Updates to EU cooperation on combating VAT fraud are watered down
The EU’s ECOFIN finance ministers’ meeting on 5 May 2026 endorsed giving its fraud investigators long-demanded access to national VAT data. The measure now moves to the EU Parliament for sign-off probably in July.
Whilst it represents progress towards tackling VAT fraud, a compromise on broader analytical access means a real risk that investigators are given visibility, but not the tools to fully exploit it – for example, using Artificial Intelligence on carousel fraud detection.
The amendment to Regulation (EU) No 904/2010 will allow European Anti-Fraud Office (OLAF) and European Public Prosecutor’s Office EPPO to directly query Member State systems. This is a structural shift. Today, both bodies rely on national tax authorities to retrieve VAT data, slowing investigations into fast-moving cross-border fraud.
Broad VAT data fishing curtailed on carousel fraud
The compromise text introduced strict safeguards: only targeted, case-by-case searches, with a ban on broad or exploratory queries.
Whilst unlocking political agreement, but it creates a practical constraint.
VAT fraud, especially carousel schemes, is not usually identified through predefined cases. It is uncovered through pattern analysis across large datasets. Limiting investigators to targeted searches assumes they already know where to look.
Technical design for VAT audits: access without build extraction or AI analytics
In practice, access would be routed through existing EU VAT data infrastructures such as VIES (intra-EU supplies), CESOP (cross-border payment data), and Eurofisc risk intelligence channels. OLAF and EPPO would be granted read-only, audit-logged access, with queries tied to specific case identifiers and subject to proportionality tests under EU data protection rules.
Crucially, there is no provision for bulk extraction, automated scanning, or AI-driven anomaly detection across datasets. Nor does the proposal harmonise underlying data quality or formats across Member States, which remain inconsistent.
Enforcement ambition meets constraint
This proposal sits alongside the EU’s wider push to close the VAT gap, including VAT in the Digital Age. But there is a clear tension. The EU is expanding access to VAT data, while restricting how that data can be used.
