Digitalization and cross-border tax fraud: evidence from e-invoicing in Italy

Marwin Heinemann () and Wojciech Stiller ()
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Marwin Heinemann: Berlin School of Economics and Law (HWR Berlin)
Wojciech Stiller: Berlin School of Economics and Law (HWR Berlin)

International Tax and Public Finance, 2025, vol. 32, issue 1, No 6, 195-237

Abstract: Abstract The digitalization of transaction processes through tools such as electronic invoicing (e-invoicing) aims to improve tax compliance and reduce administrative costs. Another important aspect of digitalization is its potential to reduce tax fraud. We exploit the comprehensive introduction of e-invoicing in Italy in 2019 and examine the effect of increased domestic tax enforcement capabilities on cross-border value-added tax (VAT) fraud. As a proxy for this fraud, we make use of the discrepancy in trade data that are double-reported in both the importing and exporting country (trade data gap, TDG). We calculate the TDG for imports to Italy from all other EU countries at the most detailed product level. Our results suggest a significant decline in cross-border fraud in response to the introduction of mandatory e-invoicing, providing an important rationale for the application of this measure by other countries. Furthermore, we estimate that e-invoicing decreased the Italian VAT loss in 2019 by about € 2.2 billion to € 2.6 billion compared to 2018. In this context, we underpin the suitability of the TDG as an approach for the study of anti-fraud measures.

Keywords: E-Invoicing; Digitalization; International trade; VAT fraud; Trade data gap; Tax enforcement; Reverse charge (search for similar items in EconPapers)
JEL-codes: F14 H21 H26 K34 K4 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10797-023-09820-x

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