Reform of the EU VAT System for Intra-Community Transactions

From a macroeconomic perspective, increasing the rate of VAT seems to be one of the most widely used policy instruments for budget consolidation. Unfortunately, the EU VAT system, and notably the system of taxing intra-Community transactions, is highly vulnerable to missing-trader fraud (“carousel fraud”) and higher VAT rates make the VAT system even more attractive for fraudsters. In this article, the authors argue that associating VIVAT with an adequate electronic monitoring of transactions offers an effective solution.