EU VAT fraud Public Prosecutor established by 20 states

Mon 9th Oct 2017

20 EU member states have agreed to establish an anti VAT fraud Public Prosecutor’s Office, focusing on the trading block’s estimated €50bn VAT fraud issue, and other EU budget issue. An approval vote by the European Parliament on 5 October cleared the last approval for the group’s creation.

The new independent ‘parquet’ (public prosecutor department) will come into place by 2020.  It will be based in Luxembourg, and be made up of seconded prosecutors from each participating state alongside EU prosecutors.  Any resulting prosecutions will only be heard in national courts.  Longer term, it is hoped that the new office’s scope will be widened to include terrorism and wider organised crime.

Its immediate remit will be to track and co-ordinate investigations into cross-border missing trader fraud whereby criminal gangs exploit the EU VAT regime’s nil-VAT rating on intra-community supplies.  This will cover fraud of €10m and above.  Also fraud affecting EU funds above €10k.

8 of the 28 EU states declined to join the initiative, including the Netherlands, Sweden, Hungary, the UK, Poland, Ireland, Malta and Denmark.

Separately, the European Commission provided an update last week on its plans to remove the nil VAT exemption on cross-border B2B supplies as part of its VAT Action Plan.

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