* EU proposes clarity of definition for financial crimes
* EU tax fraud cost 280 million euros in 2009
By Christopher Le Coq
BRUSSELS, May 26 (Reuters) - Europe should set up a special prosecutor to crack down on fraud that has siphoned hundreds of millions of euros from taxpayers at a time of government austerity cuts, the European Commission said on Thursday.
The European Union's executive arm said it also wanted to tighten definitions of embezzlement or abuse of power across the bloc's legal systems, as one of a list of proposals targeting graft.
In 2009, suspected tax fraud cases involving EU funds totalled about 280 million euros, the Commission said.
Other crimes in the Commission's sights include diverting funds from EU projects and bribing public officials.
"Crimes that rob the EU's public purse are crimes against the EU taxpayers ... In times of economic austerity, every euro cent of the EU's budget counts," EU Justice Commissioner Viviane Reding said in a statement on Thursday.
The Commission set out proposals to create the prosecutor post and make it easier for police, customs, tax and judicial authorities to share information.
The Commission said it also wanted to start standardising rules and legal definitions relating to fraud.
Currently, each of the bloc's 27 member states uses its own national criminal law to protect EU finances against fraud, even though cases often include multiple jurisdictions and individuals.
The Taxpayers' Association of Europe welcomed Reding's suggestions.
"Complex, differing and partially conflicting rules open loopholes that foster fraud," the group said in a statement.
"From our point of view, the battle against the waste of public funds and fraud are equally important as the battle against tax evasion." (Reporting by Christopher Le Coq; Editing by Rex Merrifield and Andrew Heavens)
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