European Parliament Highlights VAT Compliance and Tax Clarity as Keys to Growth

VAT-related points from the European Parliament resolution of 9 October 2025 on simple tax rules and fragmentation in EU competitiveness:

Context Overview

The resolution emphasizes that simplified, predictable, and harmonized tax rules are essential for boosting EU competitiveness, reducing compliance costs, and supporting SMEs.
It highlights the negative impact of fragmented and complex tax systems, which create barriers to cross-border investment, increase administrative burdens, and hinder economic growth.
The Parliament calls for coordinated EU action to streamline tax procedures, reduce duplication, and improve digital infrastructure for tax administration.

VAT-Related Highlights

VAT compliance gap remains significant: In 2022, the EU lost €89.3 billion in expected VAT revenue, with around 25% attributed to criminal VAT fraud.
VAT burden and revenue: In 2023, VAT contributed 7.1% of EU GDP and 18.3% of total government revenue.
Digitalisation and e-invoicing: The resolution stresses the role of electronic invoicing in improving transparency, reducing administrative burdens, and enabling efficient use of reported VAT data.
Call for simplification: The Parliament urges the Commission to streamline VAT refund procedures, harmonize Tax Identification Numbers, and reduce reporting requirements — especially for SMEs.
EU Tax Data Hub proposal: A centralized system is proposed to enhance automatic exchange of VAT and other tax information, building on existing tools like VIES and EMCS.

EU policy