Image: © Tobias Arhelger/Stock.adobe.com
New transparency rules will make it easier for EU member states to identify online sellers who do not comply with VAT obligations.
EU member states will now be able to detect VAT fraud more easily with new rules around cross-border payments that came into force yesterday (1 January).
VAT fraud can occur in e-commerce when online sellers with no physical presence in an EU country sell goods or services to EU consumers without registering for VAT anywhere in the EU, or by declaring less than the actual value of their online sales.
The EU’s new transparency rules will see a crackdown on this fraud by providing tax authorities the tools they need to detect this behaviour.
The new system focuses on payment service providers (PSPs) such as banks, payment institutions and post office giro services, which collectively handle the vast majority of online purchases in the EU.
The new rules mean these PSPs will have to monitor the payees of cross-border payments. From 1 April, they will have to transmit information about online sellers that receive more than 25 cross-border payments per quarter to the administrations of member states.
This information will then be added to a new centralised database, the Central Electronic System of Payment information (CESOP), where it will be stored, aggregated and cross-checked with other data.
All information in this database will then be made available to member states via Eurofisc, the EU’s network of anti-VAT fraud specialists, which will make it easier to identify online sellers who don’t comply with VAT obligations, including businesses that are not located in the EU.
Additionally, Eurofisc liaison officials can take appropriate action at national level, such as proceeding with requests for information, audits or deregistration of VAT numbers.
Paolo Gentiloni, EU commissioner for economy, said VAT fraud costs EU governments billions in lost revenue annually and these new will “play a crucial role” in the fight against it.
“By harnessing the information collected by payment service providers such as banks and credit card companies, anti-fraud specialists in member states will be able to more easily and accurately pinpoint and crack down on fraudulent behaviour in the e-commerce sector.”
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