The final paper “The Role of the Tax Administration in the Prevention and Detection of VAT Fraud in the EU Common Market” explores the causes and characteristics of fraud in the field of supply of goods and services between the EU member states and presents the efforts undertaken by the EU, its institutions and member states, in order to minimize the problem. This paper presents the development of the VAT system in the European Union and the Republic of Croatia and the impact of VAT revenues on the stability of Croatian public finances. The establishment of the Common Market and abolition of border controls between EU member states has opened up space for the emergence of a new type of fraudulent behaviour - missing trader fraud, whose main feature is the existence of a business entity that disappears without paying VAT. Therefore, the causes that led to the occurrence of VAT fraud on the EU Common Market were outlined and various emerging forms of missing trader fraud, as well as the characteristics of individual members of the fraud chain were described. The most important directives and regulations of the European Union are presented which regulated the European VAT system. In order to be more fraud resistant, reverse charge and quick reaction mechanisms were introduced. European Court of Justice enabled member states to take appropriate measures to combat VAT fraud through its judgements and strengthened their efforts to recover part of the lost income in two ways: by contesting the right to deduct input VAT and through solidary responsibility of all members of the fraud chain for unpaid VAT. At the EU level, it has become apparent that member states are not able to fight against Common Market fraud alone, but the cooperation of all member states is needed. Therefore, the European Union has developed various administrative co-operation tools to facilitate the exchange of information, activities and experiences between member states. The Republic of Croatia has become a part of European efforts in detecting and suppressing VAT fraud, and the central role in this belongs to the Tax Administration. Therefore, the organization and tasks of the Tax Administration are presented, with special reference to those organizational units carrying the burden of detection and proving missing trader fraud and the procedures they are undertaking. The focus is also on the methods of risk analysis, data and evidence collecting, using administrative co-operation tools. Paper presents critical review of the functioning of the Tax Administration in the area of detection and prevention of VAT fraud.