EU Member States Progress in VAT Compliance, Yet Challenges Persist

• Most EU Member States improved VAT collection from 2018 to 2022
• The VAT Gap report shows a decrease in lost VAT from €121 billion in 2018 to €89 billion in 2022
• Lost VAT revenues affect government funding for public services like schools and hospitals
• Digital tax system reforms and real-time reporting have helped reduce the VAT gap
• The EU endorsed a cross-border digital VAT reporting system to be implemented by November 2024
• Missing Trader Intra-Community fraud causes significant VAT losses, estimated between €13 and €33 billion annually
• The report suggests examining VAT policy gaps related to reduced rates and exemptions
• In 2022, the EU VAT compliance gap was €89.3 billion, a 7% loss of expected VAT revenues
• The VAT compliance gap increased by €13.3 billion from 2021 to 2022
• VAT compliance is crucial for EU and national budgets, calculated using a top-down methodology based on national accounts data

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.

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