Volume 39 (2011) / Issue 1

R.A. Wolf, 'VAT Carousel Fraud: A European Problem from a Dutch Perspective' (2011) 39 Intertax, Issue 1, pp. 26–37


The current European Union (EU) value added tax (VAT) system is a breeding ground for carousel fraud. This fraud results in tax losses of several billion euros each year. It also distorts fair competition and may lead to unexpected VAT liabilities. Carousel fraud is triggered by a flaw in the VAT regime, where the right to deduct VAT is not linked to the prior receipt of this VAT by the tax authorities. A customer can deduct VAT, even if its supplier does not pay the VAT to the tax authorities. Tax authorities may thus end up paying back VAT they never received.

The author describes the development of carousel fraud and the actions EU countries and EU institutions took to counter the problem and case law of the European Court of Justice (ECJ). He concludes with some recommendations for changes in the current VAT regime. This article is based on the findings of the author in his thesis ‘Carousel Fraud. A European Problem from a Dutch Perspective’ (Rijksuniversiteit Groningen, 2010).

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ISSN: 0165-2826
ID: TAXI2011004