The European Union has been fighting against VAT fraud for many years. The so-called ‘carrousel fraud’ is costing the EU approximately EUR 50 billion per year. This was illustrated once again in a recent Europe-wide investigation, called ‘Grand Theft Europe’, carried out by 63 journalists from 30 countries, co-ordinated by German news outlet Correctiv.
The latest action the European Commission is looking at is the introduction of a ‘super weapon’, called the Transactional Network Analysis (TNA). TNA is a data mining software developed in Belgium which uses intuitive algorithms to quickly assess multiple international databases and reviews huge amounts of data to identify and highlight instance of suspicious VAT activity and likely cases of fraud.
The Belgian tax authorities have been using similar software for several years and with great success. Since its introduction in 2002 they have successfully managed to reduce the damage caused by VAT carousels in Belgium from €1.1 billion in 2001 to under €45 million in 2018, an impressive 96% reduction in just 15 years. And also Greece has made inroads in fighting VAT fraud with a transaction analysis tool, which checks bank deposits and tax declarations within just two minutes.
This continual trend of tax authorities relying more heavily on and using more increasingly technology-based solutions in their mission to collect tax and fight tax crime will gain momentum and become more advanced as the European Union tries to combine the data of all EU Members States. The latest publication from the European Parliament Commission on VAT fraud can be found here.
