1. 1 Financial impact There is no upper limit; losses of VAT receipts can accumulate as long as a carousel mechanism functions.

2.  The cross invoicer: fictitious national purchases and fictitious intra- Community supplies  Third party payments  Exports to third countries free zones in third countries and re-import in another MS  Missing Traders can be reactivated dormant companies  Money laundering 2 6. Trends in MTIC fraud

3. Commodities in MTIC fraud 3 Commodities usually used at the MTIC fraud: mobile phones, CPUs, cars, soft drinks, textile, drugs, pre-paid phone cards etc. Recent trend: fruit & vegetable, platinum bars

4. 7.Abuse of triangular operations 4 National Supplier Intermediary company Customer MEMBER STATE 1 MEMBER STATE 3 MEMBER STATE 2 Profit: € 0 Vat to pay

5. 8. Fraud with cars 5 NEW VEHICLES Land vehicles with engine are regarded as new vehicles if they meet one of the two following conditions: -The delivery is carried out within six months of the date of its first entry into service OR -The vehicle has travelled less than 6.000 kilometres.

6. New Vehicles 6 The intra-community purchase of a new vehicle is always subject to VAT in the purchaser’s country irrespective of the legal status of the seller or the purchaser: merchant, intermediary or private individual

7. 7 Land vehicles with an engine which meet the two following conditions are regarded as used goods: The delivery is carried out more than six months after the date of its first entry into service AND The vehicle has travelled at least 6.000 km Transactions between private individuals regarding second-hand vehicles are not subject to VAT Second hand Vehicles

8. 8 TWO SYSTEMS CAN BE APPLIED TO THE SALE OF SECOND-HAND VEHICLES BETWEEN PROFESSIONALS 1- The margin scheme procedure in the exporting country 2- The general intra- Community acquisition procedure.

9. 9 The margin scheme procedure The vendor, in the Member State the vehicle is being exported from, can apply the margin procedure provided for in Articles 327-332 of the VAT Directive 2006/112/EC, if he acquired the vehicle: From somebody that is not subject to VAT; OR From somebody who is not permitted to invoice VAT under this delivery.

10. 10 The general intra- Community acquisition procedure The purchaser must pay VAT in his country if: -The vendor chooses to apply the general procedure of the intra- Community deliveries OR -The vendor cannot legally apply the margin procedure to the sale. This case also applies if VAT has been reclaimed upstream.

11. Different kinds of fraud as regards cars Carrousel fraud Fraud under the margin regime Lease constructions Misuse of temporary car registrations Export – construction

12. Company established in the European Union Declares an intra-community supply Greek company does not declare intra- Community acquisition invoicing Greek companies or Greek individuals False application of margin scheme Intra-community supply Initial invoice registered in the accounting books of the supplier as intra- community supply Fraud under the margin regime

13. Company of the European Union declares intra- Community supply Double invoicing Greek intermediary Greek private individual invoices Intra-community supply False invoice subject to the margin scheme payment order

14. Belgian company German missing trader Intra-community supply Greek intermediary Greek private individuals Invoices subject to the margin scheme invoices Transport on the account of the Greek intermediary Transport of cars

15. Contract of hiring from 7-8-2003 until 12-3-2004 Italian company Greek private person Payment and delivery on 4- 8-2003 Sale on 13-3-2004 invoice Contract of hiring Payment and delivery Fictitious hiring of a new vehicle

16. 9. New trend of fraud: misuse of the Customs procedure 4200 Customs procedure  The VAT due at the MS of importation  But suspension of VAT if it is certain that the goods will leave the territory of the MS of importation to another MS: the VAT due in the MS of final destination  Fill in the box 37 of the SAD with code “4200” (import with simultaneous release for free circulation- VAT exempt supply to another MS) 16

17. Description of the procedure 17 VAT procedure Exemption of VAT upon importation when followed by a transfer of the goods to another MS or when followed by an exempt IC supply art. 143 (d) of the VAT Directive (2006/112/EC) At the moment of importation it must be already certain that the goods will leave the territory of the MS of importation to another MS art. 138 of the VAT Directive

18. 18 VAT procedure  The owner of the goods or his representative must be identified for VAT purposes in the MS of importation or appoints a fiscal representative  File a recapitulative statement in the MS of importation  In the MS of arrival the owner of the goods will effect the IC acquisition- the VAT becomes chargeable in that MS  Member States shall lay down the conditions governing this exemption

19. Examples 19  French company A purchases goods from China, imports them in Belgium and subsequently transfers them to France: Company A must be registered for VAT in Belgium or fiscal representative, file recapitulative statement in Belgium, declares IC acquisition in France  French company B purchases goods from China, imports them in Belgium and subsequently transports them to its customer C in Luxemburg: Company B must be registered for VAT in Belgium or fiscal representative, issue an invoice to company C, file recapitulative statement in Belgium, company C declares IC acquisition in Luxemburg

20. 20 Abuse of the Customs 42 procedure The goods enter the EU without paying the VAT so it is possible to misuse the VAT rules for fraudulent reasons, e.g.: differences in value declared upon importation and the price charged to the customer the goods do not leave the MS of importation and are sold at the black market the goods are supplied to missing traders or hijacked VAT numbers (MTIC fraud)