According to the annual VAT gap study an estimated €137.5 billion in VAT revenue was lost within the EU, due to non-compliance or non-collection during the year 2017. When compared with the same study from 2016 this shows a reduction in the gap of €7.9 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 European Union.
Each year the study sets out detailed data on the gap between the amount of VAT due and the amount of VAT actually collected in the 28 member states. The main factors contributing to the VAT gap are said to be evasion, complicated systems of VAT and mistakes due to multiple VAT rates.
Overall, the VAT Gap decreased in 25 out of the 28 EU Member States during 2016, with the biggest declines occurring in Poland, Malta and Cyprus.