Here’s How the European Union Runs a Trade Surplus With...Itself

The European Union has a growing trade surplus with itself, a statistical discrepancy that may indicate value-added tax fraud of more than 60 billion euros ($67 billion) a year, according to a study by two leading German research institutes.

Exports to fellow EU countries are exempt from VAT. However, if companies have improperly declared the transactions, and they are in fact domestic, they are not recorded as imports by the partner country and go untaxed, according to the study published Tuesday by Gabriel Felbermayr, president of the IfW Institute in Kiel, and Martin Braml, a researcher at Ifo in ...