From January 1, 2024, new transparency rules that will help EU countries fight fraud in the field of value added tax (VAT) came into force.

According to a press release from the EU executive, the new rules will provide tax administrations in EU member states with payment-related information that will allow them to more easily detect VAT fraud, with a particular focus on e-commerce. , a sector highly prone to non-compliance and fraud of this nature. This, in turn, creates gaps in the tax revenues that pay for vital government services. For example, some online sellers who are not physically present in EU Member States sell goods and services to EU consumers without registering for VAT anywhere in the EU or declaring a lower value than the actual value of their online sales. Member States therefore need strengthened tools to detect and stop this illegal behaviour.

“These new rules will play a key role in the fight against VAT fraud, which costs EU governments billions of euros in revenue each year. Using information collected by payment service providers such as banks and credit card companies, fraud officers in Member States will be able to more easily and accurately detect and combat fraud in the e-commerce sector,” he said. Economic Commissioner Paolo Gentiloni.

The new system reinforces the key role played by payment service providers (PSPs), such as banks, e-money institutions, payment institutions and postal money order services, which together facilitate more than 90% of online purchases in the EU.

From 1 January, these PSPs will have to monitor the beneficiaries of cross-border payments, and from 1 April they will have to provide EU Member State administrations with information on those who receive more than 25 cross-border payments per quarter. This information will then be centralized in a new European database developed by the European Commission, namely the Central Electronic System for Information on Payments (CESOP), where the information will be stored, aggregated and cross-checked with other data.

All information from the CESOP will then be made available to Member States through Eurofisc, the EU’s specialist network in the fight against VAT fraud launched in 2010. This will make it much easier for Member States to analyze the data and identify online sellers who do not comply with their VAT obligations, including businesses located outside the EU. Eurofisc liaison officers are also empowered to take appropriate measures at national level, such as requesting information, carrying out checks or deleting VAT numbers. Similar provisions already in place in some Member States and elsewhere have had a significant impact on the fight against fraud in the e-commerce sector.

(Source: Agerpres / Photo: Dreamstime.com)