European Commission proposes measures against tax fraud and evasion

Minimum sanctions for tax crimes, a cross-border tax identification number, a European Union tax-payer’s charter and stronger common measures against tax havens. These are just some of the concrete ideas that the European Commission put forward on June 27 2012 to improve the fight against tax fraud and evasion in the EU, the Commission said.

Taking a holistic approach, today’s Communication looks at ways to strengthen current measures and sets out possible new initiatives for eliminating fraud and evasion in Europe.

Algirdas Šemeta, Commissioner for taxation, customs, anti-fraud and audit, said: “Let there be no illusion: tax evaders steal from the pockets of ordinary citizens and deprive member states of much-needed revenue..

“If we want fair and efficient tax systems, we must stamp out this activity. The political will to intensify the battle is there. Now it is time to translate that into action. As a Union of 27, we have a powerful advantage – strength in numbers. If we play as a team, with a common strategy, we can defeat the fraudsters and evaders, and reclaim vast sums of money that are legitimately due,” Šemeta said.

The size of the shadow economy is estimated to be nearly one fifth of GDP on average across EU member states, representing nearly two trillion euro in total.

Given the globalisation of the economy and technological advances, it is clear that isolated national efforts to overcome this problem will not work. Therefore, the Communication sets out a three-tier approach aimed at attacking evasion and fraud from every possible angle, the Commissions said.

National level

Member states should focus on improving their administrative capacity to collect taxes, the Commission said.

“The Commission will monitor closely their progress in this field, while also providing technical assistance where needed.”

National authorities should also make it easier for the willing to comply, for example, through voluntary disclosure programmes. EU instruments such as the one-stop-shop and a possible Tax Web-Portal should also assist better compliance, the Commission said.

EU level

Action to tackle tax evasion at European level has proven to be effective.

“Thanks to the EU Savings Directive, for example, member states exchange information on non-resident tax-payers to the value of 20 billion,” the Commission said.

“The challenge now is to deepen such co-operation and strengthen common tools. In this respect, agreement by member states on the revised Savings Directive is essential.”

In addition, a number of new ideas are presented. These include a possible European cross border tax identification number, a quick reaction mechanism for VAT fraud and minimum EU rules and sanctions for fraud and evasion, the Commission said.


For the fight against tax evasion to be truly effective, international partners must apply good governance standards that are equivalent to the EU’s, the Commission said.

“The mandates that the Commission has requested to negotiate stronger savings agreements with key neighbouring countries are crucial in that respect.”

Before the end of 2012, the Commission will also set out a “stick and carrots” approach to dealing with tax havens, and measures to deal with aggressive tax planners.

At the March 2012 European Council, EU member states asked the Commission “to rapidly develop concrete ways to improve the fight against tax fraud and tax evasion, including in relation to third countries and to report by June 2012”.

The June 27 Communication will be submitted to the EU Summit at the end of June.

The Commission said that it would start work on developing the ideas set out in the June 27 Communication.

Before the end of the year, the European Commission will present an Action Plan on fighting fraud and evasion, with specific measures that could be rapidly developed. In tandem, the Commission will also come forward with its initiative on tax havens and aggressive tax planning.

(Photo: G Schouten de Jel/




The Sofia Globe staff

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