National E-Systems for Combating VAT Evasion and Intra-EU Trade. Hungary’s ‘EAKER’ and Romania’s ‘RO e-Transport’

The purpose of this paper is to critically look at two recent E-Systems – one introduced in Hungary (EKAER and more recently BIREG) and the other in Romania (RO e-Transport) – that apply or have until recently applied, among others, to the intra-EU transportation of goods to and from the countries in question. These E-Systems are meant to combat Value Added Tax (VAT) evasion. Whilst they pursue a worthy public goal, on a closer look they pose significant legal and practical challenges. From a legal perspective, these E-Systems and the compliance checks at the border that arise from their implementation amount to measures having an equivalent effect to quantitative restrictions, prohibited under Article 34 TFEU. Furthermore, they contravene secondary EU legislation, such as Regulation 1100/2008 on the prohibition of internal frontier checks, and the VAT Directive and its implementing regulations. The E-Systems also pose numerous practical challenges, such as increased direct and indirect costs for businesses and frequent technical problems. Furthermore, the introduction of national E-Systems increases the administrative burden that the transportation of goods entails and risks further fragmenting the Internal Market. Besides Romania and Bulgaria’s impending full accession to the Schengen Area and the need to increase awareness around EU law, a possible solution could be to set up an EU-wide E-System, managed by public authorities, for combating VAT evasion for the intra-EU transport of goods. Furthermore, instead of systematic border checks, compliance checks should be carried out in a country’s interior, using a multi-filter approach and cross-checks.