- with readers working within the Securities & Investment industries
Niall Hearty of Rahman Ravelli details the statements coming from the European Public Prosecutor's Office.
The European Public Prosecutor's Office (EPPO) has warned that the European Union (EU) is losing €50 billion a year to VAT and customs fraud.
EPPO puts the blame for this on organised criminal networks that operate sophisticated cross-border schemes that have become some of Europe's most profitable illegal activities.
The warning was made by EPPO following a seizure of more than 2,400 shipping containers at the Greek port of Piraeus, as part of an investigation into a criminal scheme involving tax evasion, corruption and exploitation of weak enforcement across Member States. Authorities estimate that the scheme caused losses of around €350 million in customs duties and €450 million in VAT.
Such schemes often involve the undervaluing of imports to reduce customs duties. Criminals also use carousel schemes (where VAT is claimed but never paid when it should be) and transport goods through jurisdictions with weak enforcement to avoid detection.
The EU's VAT in the Digital Age (ViDA) reforms may have some success in tackling these problems. They are set to come into effect in the coming years. They involve near real-time digital reporting and e-invoicing, changes to VAT payment rules and a broader single VAT registration system.
In addition, the 2028 EU Customs Reforms package has now been formally approved. Its measures include setting up a single customs authority, digital customs declarations and changes to the EU Import One-Stop Shop system that allows businesses to register with a single tax authority and collect, declare, and pay VAT on the sale of low-value goods to EU customers at the point of sale.
EPPO investigations have shown that abuse of VAT and customs payment systems is carefully planned and uses tactics such as front companies, intermediaries and large numbers of corrupt insiders. The scale of the illegal gains being made has led to violent disputes between the criminal gangs involved.
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