The European Commission says European Union governments lose roughly 128 billion euros ($151 billion) a year in uncollected value-added tax revenue.
Despite these massive losses, EU governments are hesitating to give anti-fraud agencies access to the cross-border data required to close the gap. The latest delay in a bill to expand VAT information-sharing suggests tension revolves around who within the community gets to police fraud—and how much authority member nations would concede in the process.
The proposal itself isn’t radical. It would allow EU anti-fraud bodies to access VAT data held by national authorities, enabling them to investigate and intercept cross-border schemes.
That matters because VAT fraud is cross-border by design. Carousel schemes exploit that goods move freely across the single market but enforcement authority and transaction details don’t. It’s essentially information-delay fraud. By the time an exploited revenue authority realizes something is amiss, the fraudsters and the proceeds are long gone.
The problem is structural. Europe built a borderless marketplace, but individual member nations retained tax enforcement authority. Governments exchange tax information under existing directives, so sharing VAT data would hardly break new ground.
The sticking point is jurisdiction—how and when agencies such as the European Public Prosecutor’s Office can access national databases. EU members insist that such access must be the exception rather than the rule, but one member’s exception may be another’s routine.
This raises the ultimate question: Is this enforcement debate about privacy or institutional power? Expanding data access inevitably expands authority. For some capitals, empowering EU-level prosecutors may feel a bit too much like incremental federalization.
The real discomfort may not be with the VAT gap, but who gets to close it.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the OECD’s and UN’s international tax reform efforts, tax consequences of employee compensation clawbacks, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Technical Mastery Isn’t Enough for CPAs in an AI-First World
The pace of technological change impacting accounting and compliance over the very recent past is materially ahead of what many of the largest firms publicly acknowledge, and the shift has been visible in real time.
Saudi Arabia Opens Door Wide to Foreign Real Estate Investment
Saudi Arabia’s new real estate ownership law reflects a deliberate policy choice to deepen foreign participation in one of the kingdom’s most important economic sectors.
Act Fast for Tariff Refunds as Trump Walks Back DOJ Assurances
Importers seeking tariff refunds after the Supreme Court’s ruling may face additional obstacles as Trump and Bessent describe protracted disputes ahead.
Artificial Intelligence Goes Shopping, Creates Tax Challenges
Artificial intelligence is starting to move from recommending products to buying them. For tax, the question is, when an AI agent completes a sale, who is required to collect tax?
Tariff Decision Does Little to Check Trump’s Unilateral Actions
Last week’s landmark tariff ruling makes clear that the Supreme Court intends to rein in Democratic and Republican presidents alike, sending a message that both parties will need unusually clear authority to take unusually significant actions.
OECD, UN Should Align on Pro-Growth International Tax Reforms
The UN and OECD should collaborate in developing tax frameworks that encourage—or at least don’t discourage—investment, employment, and growth.
Tax Court Ruling Makes Going to Trial Under ‘Jarkesy’ Complex
Taxpayers that believe they can get a jury trial under Jarkesy v. SEC to fight security fraud penalties may want to think twice before pursuing that option.
Tax Practitioners Belong at the Center of Any IRS Reform Efforts
Improving IRS administration can’t happen without involvement from the practitioners who work with taxpayers every day.
Mishandled Taxes on Employee Pay Clawbacks Are Tricky to Correct
Navigating the tax consequences of employee compensation clawbacks is a challenge, particularly since it may require coordination with, and the cooperation of, the affected employee.
What Software’s AI Shift Reveals About the Future of Tax Work
As generative AI accelerates preparation and analysis work, the new challenge for tax professionals is how responsibility shifts when work moves faster, away from execution itself and toward judgment and accountability.
Italy’s Tax Agency Aligns Rules with EU, Benefiting M&A Deals
The Italian Revenue Agency’s change of stance on VAT deductibity provides robust legal certainty for taxpayers, and opens a window for market players to challenge restrictive administrative positions and to pursue VAT recovery with renewed confidence.
Goldstein Faces Daunting Path to Overturn Tax Fraud Conviction
The federal prosecution of Tom Goldstein on tax fraud charges was never going to be a routine case. But strip away the celebrity witnesses, the tens of millions in poker chips won and lost, and the movie studios circling the story, and the case turned on something far more prosaic: Intent.
Technically Speaking
The Trump administration’s “land port maintenance tax” idea looks like contingency planning following the US Supreme Court’s ruling that the president can’t impose tariffs under the International Emergency Economic Powers Act, Andrew Leahey argues in his latest Technically Speaking column.
Creating a maritime security fund within the Department of Defense or reforming the Harbor Maintenance Fee would be better options than imposing a tax that functions as “a tariff in substance, even if it’s dressed up in infrastructure policy attire,” Andrew writes. Read More
News Roundup
Treasury Issues Guidance on Units’ Currency Gains and Losses
The Treasury Department issued guidance for a key change in regulations on how companies’ subsidiaries treat foreign-currency gains and losses.
Pepsi Set Up Affiliate to Avoid Taxes, Illinois Court Affirms
Goldstein Convicted on 12 of 16 Criminal Counts After Trial
Poker-playing former US Supreme Court litigator Tom Goldstein has been found guilty of 12 of 16 counts following a six week trial in Maryland.
Data Center Tax Breaks Divide Lawmakers in Virginia Budget Talks
Virginia Democrats are heading into budget negotiations with a major unresolved issue: the massive data centers that have reaped $1.6 billion in sales tax exemptions in the most recent fiscal year.
Tax Management International Journal
The Side-by-Side Agreement Reshapes US Canadian Subsidiaries’ Tax
Side-by-side deal exempts US multinationals from key Pillar Two taxes in Canada.
How Does Tax and Business Alignment Drive Procurement Value?
Global disruption, rising costs, and digital innovation are transforming procurement into a critical driver of enterprise value—explore how a tax-informed operating model is reshaping the future of procurement.
Tax Management Memorandum
OECD Updates Manual on Effective MAP: Practical Tax Takeaways
An examination of the updated OECD Manual on Effective Mutual Agreement Procedures that highlights seven practical insights tax departments should consider when developing cross-border dispute resolution strategy.
Who Won Gold with the Latest CAMT Guidance from Treasury?
Treasury issues new guidance addressing CAMT criticisms, offering relief on a number of issues plaguing CAMT taxpayers while final regulations are pending.
Career Moves
Citrin Cooperman Adds Christopher Brown to Audit Practice in NY
Christopher Brown joined Citrin Cooperman as an audit partner in its New York City office, the firm announced.
Nixon Peabody Adds Nicholas Gerlach as Corporate Tax Partner
Nicholas Gerlach joined Nixon Peabody as a partner in its tax team in San Francisco, the firm announced Monday.
Brown Joins Greenberg Traurig Real Estate Practice in San Diego
Robert Brown joined Greenberg Traurig as a shareholder in its real estate practice in San Diego, the firm announced Wednesday.
Polsinelli Brings on Tax Lawyer Joseph Mandarino as Shareholder
Joseph C. Mandarino joined Polsinelli as a shareholder in its tax practice in Atlanta, the firm announced Tuesday.
Sheppard Hires Buch, Danko as Partners in the Chicago Office
Christopher Buch and Balazs Danko joined Sheppard as partners in its Chicago office, the firm announced Wednesday. Buch joined the corporate practice group, while Danko joined the tax practice group.
Greenberg Traurig Hires Robert Brown as Shareholder in San Diego
Robert Brown joined Greenberg Traurig as a shareholder in its California real estate team in San Diego, the firm announced Wednesday.
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