Carousel fraud is a form of VAT fraud whereby a trader receives VAT but does not pass it on to the Belgian State. Entrepreneurs can unwittingly become involved in carousel fraud, with potential consequences such as refusal of input tax deduction or joint and several liability for VAT payment. Entrepreneurs retain their rights if they acted in good faith and did everything possible to avoid becoming involved in the fraud. Carousel fraud involves at least 3 companies, with at least 1 company not paying the VAT received. Fraud can be complex and span multiple EU countries, with bona fide companies becoming unwitting victims. Fraud can also occur without actual delivery of goods, through sham transactions and incorrect invoicing. Example of carousel fraud: Company A supplies goods to B, who does not declare the VAT and resells to C, who pays the VAT but is ultimately cheated by B.
Source: financien.belgium.be
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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