VAT carbon fraud costs Europe billions, says Europol
Thursday December 10, 2009
VAT fraud in the carbon markets costs Europe billions of euros in lost revenues, new figures reveal.
The Europol police agency said fraudulent traders within the European Union Emission Trading System have pocketed around five billion euros within the last year and a half.
According to the agency, which is based in The Hague, up to 90 per cent of the whole market was caused by illegal activities in some countries.
The fraud typically occurs when traders set up in one country and buy VAT-exempt carbon polluting allowances from a second country. Traders then sell these allowances on in the country where they are based without paying any VAT.
Rob Wainwright, director of Europol, said the agency is using its information capabilities and expertise to target the criminal groups involved.
“These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments,” he commented.
France, the Netherlands, Spain and the UK have all changed the tax rules to combat carbon fraud.