Stopping MTIC -- With a 3rd Invoicing Directive

24 Pages Posted: 4 May 2013

See all articles by Richard Thompson Ainsworth

Richard Thompson Ainsworth

NYU - Graduate Tax Program; Boston University - School of Law

Date Written: May 3, 2013


A Third Invoicing Directive for the EU VAT seems to be a foregone conclusion. Corrections are needed in the Second Invoicing Directive. The hallmark of the next Directive will be its application of digital invoice technology. The Commission’s proposals will include adoption of tax-technology advances in invoice-control that are currently in use outside the EU. The next Invoicing Directive will require comprehensive e-invoicing, invoices that are digitally signed, and invoices that are fed into a system of relational databases that match transaction data across the Single Market. There will be real-time EU sales/purchases lists, and remote/real-time audit functionality.

This will occur, because the true target of the Third Invoicing Directive will be missing trader intra-community (MTIC) fraud, not invoices. Improvements in invoicing will be a means to achieve a larger end.

This will not be a “black swan” IT effort. The needed technology is here today; the necessary systems are tried and proven in large multi-jurisdictional tax systems; the implementation costs will be a small fraction of the €100 billion that is currently lost to MTIC fraud annually.

This paper “connects the dots.” It considers Brazil’s successful digital invoicing regime in the Sistema Publico de Escrituracao Digital or Public System for Digital Accounting (SPED) and applies what has been learned to the pattern of MTIC and missing trader extra-community (MTEC) frauds in the EU. A follow-up paper will align the Croatian Fiskalizacija – IT (Fiscalization program) with the Brazilian SPED, and then consider the data security and remote audit functionality of the newly implemented Rwandan system.

There is much to be learned and borrowed from these systems. Workability is assured.

Keywords: MTIC, MTEC, SPED, NF-e, CT-e, Rwanda, Croatia, Brazil, VAT fraud

JEL Classification: H2, H21, H26, H29, K14, K34

Suggested Citation

Ainsworth, Richard Thompson, Stopping MTIC -- With a 3rd Invoicing Directive (May 3, 2013). Boston Univ. School of Law, Law and Economics Research Paper No. 13-13, Available at SSRN: or

Richard Thompson Ainsworth (Contact Author)

NYU - Graduate Tax Program ( email )

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Boston University - School of Law ( email )

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