VAT carousel fraud

A form of fraud in the payment of VAT.

In the event of carousel fraud an entrepreneur does not pay VAT to the Tax and Customs Administration while he has charged this VAT over his delivered goods or services. This can also concern fraud in a chain in the course of which the goods are always resold whereby VAT is charged; the buyer does deduct the VAT paid (but not paid by the seller) as input tax. This can go in circles, hence the name “carousel”. It is a characteristic of this that there is usually a European transaction in the chain. For a European transaction services or goods are permitted to be delivered (between 2 EU member states) at the 0% VAT rate.