According to the 2022 VAT Gap report published by the European Commission, EU-27 value-added tax (VAT) revenue amounted in 2019 to over EUR 1 trillion and in 2020 to over EUR 930 billion. This represents a major source of revenue for Member States’ budgets and a significant own resource for the EU. However, VAT revenue loss, including from fraud and inadequate tax collection systems, was estimated at almost EUR 124 billion in 2019 and EUR 93 billion in 2020. The biggest kind of VAT fraud, missing trader intra-community (MTIC) fraud 1 , causes the most financial damage to public revenue in the EU. It costs around EUR 50 billion annually in tax losses to Member States according to Europol’s latest estimate.
Strengthening cooperation among Member States to ensure taxpayers compliance with VAT laws and combat VAT fraud is critical to protect VAT revenue. This initiative stems from the Commission action plan for fair and simple taxation supporting the recovery that planned legislative proposals to amend Council Regulation 904/2010 governing this field. This proposal will build on the ongoing Commission evaluation of the Council Regulation. It should also be seen in the context of VAT in the digital age. That proposal, currently under negotiation, will modernise VAT reporting obligations by introducing e-invoicing and digital reporting requirements for all cross-border transactions.
Source: eur-lex.europa.eu
