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The European Commission has detailed its proposals to crackdown on value added tax (VAT) fraud, two months after it announced the need for an overhaul of the current structures in place.

The latest plans include allocating more powers to ‘Eurofisc,’ the European Union’s existing network of anti-fraud experts, as well as digitising information-sharing in order to enable member states to better analyse cross-border risks.

In addition, tax officials from two or more EU countries will be allowed to form a single audit team to combat fraud.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The Paradise Papers have again shown how some are taking advantage of lax application of EU VAT rules to get away with paying less VAT than others. And we know that VAT fraud can be a source of financing for criminal acts, including terrorism.”

The Paradise Papers allege Formula One star Lewis Hamilton “dodged” the VAT of his new luxury jet, receiving a £3.3 million VAT refund on a £16.5 million Bombardier Challenger 605.

Hamilton’s lawyers say his actions were legal.

The EC also plans to crackdown on VAT fraud in the sale of cars.

“Trading in cars is also sometimes subject to fraud due to the difference in how VAT is applied to new and used cars,” an EC statement explained.

“Recent or new cars, for which the whole amount is taxable, can be sold as second-hand goods for which only the profit margin is subject to VAT,” the EC explained, “in order to tackle this type of fraud, Eurofisc officials [will] also be given access to car registration data from other member states.”

The new measures would open up data exchange between tax authorities and European law enforcement bodies, and for national information to be cross-checked with criminal records, databases and other information held by authorities.

The EU’s war against VAT fraud has been gradually picking up pace.

In May 2016 member states agreed on the need to improve cooperation between tax authorities and November 2016, it welcomed a VAT action plan.

In October this year it emphasised a need to make reforms.

Related topics:

What is VAT fraud, and why is the EU worried? – Q&A

UK: Taxation (Cross-Border Trade) Bill introduced in parliament

“Reasonable grounds for knowing or suspecting”: A cautionary tale about VAT fraud