EC launches Transaction Network Analysis to recoup billions in VAT fraud
Elizabeth Wilson 21 May 2019 No comments
On 15 May 2019, the European Commission launched the Transaction Network Analysis (TNA) tool, a new system to combat cross-border VAT fraud. The system will allow Member States to jointly process and more rapidly exchange VAT data, resulting in earlier detection of suspicious networks.
The EC has consistently looked to put in place a more modern and fraud-proof VAT system. Recent progress has been made with new rules agreed on VAT for online sales, and more efficient rules for the exchange of information and cooperation between Member States.
However, progress has been slow on proposals to put in place a definitive EU VAT regime, fundamentally overhauling the current system. [See our earlier blog articles on the proposed definitive VAT system here and the interim “quick fixes” solution here].
One of the key issues with respect to tackling cross-border VAT fraud has been that by the time the relevant VAT audits have been performed, the perpetrators have moved on and can no longer be located.
The new TNA tool
The TNA tool, developed through close collaboration between Member States and the EC, will allow tax authorities fast and easy access to cross-border transactional information.
It will boost cooperation and information exchange between national tax officials, as well as allowing the EU’s network of anti-fraud experts (‘Eurofisc’) to cross-check information with criminal records, databases and information held by Europol and OLAF (the EU’s anti-fraud agency) and to coordinate cross-border investigations.
As a result, the TNA, which Member States started using last week, will enable tax authorities to detect and intercept VAT fraud much more quickly and effectively going forward.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said:
“Criminal VAT fraud is one of the major issues facing our public finances today and its eradication should be a top priority for EU governments. This new tool will increase the speed at which authorities can uncover and act on suspicious activity. But this progress does not lessen the need for deeper and more fundamental reform of the EU’s VAT system, to ensure it can cope with the vast amounts of trade taking place across borders in the EU. “
The press release on the launch is available here.