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Is EU VAT Compliance Actually Improving?

The European Commission’s latest “VAT Gap” report shows an increase in VAT compliance in 2021, with the compliance gap dropping from €99 billion in 2020 to €61 billion in 2021. However, the largest compliance gaps were observed in Romania, Malta, Greece, and Lithuania. The smallest compliance gaps were registered in the Netherlands, Finland, Spain, and Estonia. The decrease in the VAT compliance gap is attributed to the digitalization of the tax system and e-invoicing, as well as government support measures implemented during the COVID-19 pandemic. However, the decrease in bankruptcies may have also played a role in increasing VAT compliance.

Source Tax Foundation

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