Thanks Philippe 07:55 Nov 29, 2009
What is carousel fraud?
‘Carousel fraud’ is a significant problem for member states. The ECJ summarised the nature of the fraud as follows:
* A company (A) in one European Union member state sells taxable goods to a company (B) in another member state.
* Company B, which is the defaulting trader or the trader using a ‘hijacked’ VAT number, sells the goods at a discount to another company (C), a buffer company, in the other member state. Further sales can thereby be made at a profit. Company B incurs liability to VAT on the purchase of the goods, but, having used the goods for taxable transactions, it is also entitled to deduct that VAT as input VAT. On the other hand, it incurs liability for the output VAT it has charged to company C, but goes missing before discharging that liability to the tax authorities.
* In turn, company C sells the goods to another buffer company (D) in the other member state, paying the tax authorities the output VAT charged after having deducted the input VAT paid, and so on until a company in the other member state exports the goods to another member state. Exports are exempt from VAT, but the e | 
The translation workplace 
peer agreement (net): +1
