VAT "CAROUSEL" FRAUD: A FRAUD OF INTERNATIONAL SCOPE (1/3)
The vat "carousel" fraud originates in Europe (1/3)
Carousel fraud developed in the 1970s in the Benelux region. It is now widely established throughout the European Union.
Those involved in fraud create a multitude of companies that sell at a loss and systematically claim a VAT deduction. The operation is carried out so quickly that the national tax authorities do not have the time to identify the perpetrators and sanction them.
When the tax authorities suspect a "carousel" fraud, they must characterize the elements constituting the fraud with precision:
- Proving fraudulent conduct;
- Demonstrate the responsibility of the respondents in this fraud;
The CJEU accepts that the tax authorities will not refund VAT in cases of fraud if it is shown that the trader could have known that he was involved in fraud
Fraud cannot be presumed.
In 2021 the Court of Cassation[1] established that a VAT fraud was a full-fledged offence and that it could lead to a double conviction for tax fraud and VAT fraud when the element characterizing the tax fraud does not constitute an element of the fraudulent maneuvers of the fraud.
This "carousel" fraud is difficult to apprehend by the national tax authorities because of the speed of the operation and its intercommunity dimension.
This is where the creation of the EPPO (European Public Prosecutor's Office) comes in, in order to centralize more efficiently the investigations of the national tax administrations. The result was almost immediate as the Prosecutor's Office uncovered one of the largest intra-EU frauds in 2022.
[1] Cass. crim., 6 Jan. 2021, n° 19-85.133 : JurisData n° 2021-000111 ; Dr. pén. 2021, comm. 66, P. Conte
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