Brussels, 14/12/2011 (Agence Europe) - The European Court of Auditors (ECA) concludes that the control of customs procedure 42 does not prevent or detect VAT evasion. Application of customs procedure 42 has led to significant losses, according to a report published on Tuesday 13 December by the EU Court of Auditors. Based on results of the sample tests, the amount of the losses in 2009 is approximately €2200 million. This represents 29% of the VAT theoretically applicable on the taxable amount of all the imports made under customs procedure 42 in 2009 in the seven selected member states (Belgium, Denmark, Spain, France, Austria, Slovenia and Sweden). Of the losses in 2009, €1800 million were incurred in the seven audited member states of importation and €400 million in the 21 destination member states of the goods imported in the sample.
Customs procedure 42 is the regime a trader uses in order to obtain a VAT exemption when the goods imported from outside the EU into the member state of importation will be transported to a second member state. The VAT is due in the latter, the member state of destination. In the absence of proper control, goods risk remaining in the member state of importation without payment of VAT or being consumed in the member state of destination without VAT being charged there. VAT evasion affects the financial interests of member states. It has an impact on the EU budget as it leads to lower VAT-based own resources. This loss is compensated by the GNI-based own resource, distorting individual member states' contributions to the EU budget. Moreover, tax fraud undermines the functioning of the internal market and prevents fair competition.
The ECA found that the Commission has proposed some improvements to the EU regulatory framework. Nevertheless, more needs to be done. The regulatory framework does not ensure the uniform management of VAT exemption by customs authorities. It does not ensure that the information concerning these transactions is always made available to the tax authorities in the destination member state either. These deficiencies can be exploited by fraudsters.
The ECA found that control in the seven member states examined was also deficient. Member states do not ensure that exemption conditions are met. Essential information is not made available to tax authorities to ensure that VAT is eventually paid. Furthermore, tax authorities do not exploit the possibilities offered by the information available to them to detect and prevent VAT evasion. And last but not least, there was no agreement to impose joint and several liabilities for not reporting information relating to such intra-Community transactions.
The ECA recommends that the Commission take the following actions: - amend the customs code implementing provisions to implement uniform communication of the complete VAT data for each intended transport; - importers should be held jointly and severally liable for VAT losses in the member state of destination when the VAT statement is not submitted by them; the member states' custom electronic clearance system should carry out automatic verification of VAT data; - create a common EU risk profile for these imports; - change legislation to improve the exchange of information necessary for correct charging of VAT in the member state of destination. (LC/transl.fl)