VAT fraud: numbers never seen

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The numbers vary according to the source, but they are huge. Between 20 and 30 billion euros a year. This is the sum of the VAT not levied by the French state, about 12% of its VAT revenue, which is the first item of tax revenue. And the gap rises to around 150-200 billion across the European Union. Fraud involved and well known as that of the carousel of the VAT but also that on the carbon tax, on used cars or on the building.


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A huge deficit for the state

The value added tax (VAT) is the main source of tax revenue for the states of the European Union, about 700 billion euros each year. In France, the VAT earned 154.6 billion euros in 2018, long before the income tax (IR) with 72.6 billion euros or corporate tax and 25.9 billion euros . The VAT is levied on the exchange of goods or services at the time of sale of goods. Companies collect it from consumers and then return it to the state. Exemptions exist under certain conditions when companies operate outside their borders. The temptation is excellent for some "using" the passage or simply "siphoning" the money without ever returning to the state. According to the latest estimates published by Brussels, more than 147 billion euros of VAT would have evaporated throughout the European Union. Some experts even advance the figure of 193 billion. In France, if we estimate the loss of around 30 billion in 2012/2013, today it would be 20.9 billion euros. A "hole" that still represents 12% of the VAT revenue of the French state.

The VAT carousel scam

The most widespread VAT fraud is that of the VAT carousel, using the intra-community VAT, for example, that European companies do not have to pay if they carry out activities outside the Union. It is estimated that this fraud represents a deficit of around 17 billion euros each year in France. This scam consists for example of a company based in Belgium to sell goods to a phantom B company based in France. No VAT is due since they are two countries of the Union. B then resells the goods to a company C also based in France, charging the VAT. The French tax authorities will then ask B for VAT invoiced by C, but B has vanished. During this period, company C is reimbursed by the French state VAT and resells the goods to A without VAT. On goods at € 100,000, it is therefore € 16 788 VAT that France will offer to the fraudster. If Belgium managed to fight effectively against this scam and divide the amount of fraud by 10, France is still behind. And there are many other frauds. Those on the carbon tax in 2009 had made a big fuss and raised the European states from 5 to 10 billion euros in a few months. But other scams, such as those on used cars between France and Germany or those on the construction sector, are particularly within the reach of the tax authorities.

Tax optimization

In addition to these scams, many companies also choose optimization or tax evasion by simply transferring, as Amazon did, their headquarters in Luxembourg, for example where the VAT rate is lower.

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