In 2018, the VAT uncollected by the tax authorities of the Member States EU wide – the so called VAT Gap – amounted to around EUR 140 billion. Because of the COVID-19 recession the VAT Gap could further increase by 4.1 percentage points year-over year up to 13.7 percent and EUR 164 billion in 2020, primarily driven by bankruptcies. That VAT Gap needs to be reduced significantly to help the Member States recover from the current crisis. However, statistics show that there are significant differences between Member States national VAT gaps that vary between a maximum of more than 33% of the VAT total tax liability to a minimum of less than 1%. Furthermore, there are some Member States that managed to significantly reduce their VAT Gap by implementing administrative reforms. The Communication will describe these measures that, based on empirical observation, have led to concrete positive results to the VAT collection system of the Member States.
The Communication will build on:
·the evidence collected in the framework of the Ninth report under Article 12 of Council Regulation (EEC, Euratom) No 1553/89 of 29 May 1989 on the definitive uniform arrangements for the collection of own resources accruing from value added tax (the Article 12 report);
·the statistical figures of the latest VAT Gap Study published by the Commission.
What does the initiative aim to achieve and how
The specific objective of the Commission Communication is to promote the initiatives at the level of tax administrations that have proven to be effective in significantly reducing the VAT Gap. Furthermore, the Communication will identify the financing or other tools that the Commission can offer to tax administrations to implement these or similar initiatives. This is part of the wider objective to help the EU economy to recover from the impact of Covid-19, and protect and create jobs.
Source: europa.eu
