VAT "CAROUSEL" FRAUD: INTERNATIONAL IN SCOPE (3/3)
The vat "carousel" fraud originates in Europe (3/3)
Carousel fraud is on the rise.
Indeed, between the fraud of 2022, the largest in Europe unveiled by the EPPO and Netflix which produced a documentary on the fraud of "carbon quotas" VAT is the order of the day.
If the perpetrators of this fraud are presented as cheerful and mischievous characters of a Netflix series, it is indeed a fraud that has been organized, and the mechanism is condemnable.
What are greenhouse gas emission allowances?
In 2003, the European Union adopted a directive setting up a system for the allocation and trading of greenhouse gas emission quotas in order to comply with the Kyoto Protocol.
This system authorizes each EU country to emit a tonnage of CO2 over a given period of time and allocates them to polluting activities. If at the end of the period the country has emitted less CO2 than it is allowed to emit, it can then sell them.
These allowances are considered intangible personal property, and any person registered in the national registry may hold and trade in allowances.
From a tax point of view, their transfer had the character of a supply of services, and was automatically subject to VAT at the rate of 19.6%, thus falling under the provisions of the l'article 259 B of the French General Tax CodeThey were sold by a service provider outside France to a customer established in France and subject to VAT.
The organization of the fraud
The fraudsters have quite simply set up a so-called "carousel" fraud.
Company A makes an intra-Community supply of allowances exempt from VAT to company B, which is subject to VAT in France.
Company B resells them to company C, this time invoicing the VAT which it does not pay to the tax authorities
Company C in turn sells the carbon allowances to company D, and then the companies evaporate and start again under different names.
The tax authorities thus reimburse VAT that has not been paid to them at each round of the carousel.
The embezzled sums are thus sent to countries where banking secrecy makes taxation opaque.
In November 2008 Tracfin was alerted but it was not until February 2009 that the courts investigated the case
The amount of the fraud is exorbitant, it amounts to 283 M€ of unpaid VAT, the main protagonists have been sentenced to 8 years in prison.
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