Intra-Community VAT Fraud: Is It Really a 50 Billion Euro Problem?

In this article, the authors investigate whether intra-Community VAT fraud remains a EUR 50 billion problem in the European Union today. The authors argue that the methods used for estimating the intra-Community VAT fraud gap are flawed and seem structurally too high, and that the intra-Community VAT fraud gap should show a decline, rather than the constant EUR 50-60 billion it is often assumed to be. In the meantime, these “fixed” figures still drive policy changes. In recent years, the European Commission and the Member States have indeed implemented several measures to fight intra-Community VAT fraud. However, not all measures specifically target intra-Community VAT fraud. The authors argue that some new VAT measures lack substantiation and advocate for deeper analysis of the potential impact of specific measures on specific groups of taxable persons in order to better justify new VAT policies.