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VAT rules date from 1993 (with some amendments, especially the new rules for cross-border sales of e-services) and are outdated and complicated.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