Conference on VAT frauds in EU Member States and the competence of the EU Institutions Fiscal

A Hungarian Perspective

Brussels, 4 February, 2015 | Balázs Romhányi

Lost VAT in % of total VAT liability

Data from 2012 Update Report to the Study to quantify and analyse the VAT Gap in the EU-27 Member States - Table 3.1 VAT Gap estimates, 2011-2012

Indirect signs of VAT-fraud

Don Giovannis of the trade registerCompany fluctuation

Number of all companies

Founded/defunct companies

per yearAdministrative services 34 871 26,4%Other services 26 654 22,3%Tourism 30 827 22,0%Construction 55 544 21,8%Energy 608 21,3%Real estate 29 807 21,1%Education 27 035 20,4%Commerce 133 866 19,9%Other sectors 295 569 15,0%Data source: Hungarian Central Statistical Office

L’art pour l’art, trade for tradeEstimation based on input-output tables

IndustryExport as % of (Output plus

Import) in 2005

Export as % of (Output plus

Import) in 2010

Lost VAT(billion HUF)

Wholesale trade 20,2 34,1 78,4Other business services 9,9 16,0 48,5Entertainment, culture, sport 3,0 21,6 44,9Food, drinks, tobacco manufacturing 20,8 27,7 44,5

Agriculture 16,1 25,6 41,0Chemicals, drugs 37,0 41,5 31,9Rent, operative leasing 11,4 26,1 28,8Other sectors with increasing export 24,6 24,6 214,9

Sum 22,8 26,0 532,8Data source: Hungarian Central Statistical Office

News in the data, news out of the dataExport by producers and export at the border

Export from foreign trade Export of industrial companiesIn billion HUF

Data source: Hungarian Central Statistical Office

Potential measures• Enhancing risk management at the birth of the

companies– Integrated databases of existing tax and company data

• E-invoicing across all countries for easier following of the trades– Not allowing breaking the VAT-chain at the borders

• Strict physical checks of exported goods• Incentives– Bonus for companies adopting the measures– Malus for non-complying companies

Thank you for your attention