Cross-border value-added tax fraud in the European Union

Adrien Bussy () and Annalisa Tassi ()
Additional contact information
Adrien Bussy: Swiss National Bank
Annalisa Tassi: Research Institute for the Evaluation of Public Policies of the Bruno Kessler Foundation (FBK-IRVAPP)

Swiss Journal of Economics and Statistics, 2025, vol. 161, issue 1, 1-23

Abstract: Abstract We study the effects of a reform to VAT rules (the reverse charge mechanism on domestic transactions) aimed at eliminating VAT fraud involving cross-border transactions within the European Union (EU). The EU VAT system is prone to fraud involving cross-border transactions between member states, whereby traders either collect VAT without rightfully remitting it to tax authorities or claim a VAT refund to which they are not entitled. We find that pre-reform fraud amounts to around 4% of the trade volume of treated products, or 0.1–0.2% of overall VAT revenues in reform countries in the year leading to the reform. We also show that fraud is concentrated in countries with higher corruption, lower customs efficiency, and lower GDP per capita. Our results represent a lower bound for the gains from local fraud removal, which appears similar in magnitude to the costs incurred by firms to comply with the reform.

Keywords: Tax evasion; VAT fraud; Tax revenues; International trade; European Union.; H26; F14 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s41937-025-00138-5 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sjecst:v:161:y:2025:i:1:d:10.1186_s41937-025-00138-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/41937

DOI: 10.1186/s41937-025-00138-5

Access Statistics for this article

Swiss Journal of Economics and Statistics is currently edited by Marius Brülhart

More articles in Swiss Journal of Economics and Statistics from Springer, Swiss Society of Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().