The VAT Gap is the overall difference between the expected VAT revenue and the VAT amount actually collected by the EU Member States. The 2015 Gap again shows the need for serious reform of the current VAT system to cut cross-border VAT fraud and enable Member States to collect the VAT they need.

While Member States have already made efforts to improve collections, modernizing of the VAT system will enable better results. The report comes just ahead of proposals by the Commission to overhaul the VAT system. The current VAT rules date from 1993 (with some amendments, especially the new rules for cross-border sales of e-services) and are outdated and complicated.

The individual VAT collection performances vary significantly amongst Member States. The largest VAT Gaps were reported in Romania (37.2%), Slovakia (29.4%) and Greece (28.3 %). The smallest gaps were observed in Spain (3.5%) and Croatia (3.9 %).

In absolute terms, the highest VAT Gap of €35 billion was in Italy. The VAT Gap decreased in most Member States, with the strongest improvements in Malta, Romania and Spain. Seven Member States saw small increases: Belgium, Denmark, Ireland, Greece, Luxembourg, Finland and the UK.

The VAT Gap study is funded by the Commission.

Source: European Commission

29 Sep 2017 at 9:36 am

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New VAT Gap report published: EU countries lost an estimated total of €152 billion in VAT revenues in 2015