European Union has trade surplus with itself

Taking a slice from European Tax fraud Credit: Shutterstock

A REPORT compiled by the Kiel Institute for the World Economy (IfW Kiel) and the ifo Institute Munich has concluded that the European Union has a trade surplus with itself of €307 billion rather than the zero it should be.

They contend that simple calculation errors could not possibly account for such a huge amount which grows annually but is likely to be the result of massive tax fraud which affects every member state.

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According to their estimates, such practices could have cost the EU member states’ treasuries some €30 billion in 2018 alone and it is easy for companies to perform the sleight of hand which results in the tax evasion.

“When companies declare sales as exports, they are exempt from VAT. However, if, in reality, these transactions were not cross-border but domestic, they are not recorded in the supposed trading partner’s import statistics and go untaxed,” explained those responsible for undertaking the study.

Last year, the entire world ran a trade surplus with itself of €357 billion, so this new analysis suggests that 86 per cent of the global deviation is solely due to the EU and points a finger at the UK due in part to the way in which it prepares its trade data using small random samples only.

Britain however battled for many years with the Carousel Fraud problem which saw goods imported from the EU without paying VAT and then companies selling those goods and charging VAT , finally closing down prior to paying the UK Customs and absconding with the money.


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