Member states move ahead with Commission proposal to reinforce data sharing in fight against cross-border tax fraud

The Council of the EU has agreed a position on a proposed amendment strengthening cooperation and VAT data sharing between national tax authorities, the European Public Prosecutor's Office (EPPO), the European Anti-Fraud Office (OLAF), and the Eurofisc network of anti-fraud experts.

Fraudsters operating across borders exploit weaknesses in the tax system to avoid paying VAT, often charging consumers for VAT that is never passed on to the state. The European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) are both active in cross-border fraud investigations. The Eurofisc network of member state experts on VAT fraud also works on the issue, sharing and analysing data to spot cases of fraud. Until now, however, it was complex for the EPPO and OLAF to access this vital information using repetitive bilateral exchanges with Member States. This bottleneck slows investigations, allowing more illicit traders to get away with fraud.

The Commission proposal of November 2025 aimed to streamline the process and give the EPPO and OLAF easier access to the data they need to conduct their investigations. The Eurofisc network will be mandated to transmit its own VAT fraud-related risk analysis to the EPPO and OLAF in certain circumstances. The EPPO and OLAF will also gain direct and targeted access to Member State’s VAT information under strict conditions and in line with data protection rules.

Today, Member States meeting at the ECOFIN Council agreed their position on the reform, largely maintaining the objectives and approach of the Commission proposal with some precisions. This represents an important step towards adoption and implementation for this important initiative. The European Economic and Social Committee has already published an opinion on the file, and the European Parliament is preparing its opinion. 

Background

Member states lose billions in revenue every year due to cross-border VAT fraud. One of the most damaging types of cross border VAT fraud is “carousel fraud” whereby fraudulent actors use complex chains of companies and transactions to exploit the fact that intra-EU transactions between businesses are not charged VAT, while VAT is charged on domestic transactions.  This carousel fraud one costs member states and the EU up to €32.8 billion in lost revenue every year, so this is an urgent issue to increase fairness and boost public budgets. The amounts related to cross-border VAT fraud are even higher if we consider other fraud types like eCommerce fraud. 

Another fraud scheme exploits Customs Procedure 42 by importing goods VAT-free, falsely claiming they are sold to another EU state, and then either keeping them untaxed in the import country or selling them elsewhere without paying VAT. 

Recent international investigations by the EPPO and OLAF include the discovery of a €500 million carousel fraud in the IT sector and a large-scale customs and VAT fraud scheme involving imports of textiles, footwear, electric bicycles and other goods where approximately €118 million in customs duties and €79 million in VAT were evaded. Empowering EPPO and OLAF to successfully conclude more such enquiries can have a significant positive and ensuring a level playing field for businesses that follow the rules.

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