Vat fraud: Interdisciplinary Research on Tax crimes in the European Union
(Grant Agreement no: 878619)
Please find below the reports and technical papers produced by the project's Leading Experts and Research Associates.
The interconnections between tax crimes and corruption in the United Kingdom
Dr. Branislav Hock
Senior Lecturer in Economic Crime at the University of Portsmouth
VIRTEU Leading Expert for the United Kingdom
This report explores the interconnections between tax crimes and corruption in the United Kingdom. As it is highlighted in the report, policing corporate economic crime and especially tax crime presents a regulatory challenge. Moreover, as the report explains, tax systems may feature inequalities, being economic, legal, or political. Such inequalities allow tax debtors to obtain an improper tax advantage by bending the rules of the tax system, taking advantage of the technicalities of a tax system or mismatches between two or more tax systems. When investigating and prosecuting tax fraudsters and other criminals, criminal justice agencies face substantive, procedural, and operational obstacles. In the United Kingdom, such a phenomenon is affected by a complex set of legislative and regulatory mechanisms targeting both criminals and those that facilitate tax crimes.
Forensic Accounting, Auditing and Tax Corruption
Prof. Atul Shah
School of Arts and Social Sciences, City University of London, United Kingdom
VIRTEU Leading Expert in the Area of Forensic Accounting
This report explores the practices of tax avoidance and evasion which often undermine efforts by states to collect fair taxes and provide valuable infrastructure. In particular, it focuses on the role of professional accountants and lawyers in enabling tax corruption by using their skills and knowledge of the rules to help corporate and individual elites exploit any gaps and thereby minimise the payment of taxes. These professional individuals, institutions and networks are increasingly powerful in undermining tax collection. At the same time, offshore tax havens and secrecy jurisdictions make the problem of global enforcement of tax collection very difficult and encourage a race to the bottom in tax collection. Common techniques of tax avoidance are explored and methods used to detect and monitor aggressive tax practices are discussed.
Tax Compliance Through Governmental Capture: An Ethical Assessment
Prof. Daniel T. Ostas
James G. Harlow, Jr. Chair in Business Ethics at the University of Oklahoma
VIRTEU Leading Expert in the Area of Business Ethics
This report focuses on the symbiosis between government officials and taxpayers that allows a huge and widespread tax gap to persist. It finds moral blame among both government officials and taxpayers. High-income earners and corporate actors often find ways to conceal income through tax shelters and the offshoring of profits. Today, there is an estimated $32 trillion of untaxed money reported in places where no money was earned and then reinvested around the globe. The report explores the symbiosis between government officials and taxpayers that allows this staggering tax gap to persist. It also discusses how the judiciary plays a role in supporting the tax gap and highlights how legislators also share part of the blame for failing to close tax loopholes.
The interconnections between tax crimes and corruption in Bulgaria
Director, Economic Program, Center for the Study of Democracy
VIRTEU Leading Expert for Bulgaria
in cooperation with
Daniela Mineva, Juan David Abella Osorio, and Kristina Tsabala
This report is focused on the phenomena of tax crime and corruption, with special emphasis on VAT fraud. The report is divided into four main sections. In the first part, the most significant Bulgarian legislative instruments in the fight against tax crimes are reviewed, with a special focus on VAT fraud and corruption. The second part addresses the critical examination of the complex links between fiscal crime and corrupt practices in Bulgaria. The third part refers to the selection of research topics including corporate liability and whistleblowing in the area of taxation. Finally, the fourth part focuses on some specific practical institutional challenges in Bulgaria as identified in a national practical workshop with various stakeholders.
The interconnections between tax crimes and corruption in Italy
Full Professor of Criminal Law, University Luiss Guido Carli
VIRTEU Leading Expert for Italy
This report is focused on the phenomena of tax crime and corruption in Italy. This report is structured as follows. Section 1 introduces the Italian context; section 2 outlines the main legal instruments in force in the Italian jurisdiction to highlight the possible interrelation between corruption and tax evasion; Section 4 presents the features of the Italian legal system through the lens of specific areas of action – namely, prevention, investigation, enforcement, sanctions, recoveries, and remedies; Section 4 addresses specific research topics selected for their relevance in the context of the present research, such as corporate prevention of tax crimes, ne bis in idem issues and whistleblowing; Section 5 investigates issues of undue influence and institutional challenges in Italy; Section 6 concludes.
The Potential Role of Tax Practitioners’ in Enhancing Tax Compliance
Dr. Elaine Doyle
Senior Lecturer in Taxation & Head of Department of Accounting and Finance,
Kemmy Business School, University of Limerick, Ireland
Tax practitioners are systemically crucial intermediaries between taxpayers and the tax authorities. The combination of self-assessment systems, complex tax codes, increased penalties for non-compliance and higher levels of cross border activity has resulted in an increased reliance on tax practitioners’ advice as taxpayers grapple with complying, or not, with tax legislation. Tax practitioners are acknowledged as having significant influence on the tax compliance behaviour of their clients. Enhancing our understanding of how tax practitioners approach predicaments is therefore essential in the context of increasing tax compliance. The first main action identified by the VIRTEU project in the fight against tax crimes is prevention. Within this context, this paper will focus on the role carried out by tax practitioners, how they approach their work from an ethical perspective and how we can use this knowledge to suggest ways of encouraging tax practitioners to enhance the tax compliance behaviour of their clients.
Prevention, punishment and punitive damages: Strengths and weaknesses of the Italian anti-corruption strategy in area of taxation.
Dr. Pietro Sorbello
Colonel of Guardia di Finanza (Italian Tax Police)
Adjunct Professor in Criminal Law at University of Teramo
Tax evasion distorts the correct functioning of the market and alters the fairness of the tax system generating social inequity. Tax crimes are also criminogenic with respect to corruption. As a result, a successful strategy to counter both tax crimes and corrupt practices should aim at improving the relationship between tax authorities and taxpayers so to increase tax compliance, and at enhancing cooperative adherence to tax rules. Alongside repression, it is necessary to identify alternative tools that at the same time make violations unprofitable and incentivize subsequent disclosure and remedial actions.
Tax Injustice and Corruption? The adverse effects that tax evasion and tax avoidance exert on human rights
Dr. Ina Kubbe, Tel Aviv University
Dr. Morten Koch Andersen, University of Copenhagen
This paper analyses the consequences of tax corruption on human rights. The study explores and illuminates how fiscal corruption; tax evasion and tax avoidance, undermine the state’s ability and capacity to promote, protect and enforce the enjoyment of human rights and can lead to the violation of fundamental human rights. It aims to develop a victim-oriented approach that connects tax evasion, as a form of corruption, to violations of people's rights. We focus on three case studies - the Fresenius model, the Panama Papers, and the Danske Money Laundry Scandal - that are related to the misuse of power in the European banking sector, in order to illuminate the interconnections between fiscal corruption and human rights violations and the possible liabilities of states if they fail to ensure the full realisation and enjoyment of the citizens' human rights.