EU VAT Compliance Gap Hits €128 Billion in 2023, Driven by Six Major Economies

• The EU VAT compliance gap increased to €128 billion in 2023, with 75% of the gap coming from France, Germany, Italy, Poland, Romania, and Spain.
• The VAT actionable policy gap, representing potential revenue from eliminating reduced rates and exemptions, reached €773.5 billion in 2024.
• The largest compliance gaps were in Romania, Malta, Poland, Lithuania, and Italy; the smallest were in Austria, Finland, Cyprus, and Portugal.
• The compliance gap rose in 17 EU countries and fell in 9, with causes including VAT avoidance, enforcement gaps, bankruptcies, and legal tax optimization.
• There is only a weak correlation between rising bankruptcies and lower VAT compliance, suggesting other factors also play a significant role.

Source: taxfoundation.org

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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