In addition to private individuals, some companies and organisations do not pay their taxes. In VAT carousel fraud, for example, a company charges VAT but does not remit it to the tax authorities.
VAT carousel fraud
Reputable companies suffer from carousel fraud in two ways. Firstly, they cannot compete with companies that do not charge VAT on their products. Secondly, they can unwittingly become involved in carousel fraud.
The Netherlands is a leader in combating VAT carousel fraud in Europe. The former State Secretary for Finance, Frans Weekers, repeatedly called for international measures to combat this type of fraud. In June 2013, this led to the introduction of a fast response mechanism to speed up the investigation of international carousel fraud.
Reverse-charge mechanism to combat VAT fraud
Companies can avoid becoming involved in VAT carousel fraud by using the reverse charge mechanism. The company they are doing business with then remits the VAT to the tax authorities.
Involvement in VAT carousel fraud
A company can normally deduct the VAT it pays on its own purchases and costs as input tax. If a company knows or should have known that it was involved in carousel fraud the Tax and Customs Administration can refuse to accept such deductions.
High-risk goods in carousel fraud
Carousel fraud is more likely to involve small but high-value goods such as computer chips (CPUs, MPUs and MCUs), mobile telephones, tablets and laptops.
Reporting tax fraud
Entrepreneurs can use the TaxLine to report suspected fraud.