In most Member States, the absolute year-over-year change in the VAT Gap was lower than 2 percentage points.
In absolute terms, the highest VAT compliance gaps were recorded in Italy (€30.1 billion) and Germany (€23.4 billion).
The smallest gaps were observed in Croatia (1.0%), Sweden (1.4%), and Cyprus (2.7%). In 2019, Romania recorded the highest national VAT compliance gap with 34.9% of VAT revenues going missing in 2019, followed by Greece (25.8%) and Malta (23.5%). This downward trend was expected to continue, though the coronavirus pandemic is likely to revert the positive trend. In nominal terms, the overall EU VAT Gap decreased by almost €6.6 billion to €134 billion in 2019, a marked improvement on the previous year's decrease of €4.6 billion. What are the main findings of the 2021 Report on the VAT Gap?
We need to make a joint effort to crack down on VAT fraud, a serious crime that takes money out of consumers’ pockets, undermines our welfare systems and depletes government coffers.
These are unacceptable losses for national budgets, and mean that ordinary people and businesses are left to pick up the shortfall through other taxes to pay for vital public services. This year’s figures correspond to a loss of more than €4 000 per second.
The full extent of the COVID-19 pandemic on consumer demand and therefore on VAT revenues in 2020 remains yet unknown, but a reversal of this positive trend may be expected.ĭespite the positive trend registered in the last few years, the VAT Gap remains a major concern – particularly in view of the immense investment needs our Member States must address in the coming years. VAT Gap: EU countries lost €134 billion in VAT revenues in 2019ĮU Member States lost an estimated €134 billion in Value-Added Tax (VAT) revenues in 2019, according to the 2021 Report on the VAT Gap released by the European Commission. Though still extremely high, the 'VAT Gap' – the difference between expected revenues in EU Member States and the revenues actually collected – has been improving between 20.