EU VAT Compliance Progress in 2022: Challenges Remain Despite Reduction in Revenue Gap

EU Member States made significant progress in VAT compliance between 2018 and 2022
VAT fraud, evasion, and other factors led to approximately €89 billion in lost revenues in 2022
Targeted policies such as digitalizing tax systems and real-time reporting have been effective in reducing the compliance gap
Ongoing reforms are needed to further close the gap and combat fraud
The Council approved the VAT in the Digital Age proposal to address cross-border VAT fraud
MTIC fraud within the EU caused annual losses of €13-33 billion between 2010 and 2023
The report also highlights the “actionable VAT policy gap” related to reduced rates and exemptions
In 2022, the EU VAT compliance gap was €89.3 billion, representing 7% of expected revenues
VAT is crucial for EU and Member State budgets, with the gap calculated based on national consumption data and VAT Total Tax Liability

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.