Brussels, 29/02/2008 (Agence Europe) - EU finance ministers will discuss the EU's strategy to combat value added tax (VAT) fraud on Tuesday 4 March. Most of them oppose the introduction of ambitious measures like the introduction of a reverse charge mechanism and the taxation (of goods and services supplied by one member state to another) in the member state of origin, as outlined by the European Commission in a recent report (see EUROPE 9608). ECOFIN is expected to confirm its December 2007 agreement on conventional methods for increasing administrative cooperation (see EUROPE 9555). A diplomat explained that Germany's opinion on this had very little support and the majority of member states required in order to move forward with ambitious measures did not exist at the Council. Austria is expected to launch a reverse charge pilot study for VAT at national level and is expected to make its position known on Tuesday.
In its draft conclusions document, the ECOFIN Council will give 'absolute priority' to draft legislation to boost administrative cooperation to be unveiled by the end of the year. In about a fortnight's time, the European Commission will publish an initial raft of measures to ensure company VAT returns have to be lodged every three months on deliveries of goods and services from other member states, and measures concerning the deadlines for exchange of information between national VAT authorities. A problem here is that companies fear these measures will cost them dear (see EUROPE 9586). Other measures may cover access to detailed, up-to-date information about the registration and removal of companies from national VAT registers. The ministers will pledge to review (by the end of 2011 and following an assessment of the effectiveness of conventional measures) the option of introducing ambitious measures to tackle VAT fraud, including a pilot VAT reverse charge study.
Against the backdrop of huge media coverage of tax evasion in Liechtenstein by people from several member states, Germany is expected to try and focus debate on combating tax fraud more generally. Tax fraud is estimated to total between €200 -250 billion every year. VAT fraud is member states' biggest concern. (M.B.)