Key Findings
- The value-added tax (VAT) is a major source of revenue for EU countries and is one of the EU’s own resources. For Member States, it represents on average 17.8 percent of their total tax revenue. For the EU, VAT revenue represented roughly 7.5 percent of its total revenue in 2021.
- While the European Commission focuses on improving VAT compliance, policy is a major contributor to VAT revenue losses. The VAT Actionable Policy Gap—the additional VAT revenue that could realistically be collected by eliminating reduced rates and certain exemptions—is just above EUR 310 billion, more than triple the Compliance Gap—the additional VAT revenue that could be collected if all taxpayers, consumers, and businesses fully complied with the VAT rules.
Source Tax Foundation
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