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VAT compliance gap due to Missing trader intra-community (MTIC) fraud

Project

14 Dec 2022 - 14 Jun 2024

Adam Śmietanka

Magdalena Wiśniewska

Date:

14 Dec 2022 - 14 Jun 2024
Project duration:

14.12.2022 - 14.06.2024
Leader:

CASE – Center for Social and Economic Research

Adam Śmietanka

Economist
Adam Śmietanka is an Economist at CASE. His areas of expertise include data analysis, data visualization, web scraping, and inflation measurement. At CASE, Mr. Śmietanka is responsible for conducting data analysis, economic research, and developing and maintaining CASE’s online monthly consumer price index. His professional experience includes an internship with PwC’s Advisory Team and a … <a href="https://case-research.eu/project/vat-compliance-gap-due-to-missing-trader-intra-community-mtic-fraud/">Continued</a>

Projects from this author:
- The challenges of VAT beyond VAT in the Digital Age
  This study should consider possible improvements to the EU VAT system and assess their feasibility and likely consequences, based on the analysis of its current weaknesses, gaps, inefficiencies. As requested by the ToR, this requires a forward-looking analysis and prospective reflection, combined with and based on the retrospective assessment of the current situation. The study requires, on the one side, a thorough re-assessment of well-known problems of the EU VAT systems, which have been discussed for years by policymakers, scholars and in courts and tribunals, the solutions to which have already been long proposed in the academic as well as policy arena. On the other side, it requires a fresh view to identify new solutions to old problems, new problems and their possible solutions, as well as potential unknown problems, i.e. those that may appear in the future given the current economic, political and legal evolution and the megatrends of the EU and global society. Operationally, the activities needed to achieve the objectives of the study are straightforward. For each of the areas or angle of analysis, the study team will have to: Identify existing weaknesses and challenges of the EU VAT system, including those that may appear in the future given the likely evolution of the current situation. Design solutions to the problems identified. Assess the feasibility and consequences of the solutions identified.
- VAT Gap in the EU
  The core objective of this study is to inform in an accurate, timely, understandable, and attractive manner the national administrations, Commission, academic community, and a broader audience on the value, development over time, and difference across Member States of tax gaps and related parameters. More specifically, the study will cover the VAT compliance gap, … Continued
- Personal income tax (including Social Security Contributions) gap
  Personal Income Tax (PIT) and social security contributions (SSC) are the core source of government revenue in all EU Member States. In 2020, PIT and SSC contributions across Member States ranged from 49 to 75 percent and accounted in total for approximately 67 percent of total receipts from taxes and social contributions in the … Continued
Author’s projects
Magdalena Wiśniewska

Head of Business Development Team
Magdalena Wiśniewska is responsible for managing research projects at CASE. She holds MA in International Relations from the Nicolaus Copernicus University in Toruń and MA in  Finance & Accounting from Warsaw School of Economics. During her career she gathered an extensive experience both in the public and private sector. She worked among others for Office … <a href="https://case-research.eu/project/vat-compliance-gap-due-to-missing-trader-intra-community-mtic-fraud/">Continued</a>

Projects from this author:
- The future of UK-EU cooperation on Justice and Home Affairs from the perspective of Poland
  This project examines the future of United Kingdom–European Union cooperation in Justice and Home Affairs (JHA) through an in-depth case study of Poland. It frames UK–EU relations as an evolving, practical partnership shaped by shared risks and operational needs rather than purely by post-Brexit institutional arrangements.
- Study to analyse national sick leave policies and their impacts on workers’ health and productivity to identify best practices for workers and businesses
  The project involves carrying out a comparative study of national sick leave policies in the European Union. It focuses on analysing sick leave policies and their impacts on workers’ health and productivity, with the aim of identifying best practices for workers and businesses.
- Upgrade of the ESPON’s Territorial Impact Assessment methodology – towards new innovative approaches
Author’s projects

Revenues generated by Value-Added Tax (VAT) play an important role in the budgets of European Union (EU) Member States (MS) and the EU; as VAT resource accounts for around 10% of EU own resource revenue and around 26% of MS’s tax revenue. Tax fraud, evasion and avoidance reduce these revenues, and undermine the tax system, affecting the principles of fair taxation and fair competition between companies. Reflecting the importance of these issues, a new Fiscalis Project Group led by Italy has been set up as part of ongoing work under the Tax Administration EU Summit (TADEUS). One of the key areas of focus for the Fiscalis group is the VAT compliance gap that occurs due to Missing Trader Intra Community (MTIC) fraud and e-commerce fraud.

MTIC fraud is conducted by organised criminal groups, and previous estimates suggest that MTIC fraud is producing large revenue losses for MS . However, up to date estimates with more robust methodologies are needed to assess the evolution of this issue. E-commerce fraud occurs during the purchase and supply of goods conducted on the internet or other online methods. There are relatively less developed methodologies to robustly measure the scale and magnitude of types of e-commerce VAT fraud. Nonetheless, indications of the magnitude of lost revenue appear sizable, for example, the Commission (2016) estimated that between €2.6 – €3.8 billion of VAT revenue was lost from cross-border e-commerce alone in 2013. Despite several changes to the (import) VAT landscape since 2013, most significantly the VAT e-commerce package and the linked removal of the €22 VAT de minimis threshold, we still anticipate significant levels of e-commerce non-compliance.

The purpose of the study is to identify, agree on and potentially implement a common methodology for the estimation of the VAT compliance gap due to MTIC fraud and e-commerce fraud. The intention is for this methodology to produce estimates that are comparable between EU MSs and highlight characteristics that are of importance to MS tax authorities. This will be achieved by:

Identify, systematising and evaluating methodologies to estimate the VAT compliance gap due to MTIC fraud and e-commerce fraud based on a predetermined set of bespoke evaluation criteria;
Developing and testing the feasibility of a common methodology to calculate such estimates, including an assessment of the limitations of any proposed methodology; and,
If decided feasible and desirable by the contracting authority, applying the chosen methodology in order to estimate components of the VAT compliance gap, namely VAT compliance gap due to MTIC fraud and e-commerce fraud.

Experts: Grzegorz Poniatowski (CASE), Adam Śmietanka (CASE), Aleksandra Sojka (CASE), David Anderson (PwC), Rosalind Piggot (PwC), Simon Loretz (WIFO)

Sponsor: Directorate-General Taxation and Customs Union (DG TAXUD)

Project leader: CASE – Center for Social and Economic Research

Partners: Austrian Institute of Economic Research (WIFO), PricewaterhouseCoopers (PwC),

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VAT compliance gap due to Missing trader intra-community (MTIC) fraud

Date:

Project duration:

Leader:

Adam Śmietanka

Projects from this author:

Magdalena Wiśniewska

Projects from this author:

Related projects

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VAT compliance gap due to Missing trader intra-community (MTIC) fraud

Date:

Project duration:

Leader:

Adam Śmietanka

Projects from this author:

Magdalena Wiśniewska

Projects from this author:

Related projects

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