- The European Commission has published the annual VAT Gap study for 2021.
- Member States lost around €61 billion in VAT in 2021, compared to €99 billion in 2020.
- The losses are mainly due to VAT fraud, evasion, avoidance, bankruptcies, miscalculations, and financial insolvencies.
- The decrease in the VAT Gap is a positive development, as lost VAT revenues can impact government funding for public goods and services.
- Italy and Poland have recorded notable reductions in their national VAT Gap figures.
- Targeted policy responses, digitalization of tax systems, real-time reporting, and e-invoicing have contributed to the improvement.
- The COVID-19 pandemic and government support measures may have also played a role in driving positive change.
- Electronic payments and online shopping have increased VAT compliance.
- Member States have implemented effective measures against criminal VAT fraud.
- The Commission has proposed a cross-border digital reporting system based on e-invoicing to address VAT fraud.
- The 2023 VAT Gap report is available for download.
Source: taxation-customs.ec.europa.eu
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
