Support for Hungary to deal with financial crisis

EU finance ministers, gathering in Brussels on 4 November, decided to grant a loan of 6.5 billion euros to Hungary to enable it to cope with the country's current financial turmoil.

Christine LAGARDE, Minister for the Economy, Industry
and Employment of France, President of the Council
Photo: Council of the European Union

Stopping the fraudulent carousel

Member states will take steps to fight evasion of value added taxes (VAT) in the EU more efficiently. At the Council meeting, finance ministers agreed on amending the common VAT system (Directive 2006/112/EC and Regulation No 1798/2003). The new rules will accelerate the exchange of information between national tax authorities. This will make it easier for member states to detect what is known as missing trader fraud (also called "carousel fraud"), which costs EU governments tens of billions of euros a year.

"Carousel fraud" is a growing EU-wide problem. The fraudsters take advantage of the fact that sales in intra-Community trade are taxed in the country of destination. They import high value goods, such as mobile phones and computer chips, VAT-free from other member states, sell them on at a VAT-inclusive price, and then disappear without paying the tax to the competent authorities. The fraudulent carousel moves on when the new owner of the goods exports them again and claims the refund of the VAT he paid. In this way, the same goods travel around, with the VAT being pocketed every time they change hands.

The new rules will allow better control of intra-Community sales, without imposing an undue administrative burden on businesses. From 2010, national tax authorities will have to communicate information on cross-border transactions, within one month, to the member state where the VAT is due. Under the current EU rules, such notifications can take up to three months.

To make sure that national authorities receive the necessary information in time, traders will be obliged to file a monthly declaration of their cross-border transactions. However, member states may allow small-scale operators to submit these statements on a quarterly basis. They may also allow the VAT declarations to be transmitted electronically, to reduce the administrative burden to a minimum.

For more information:
Council press release (pdf)
Council webcast of press conference

Forthcoming events:
Informal meeting of Heads of State or Government, 7 November
General Affairs and External Relations Council, 10-11 November