New rules to combat fraud on cross-border payments in the EU came into force on 1 January

New transparency rules that will help EU Member States to crack down on Value-Added Tax (VAT) fraud came into force on 1 January. The new rules will provide tax administration of the EU Member States with payment information allowing them to detect VAT fraud more easily, with a particular focus on e-commerce which is particularly prone to VAT non-compliance and fraud. This in turn creates holes in the tax revenues that pay for vital public services.

For example, some online sellers with no physical presence in an EU Member State sell goods and services to EU consumers without registering for VAT anywhere in the EU, or by declaring less than the actual value of their online sales. Member States therefore need strengthened tools to detect and shut down this unlawful behaviour.

Paolo Gentiloni, Commissioner for Economy, said: “These new rules will play a crucial role in the fight against VAT fraud, which costs EU governments billions in lost revenues every year. 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.”

Source: European Commission