The Council of the European Union said on June 8 2010 that it had reached political agreement on a draft regulation aimed at enabling EU member states to step up their efforts in combating value-added taxation (VAT) fraud.

The main innovation involves the creation of Eurofisc, a network of national officials to detect and combat new cases of cross-border VAT fraud.

Combating VAT fraud represents a major challenge for the EU, as every year it costs member states billions of euro in lost revenues, a media statement said.

VAT fraud is often organised on a crossborder basis, in particular so-called carousel schemes where goods are traded among several operators in different member states without paying VAT to the tax authorities.

"The Council has highlighted the need for a common approach, so as to make co-operation between tax administrations more effective and to give member states the means to combat VAT fraud more effectively," the statement said.

The draft regulation, which recasts an existing 2003 regulation, specifies the cases in which member states must exchange information spontaneously, the procedures for providing feedback on such information and situations in which member states must conduct
multilateral controls.

The Eurofisc network, in which all EU member states will participate, will enable targeted and swift action to be taken in order to combat new and specific types of fraud, the media statement said.

It will involve a multilateral early warning mechanism, and the co-ordination of both data exchange and thework of liaison officials in acting after warnings are received.

The regulation will be adopted without discussion at a forthcoming Council meeting, once the text has been finalised, the statement said.