in all those who want to operate. Thus, cross-border merchants will have a single register for VAT management. This administrative saving is estimated at 8,700 million.

Spain, well stopped in VAT collection

“EU countries are losing billions every year due to VAT fraud, while companies struggle to comply with outdated VAT rules,” Gentiloni said of the VAT collection system, which has been in place for 30 years. years with only a few changes since it came into force. “Today’s proposal will usher in a new era in the VAT system, benefiting businesses, especially SMEs, as well as member states at a time when public finances are under pressure and the need for financing for investments and public services is immense. At the same time, we are introducing a higher level of play between traditional providers and digital platforms in sectors that suffer more from unequal tax treatment”, the commissioner remarked.

According to the estimates prepared by the EU, Spain is one of the countries with the best standing in terms of fraud in VAT collection, with a deviation of 4.7% compared to others such as Romania, which lost 35.7%, Malta (24.1%) and Italy (20.8%). The figure represents a loss of 3,396 million euros of income for public coffers. Thus, Spain collected 69,382 million VAT, but should have pocketed 72,778 million euros.



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