- In 2022, the EU VAT gap was approximately 89 billion euros
- This figure shows a decrease from 121 billion euros in 2018 but an increase from 76 billion euros in 2021
- The shortfall in VAT revenue is mainly due to fraud, tax evasion, and other similar issues
- Despite the reduction since 2018, VAT revenue loss remains a significant challenge for funding public services
- The European Commission report credits digital tax measures for helping reduce the VAT gap
- In November 2024, the VAT in the Digital Age proposal was endorsed to enhance cross-border digital reporting
- Missing Trader Intra-Community fraud significantly impacts VAT compliance, with substantial annual losses
- The report suggests that adjusting reduced VAT rates and exemptions could recover lost revenues
- The 2022 VAT compliance gap represented 7 percent of the expected VAT revenues, showing an increase from the previous year
Source: globalvatcompliance.com
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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