6 January 2022
According to the annual VAT gap study, an estimated €134 billion in VAT revenue was lost within the European Union (EU) due to non-compliance or non-collection during the year 2019. When compared with the same study from 2018, this shows a decrease of €6 billion.
The VAT gap study is funded by the European Commission as part of its work to reform the VAT system and clamp down on tax evasion within the EU.
Each year, the study sets out detailed data on the gap between the amount of VAT due and the amount of VAT collected in EU member states. The EU confirmed that the four main factors contributing to the VAT gap are VAT fraud and VAT evasion, VAT avoidance practices and optimisation, bankruptcies and financial insolvencies and administrative errors due to complicated VAT systems
The report also confirmed that the countries showing the largest gaps were Romania (34.9%), Greece (25.8%) and Malta (23.5%), with the smallest VAT Gaps being Croatia (1%), Sweden (1.4%), and Cyprus (2.7%).
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