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Tackling the EU VAT gap: How authorities are uncovering more fraudulent transactions than ever before

The fight against VAT fraud continues apace, with new statistics from Eurofisc revealing it uncovered a record €12.7 billion of fraudulent or suspicious transactions across the EU in 2023.

Eurofisc, founded in 2010 specifically to combat cross-border VAT fraud and comprised of all EU member states plus Norway, is provided with technical and financial support by the European Commission to rapidly exchange and process VAT data.

Its latest figures for 2023 show it is detecting more suspicious activity earlier and more efficiently.

€12.7 billion

of fraudulent or suspicious transactions


businesses linked to VAT fraud in the EU


individual VAT fraudsters identified


suspicious fraudsters deregistered for VAT


networks of trading companies considered at high risk of VAT fraud

The statistics also disclose a remarkable rise in the cases of VAT fraud being picked up on by authorities.

In 2023, a total of 12.7 billion fraudulent or suspicious transactions were uncovered in the EU; up from 10.8 billion a year earlier, 8.1 billion in 2021 and just 3.3 billion in 2020.

The rise of digitalisation

As we wrote about last year, the way businesses must manage tax has been transformed by increased digitalisation in recent years; whether it’s e-invoicing, SAF-T, real-time reporting or any other electronic mandate.

But it’s not only companies for which the era of tax digitalisation offers new opportunities to manage and scrutinise data in real time.

Tax authorities are increasingly harnessing digital methods to access taxpayer data, analyse records more closely and act quickly in cases where fraud is suspected. By mandating the sharing of tax data via digital platforms, authorities can clamp down on suspicious activities and ultimately ensure a far greater proportion of VAT fraud is identified and punished.

All of this is done with the objective of closing the VAT gap, which in 2021 stood at €61 billion in the EU alone.

What does this mean for businesses seeking to comply with VAT laws?

Business owners and tax professionals must be aware that any instances of non-compliance are now highly likely to be brought to the attention of tax authorities.

Gone are the days of authorities manually checking paper invoices and VAT returns; instead, complex data systems can run processes around the clock to seize upon any data that potentially contains inaccuracies, gaps or deliberate fraud.

What’s more, those systems are able to scrutinise not only real-time data and the most recent submissions, they can also be leveraged to process historic documents.

As a tax professional, you might think that data has a relatively limited lifespan. In fact, many people don’t know what to do with most of their legacy data and often view it as an inconvenience.

But in the era of digitalisation, these dead, unused data from years gone by have the potential to transform into data zombies; causing all manner of problems as they are dug up from the grave by emboldened tax authorities utilising the latest technology.

The only way to protect a business now and in the future is to ensure the data filed in tax returns and other documentation is wholly accurate and contains a digital link from the final report back to the source.