THE EUROPEAN Union has probably lost at least €5 billion to VAT fraud related to carbon trading and there is a risk that the criminals will now shift their attention to Europe’s electricity and gas markets, according to Europol, the EU’s law-enforcement operation.
The news will further embarrass EU governments negotiating in Copenhagen and trying to persuade other countries to sign up to carbon trading as a way of reducing emissions.
It was recently reported that the Danish government had been forced, on the eve of the Copenhagen summit, to rush through an emergency law making it impossible for criminal gangs to reclaim huge amounts of VAT on fraudulent trades they were making on Europe’s various carbon exchanges.
Europol has now set up a specific project to collect and analyse information to identify and disrupt the organised criminal structures behind these fraud schemes.
Rob Wainwright, director of Europol, said: “These activities endanger the credibility of the European Union’s emission trading system [ETS] and lead to the loss of significant tax revenue for governments. Europol is using its expertise to help target the organised crime groups involved.”
Europol believes fraudsters might soon turn their attention towards the gas and electricity branches of the energy sector.
A spokesman said that while there was no evidence these markets had yet been tackled, they were so similar to those for carbon trading that the link in the criminals’ minds would be obvious.
The fraud involves a criminal registering to be able to trade carbon permits in the ETS. Most of these registrations have taken place in Denmark where the rules are slackest.
The criminal then buys carbon permits in one EU country from another, free of VAT, then sells them on with the VAT added.
But instead of passing the VAT on to the relevant tax authority, the criminal disappears, hence the term “missing trader fraud”. – (Guardian service)