This paper deals with explaining what missing trader intra-Community and carousel frauds are and how they are performed. A fault in taxing intra-Community supplies with Value added tax (VAT) enables these frauds. Member States and the European Commission are aware of the fault but are unable to agree on how to change the taxation of the mentioned supplies. Therefore the fight against these frauds is done by improving tax inspections, tax cooperation between Member States, introducing liability on persons participating in the transactions in which these frauds occur, and disallowing deduction of input VAT. The European Court of Justice and the European Court of Human Rights dealt with liability and deduction cases. They decided that filling up tax gap with recovering VAT from persons participating in the transactions is legal if it is in accordance with the so called knowledge test, discussed in the article.