VAT compliance gap due to Missing Trader Intra-Community (MTIC) fraud : executive summary; Phase II

Missing trader intra-Community (MTIC) fraud is a prominent form of VAT non-compliance, which involves a fraudulent trader supplying goods and services to other businesses, collecting the tax due on the supply, and then disappearing without remitting it to the tax authorities. This type of fraud warrants particular attention in the EU, as it exploits the fact that the intra-Community movement of goods and services is VAT-free, making the fraud even more profitable. There is broad consensus in the literature that the revenue lost due to MTIC fraud in recent years makes up a significant portion of the overall VAT compliance gap. As a continuation of Phase I of this work, this report presents the final estimates of the MTIC gap, based on a methodology focused on irregularities in value and discrepancies in Intrastat mirror statistics (the most detailed statistics on intra-Community trade). It also offers a more detailed analysis of the feasibility of a second identified method, which involves matching VAT Information Exchange System (VIES) and VIES-like reporting obligations data on intra-Community acquisition available to Member State tax administrations.