Journal Publications
Digitalization and cross-border tax fraud: evidence from e-invoicing in Italy
International Tax and Public Finance 32.1 (2025): 195-237 together with Prof. Dr. Wojciech Stiller
Abstract
The digitalization of transaction processes through tools such as electronic invoicing (e-invoicing) aims to improve tax compliance and reduce administrative costs. Another important aspect of digitalization is its potential to reduce tax fraud. We exploit the comprehensive introduction of e-invoicing in Italy in 2019 and examine the effect of increased domestic tax enforcement capabilities on cross-border value-added tax (VAT) fraud. As a proxy for this fraud, we make use of the discrepancy in trade data that are double-reported in both the importing and exporting country (trade data gap, TDG). We calculate the TDG for imports to Italy from all other EU countries at the most detailed product level. Our results suggest a significant decline in cross-border fraud in response to the introduction of mandatory e-invoicing, providing an important rationale for the application of this measure by other countries. Furthermore, we estimate that e-invoicing decreased the Italian VAT loss in 2019 by about € 2.2 billion to € 2.6 billion compared to 2018. In this context, we underpin the suitability of the TDG as an approach for the study of anti-fraud measures.
Do more harm than good? The optional reverse charge mechanism against VAT fraud
The Quarterly Review of Economics and Finance 95(2024): 61-84 together with Prof. Dr. Wojciech Stiller
Abstract
The digitalization of transaction processes through tools such as electronic invoicing (e-invoicing) aims to improve tax compliance and reduce administrative costs. Another important aspect of digitalization is its potential to reduce tax fraud. We exploit the comprehensive introduction of e-invoicing in Italy in 2019 and examine the effect of increased domestic tax enforcement capabilities on cross-border value-added tax (VAT) fraud. As a proxy for this fraud, we make use of the discrepancy in trade data that are double-reported in both the importing and exporting country (trade data gap, TDG). We calculate the TDG for imports to Italy from all other EU countries at the most detailed product level. Our results suggest a significant decline in cross-border fraud in response to the introduction of mandatory e-invoicing, providing an important rationale for the application of this measure by other countries. Furthermore, we estimate that e-invoicing decreased the Italian VAT loss in 2019 by about € 2.2 billion to € 2.6 billion compared to 2018. In this context, we underpin the suitability of the TDG as an approach for the study of anti-fraud measures.
Reverse-Charge-Verfahren - Eine wirkungsvolle Maßnahme gegen den Umsatzsteuerbetrug in Deutschland und Österreich?
Betriebswirtschaftliche Forschung und Praxis, 72(2), 177-193 zusammen mit Prof. Dr. Wojciech Stiller
Abstract (in German)
Der Umsatzsteuerbetrug in der Europäischen Union (EU) nimmt enormes Ausmaß an, welchem das Reverse-Charge-Verfahren (RCV, umgekehrte Steuerschuldnerschaft) entgegenwirken soll. Im vorliegenden Beitrag untersuchen wir die Wirkung des RCV für Deutschland und Österreich mithilfe der Handelslücke, die als Abweichung in den Außenhandelsdaten der Quantifizierung des Steuerbetrugs dient. In beiden Ländern stellen wir teilweise den betrugsmindernden Effekt des RCV fest. Wir beobachten für Deutschland jedoch eine stärkere Auswirkung als für Österreich im Hinblick auf Importe aus der EU, wobei aus österreichischer Sicht durch die umgekehrte Steuerschuldnerschaft der Betrug insbesondere bei Importen aus Deutschland gemindert werden konnte.
Working Papers
Firm-Level Effects of VAT Reverse Charge: An Empirical Analysis of European Firms
Date Written: January 20, 2025
Abstract
To combat cross-border value-added tax fraud, the European Member States make use of the transfer of tax liability from the supplier to the buyer (so-called optional domestic reverse charge). Fraudsters receive the tax on domestic sales, which is not paid to the tax authorities. This allows fraudsters to offer low prices and gain a competitive advantage. Reverse charge provides a natural experiment in eliminating fraudulent competition. Theory offers no clear guidance on the direction of the effect on legitimate firms while the general assumption is that competitive distortions are abolished. Therefore, I explore reverse charge events between 2001 and 2019 in the European Union. I document that the average policy implementation decreases firm sales, costs and profits. However, the events are heterogenous in different dimensions. First, I demonstrate that the mechanism solely affects small firms as involvement in fraudulent chains is expected to be higher. Next, I show that the average reform instantaneously reduces firm sales at the wholesale and retail stage. This indicates that affected firms face lower trade opportunities and fraudulent products are no longer channeled to the retail stage. Producers show no response to the reform suggesting that reverse charge does not change production levels. Finally, the events show different effects across countries and industries that may be caused by different exposure levels to fraudsters and tax noncompliance.
Fighting VAT Fraud: The Importance of On-Time Monitoring and Information Exchange
together with Ayse Sule Ozdogan Laurenz
Date Written: May 16, 2025
Abstract
Our study analyzes the impact of on-time monitoring and information exchange on value-added tax (VAT) fraud. VAT is a major source of revenue; however, it is susceptible to fraudulent taxpayer behavior, particularly in integrated regions such as the European Union and Latin America. Using a difference-indifferences design on international trade data obtained from the World Bank Integrated Trade Solutions, we find that the combination of on-time monitoring of e-invoices and information exchange on cross-border transactions is likely to reduce the trade data gap, the difference between the export reported by the exporter and the corresponding import reported by the importer, as our proxy for tax fraud by 5.2%. This is more than when policies are implemented alone, such as a 4.6% reduction in VAT fraud with on-time monitoring and a 2.5% reduction in VAT fraud with information exchange alone. We also find that policy enforcement in the VAT-collecting country mainly contributes to reducing VAT fraud in cross-border transactions. These estimations are especially interesting to European policymakers fighting against VAT fraud through stricter electronic surveillance models.
WU International Taxation Research Paper Series No. 2025-08
Other Publications
Steuerliche Behandlung einer grenzüberschreitenden Kapitalrückzahlung
Eine steuerbarwertorientierte Analyse am Beispiel Deutschland/Polen
RIW - Recht der internationalen Wirtschaft, 2020(4), 207-2015 zusammen mit Prof. Dr. Wojciech Stiller
Abstract (in German)
Die Rückzahlung von eingelegtem Kapital an die Anteilseigner einer Kapitalgesellschaft stellt eine steuerneutrale Vermögensumschichtung dar. Aus deutscher Sicht kann eine Kapitalrückzahlung steuerneutral ausgekehrt werden, soweit kein ausschüttbarer Gewinn der Gesellschaft vorhanden ist (sog. Verwendungsreihenfolge). Dies kann von der Behandlung im Ausland abweichen, was zum zeitlichen Auseinanderfallen der steuerlichen Erfassung der Beteiligungseinkünfte in einem grenzüberschreitenden Fall und somit zur fehlenden Anrechnung der Quellensteuer führt. Die dadurch entstehende Mehrbelastung wird im vorliegenden Beitrag anhand der Steuerbarwerte möglicher Fallkonstellationen ermittelt. Basierend darauf wird die steuerliche Belastung der Leistungen einer polnischen Kapitalgesellschaft an einen in Deutschland ansässigen Anteilseigner dargestellt. Abschließend werden die Gestaltungsansätze zur Vermeidung der übermäßigen Besteuerung aufgezeigt.