EUROPE: EU to Collect Data on All Card Purchases

Earlier this week, an EU plan to combat ecommerce VAT fraud across the European Union received provisional approval from all member states. In future, and subject to full approval, all credit and debit card transactions that take place in the bloc will be stored and collected for a central system.

All 28 member states forming the Council of the European Union explained that the measures will harmonise records and collection of data from financial service providers when consumers pay for goods and services ordered online.

New Central Electronic System Planned

It’s another measure in a long line that the EU is introducing to combat tax fraud across the bloc. Collection of VAT is just another front in that battle.

To make collection and recording easier, the EU 28 will set up a new electronic central system, accessible by all member states, for data storage. Once established, national anti-fraud enforcement agencies will be able to access this data for the purpose of fraud investigation and criminal cases.

Mike Lintila described the system as a “powerful new tool” that will harmonise data collection, and how it is collected and stored. A system that is currently disparate due to varying VAT laws across the bloc will become a central point that will make it easier to investigate potential fraud in cross-border ecommerce.

Not Everyone Agrees

While many have welcomed the move, praise has not been universal. Four separate trade bodies for the banking industry (European Payment Institutions Federation, the European Banking Federation, the European Savings and Retail Banking Group, and the European Association of Co-operative Banks) expressed major concerns. Mostly, these industry representative organisations felt that the new European Union rules were neither effective nor proportionate to data collection.

They felt an EU-wide industry body would be better prepared in understanding the issues facing industry, rather than a new law, to ensure such new measures are not burdensome. Particularly they felt that how data should be reported and stored is currently unclear.

Further, major concerns exist of a potential major loophole in that those entities currently evading VAT payment will simply keep transactions within a single jurisdiction where such measures do not count.

However, this is only the start of the process. The next phase is a review by senior European Union lawyers before the system can proceed.