Council Regulation No 1798/2003 on administrative cooperation in the field of VAT provides that the Commission shall present every three years a report to the European Parliament and the Council on the application of this Regulation. In the past, there have been five reports which describe the functioning of the administrative cooperation in the field of value added tax, but this is the first report since the adoption of the Council Regulation No 1798/2003 in January 2004.

In particular, the Regulation introduced improvements relating to: (i) clearer and binding rules governing cooperation between Member States; (ii) more direct contacts between services with a view to making cooperation more efficient and faster; (iii) more automatic or spontaneous exchanges of information between Member States in order to combat fraud more effectively. This report assesses the functioning of administrative cooperation within the current legal framework and focuses in particular on the use that is made of these newly introduced arrangements in order to evaluate whether these changes have been effective.

This report assesses the functioning of administrative cooperation within the current legal framework and focuses in particular on the use that is made of these newly introduced arrangements in order to evaluate whether these changes have been effective.

However, the present report cannot be dissociated from the broader context of the coordinated strategy to improve the fight against VAT fraud set out in the recent Commission's Communication, A coordinated strategy to improve the fight against VAT fraud in the EU, COM(2008)0807 .

. This Communication announces a range of measures which will substantially affect the way administrative cooperation in the field of VAT between tax authorities will function in the future.

ain conclusions : the Commission's Communication of 31 May 2006 concerning the need to develop a co-ordinated strategy to improve the fight against fiscal fraud already expressed the view that the legal framework for administrative cooperation in the field of VAT has been reinforced, but that Member States do not make sufficient use of it and the level of administrative cooperation is not commensurate with the size of intra-Community trade.

This report does not come to a different conclusion; the new arrangements introduced in 2004 with Regulation 1798/2003 offered improved possibilities , but the intensity of the administrative cooperation between Member States to cope with intra-Community VAT evasion and fraud is still unsatisfactory .

As concerns the practical functioning , the willingness to improve the application of the administrative cooperation arrangements should be reflected in the management support and organisation of the tax administration through the following actions:

an appropriate number of resources should be allocated to administrative cooperation and tax controls; training should be provided for tax officials to raise their awareness as regards the instruments available and the spontaneous exchange of information; a proactive and open-minded approach should be adopted towards the application of the instruments available and obstacles should be avoided at national level; local officials should be given instructions on how to prioritise the requests for information; the software should be adjusted in order to use the XML-format for sending requests; efficient procedures should be implemented to collect data to be exchanged; direct contacts between local tax auditors should be encouraged (via CCN mail II bis).

These recommendations are in fact not new; they can already be found in previous reports presented several years ago. The fact that they need to be repeated is a worrying signal as concerns the level of follow up that has been given to them in the past.

The political importance given within a Member State to ensuring that a service of good quality is provided to the partner authorities in the other Member States is a key factor for substantial improvements.

The ECOFIN Council has had, in the past two years, several discussions about combating VAT fraud. The conclusions which have been drawn on these occasions point out the need for a common approach at EU level . The emphasis has been put on the so-called "conventional measures" which aim at strengthening the capacity of tax authorities to tackle VAT fraud within the context of the current VAT system.

Reinforcing administrative cooperation is essential in this context and the proposal for a recast of the Regulation 1798/2003 that is presented today contains substantial changes such as automated access to databases and will provide the legal base to set up EUROFISC. This report demonstrates the need for further amendments to the legal framework which are taken on board in this proposal.

However, improving the practical functioning is equally important and the Commission counts on the political willingness of the Member States to put the necessary efforts in this objective.

The willingness has to come from the Member States but the Commission is prepared to provide its assistance to these efforts. A number of actions to be taken could be coordinated at EU level and the Fiscalis 2013 programme provides appropriate tools for supporting the development and implementation of these actions.

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This Commission Staff Working Document analyses and summarises Member States' replies to the questionnaire relating the application of Council Regulation (EC) No 1798/2003 concerning administrative cooperation in the field of value added tax.

Method used : since the practical use of the different instruments of administrative cooperation is made by the national tax authorities, evidently this evaluation can only be done on the basis of substantial input from the Member State. Therefore, the Commission was of the opinion that the information for making a comprehensive assessment of administrative cooperation under the new Regulation had to be collected by way of a questionnaire launched to the Member States. 25 Member States replied to the questionnaire.

This document has been an important source of information for the Commission's report on the application of Council Regulation 1798/2003 concerning administrative cooperation in the field of VAT but it was not the only one.

Indeed, other sources of information, like existing reports, discussions with Member States on a bilateral basis or during meetings have been used when drafting the Commission's report in order to complement the results of this questionnaire.

Member States’ replies : Member States were specifically asked whether they had any suggestions for improvements to make.

The main suggestions are the following:

direct access to data would lead to quicker exchange of information, on-line conversation through CCN-network would be useful for simultaneous control purposes (conference calls, chat), closer cooperation with Customs authorities in particular for the goods moving through the 4200-procedure (exempted from taxation at import), organising annual CLO meetings for the heads of CLO, to make contacts and cooperation easier and more efficient (due to personal contact), amend the Regulation in order to provide for a legal framework for the project Eurocanet, the set up of a structure at community level to coordinate and facilitate the use of the existing cooperation instruments, better relations between the existing discussion groups (ATFS, SCAC, SCIT) enabling more coherence of the mission attributed to the discussion groups and more regular and formal contacts between them, the mandatory use of XML as unique standard, Review of the Standing Committee on Administrative Cooperation 2004 form, a computer system to ensure that requests are logged to a central record and statistical data could be extracted electronically from the system,

harmonisation of legal terms/expressions, sanctions on Member States that do not comply with the time limits to send the reply to a request.

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Regulation 2003/1798
OJ L 264 15.10.2003, p. 0001-0011

T5-0350/2003
OJ C 076 25.03.2004, p. 0036-0080 E

T5-0350/2003

A5-0262/2003

A5-0262/2003

06522/2003

06522/2003

N5-0535/2002

N5-0535/2002

T5-0040/2002
OJ C 284 21.11.2002, p. 0121-0178 E

T5-0040/2002

Debate in Parliament

CES0037/2002
OJ C 080 03.04.2002, p. 0076

A5-0466/2001

A5-0466/2001

EUR-Lex
COM(2001)0294

EUR-Lex
COM(2001)0294