EU: European public prosecutor's office estimates serious VAT fraud amounting to €11.5 billion
71% increase from 2022 report
The European Public Prosecutor's Office (EPPO) on 29 February 2024 published its annual report for 2023 announcing the launch of 1,371 investigations during the year and €19.2 billion in overall estimated damages, with 59% of that amount or €11.5 billion linked to serious value added tax (VAT) fraud—a 71% increase from the 2022 report.
The EPPO is an independent public prosecution office of the European Union (EU). It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU. These include several types of fraud, serious VAT fraud (i.e., fraud with damages above €10 million), money laundering, corruption, etc. The EPPO undertakes investigations, carries out acts of prosecution and exercises the functions of prosecutor in the competent courts of the participating member states, until the case has been finally disposed of. Since starting its operations on 1 June 2021, EPPO has registered more than 4,000 crime reports from participating EU member states and private parties.
KPMG observation
The large amount and increase in serious VAT fraud identified by the EPPO will likely drive EU member states to further advocate for the implementation of electronic invoicing (e-invoicing) and digital reporting mandates. Tax authorities view these tools as effective means to enforce VAT obligations. Italy, being the most advanced member state in this area, recently made such an announcement. Other member states, including Belgium, France, Poland, and Spain, plan to introduce e-invoicing mandates in the near future. Additionally, at the EU level, the European Council is considering a proposal to mandate an e-invoicing mechanism for transactions within the EU, as part of the VAT in the Digital Age package. Therefore, it is not a matter of if, but when most jurisdictions will adopt the e-invoicing trend. This shift will dramatically alter VAT compliance and business processes, as tax authorities will gain direct insights into daily operations.
For more information, contact a KPMG tax professional:
Kathya Capote Peimbert | kcapotepeimbert@kpmg.com
Philippe Stephanny | philippestephanny@kpmg.com