Cross-border VAT fraud: what changes under EU Regulation 2026/1743

Cross-border VAT fraud exploits trade between Member States to evade tax and make it difficult to trace transactions. Through Regulation (EU) 2026/1743, the European Union is taking action on the exchange of information between Eurofisc, the European Public Prosecutor’s Office (EPPO) and OLAF. The new provisions will mainly apply from 17 August 2027. To understand their impact, however, it is necessary to look both at the tools available to the authorities and at the controls that can uncover fraud before the money disappears.

New EU rules on VAT fraud: what Regulation 2026/1743 provides for

On 10 July 2026, the Council of the European Union adopted the Regulation (EU) 2026/1743, amending Regulation (EU) No 904/2010 on administrative cooperation in the field of VAT. The text was published on 27 July and entered into force on 16 August 2026, following the European Parliament’s opinion of 17 June.

The date of entry into force and the date of application do not coincide: Most of the new provisions will apply from 17 August 2027; the section concerning access to information from the central VIES will apply from 1 July 2030. The measure has therefore already been approved, but not all of the new operating procedures are yet in force.

The key change is to make access to specific VAT data already available at European level more direct and coordinated. Previously, obtaining an overview of transactions spread across several countries could have required a series of exchanges with individual national authorities. The new framework aims to reduce these steps, whilst respecting the respective competences of the various bodies.

What is the role of Eurofisc, EPPO and OLAF?

Eurofisc It is the network through which anti-fraud experts from national tax authorities share and analyse information on potential cross-border VAT fraud. EPPO, the European Public Prosecutor’s Office conducts investigations and brings criminal proceedings in respect of offences falling within its remit that harm the financial interests of the Union. OLAF It, on the other hand, carries out administrative investigations within the scope of its remit.

The regulation governs both the transmission of specific Eurofisc analysis reports as well as centralised access, for targeted searches, to specific information. This includes VAT identification details, intra-Community transactions, certain information on imports and payment data stored in the CESOP system. The central VIES will be subject to the provisions applicable from 2030.

One detail is important: The new access does not mean unrestricted access to all European databases. In particular, the data stored in the transaction network analysis system Transaction Network Analysis Eurofisc’s (TNA) activities are not directly covered by the targeted investigations carried out by EPPO and OLAF as provided for in the Regulation.

How carousel fraud and ‘missing trader’ schemes work

The intra-Community VAT fraud committed by the non-compliant trader, known as Intra-Community Missing Trader Scheme (MTIC) exploit the rules governing transactions between businesses established in different Member States. In a common scenario, a person purchases goods from another Member State without the supplier charging VAT – where the relevant conditions are met – and resells them on the domestic market, applying the tax. They collect the VAT from the customer but fail to pay it to the tax authorities and subsequently go missing.

A simplified example. An Italian company purchases goods worth 100,000 euros from a business in another Member State, as part of an intra-Community transaction that meets the relevant requirements. It resells them in Italy for €105,000 plus VAT at 22%, collecting €23,100 in tax. If the company disappears without paying what is due, this results in a loss to the Exchequer. In a diagram carousel, further transfers between companies may result in the same goods, or related trade flows, being drawn into a repeated cross-border cycle.

Not every case of fraud involving a missing trader It is necessarily a carousel. The defining feature of a carousel is precisely its circular nature, often created through a chain of operators, which makes it more difficult to trace responsibilities and flows.

How significant is cross-border VAT fraud in the European Union?

According to the European Commission, in its report The VAT Gap in Europe 2025, estimates of annual losses attributable to MTIC fraud, covering the period 2010–2023, range between 12.5 and 32.8 billion euros. This is an estimated range, not a confirmed figure for 2026.

In the same report, the overall VAT collection gap in the EU is estimated at €128 billion for 2023. This second figure does not measure fraud alone: it also includes other forms of non-collection, including insolvencies and errors. Confusing the two indicators would lead to an overestimation of the scale of detected fraud.

Why faster data exchange does not eliminate the risk of fraud

In carousel fraud cases, speed is of the essence: a perpetrator may cease operations or move the proceeds before the authorities manage to trace all the steps involved. More effective information-sharing can therefore improve the detection of networks and support investigations.

However, there remains an operational limitation. A database records the information provided to it; if the information is incomplete, late or appears to be consistent, the speed of the search alone may not immediately reveal the anomaly. It is necessary to interpret the data, link individuals and transactions, compare documents and verify that the declared economic activities are backed up by concrete evidence.

For businesses, this means that checks on counterparties, documents and payments serve as a preventive measure in their own right, separate from the investigative work carried out by the authorities.

What controls can help businesses identify suspicious transactions?

Regulation (EU) 2026/1743 primarily concerns cooperation and access to data by the authorities. It does not, in itself, introduce a new general obligation for all firms to carry out due diligence on their counterparties. The following checks are operational guidelines that should be adapted in accordance with the risk and the obligations applicable to each individual case.

• Verify the identity of the other party. Check VAT registration, company details, registered office, length of operation, directors and declared business activities. The public tool VIES It allows you to check the validity of a VAT number for intra-Community transactions, but a valid result does not in itself prove that every transaction is genuine.
• Assess operational capability. High volumes of goods, very low profit margins or delivery times that are incompatible with the supplier’s organisation warrant further investigation, particularly if the company has only recently been established.
• Compare orders, invoices and shipments. Quantities, dates, consignees and logistics documentation must all reflect the same transaction. Repeated discrepancies, unnecessary steps or goods that appear to be moving without an economic rationale are signs that warrant further investigation.
• Analysing payments. Sudden changes in credit balances, requests for payments to third parties or transactions that appear to be circular may require further investigation.
• Update the checks over time. An initial check is no substitute for ongoing monitoring: sudden changes in management, location, transaction volumes or payment methods may alter the risk profile.

A single indicator does not prove the existence of fraud. The value of the analysis lies in the combination of factors, in verifying the explanations provided and in documenting the assessments carried out.

Privacy and access to databases: what safeguards does the legislation provide?

Access to VAT data may involve information relating to businesses and individuals. For this reason, the new regulation does not authorise indiscriminate checks: it provides for targeted research relating to specific cases, authorised and identifiable users, restrictions based on institutional remit and audit logs which link accesses to a user and an investigation file.

The purposes are different: EPPO gains access in order to exercise the powers conferred upon it by its founding regulation; for OLAF, centralised access is limited, under the conditions laid down, to the assessment of existing suspicions and to specific administrative investigations relating to the customs sector. Further technical details and protective measures are to be laid down by Commission implementing acts.

The issue to monitor, therefore, will also be how these safeguards are implemented: it is not enough for access to be technically possible; it must be relevant, justified and verifiable.

From the new European regulations to prevention in the workplace

Regulation 2026/1743 may make European investigative cooperation more effective, but the timely identification of a fraudulent scheme also depends on the quality of the checks carried out throughout the supply chain. For those managing suppliers, customers or financial flows, a good procedure is one that links the counterparty’s identity, transaction documents and the flow of funds.

These skills are also the focus of Follow the Money - Be a Forensic Account by SENAPA Academy: a course dedicated to the investigative analysis of financial statements, documents and cash flows, designed to help participants learn how to identify anomalies and document any findings. It is not a course specifically focused on VAT regulations, but it explores analytical tools that can also be applied to the examination of potentially fraudulent transactions.

The most useful audit is still the one carried out when an anomaly can still be resolved, and before it turns into a loss or a complex investigation.

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