Commission presses Member States on VAT revenue collection Brussels, 4 September 2015

European Commission - Press release

VAT revenue collection has failed to show significant improvement across EU Member Statesaccording to the latest figures released by the European Commission today.

VAT revenue collection has failed to show significant improvement across EU Member States accordingto the latest figures released by the European Commission today.

Based on VAT collection figures from 2013, the overall difference between the expected VAT revenueand the amount actually collected (the so-called "VAT Gap") did not improve on 2012. While 15Member States including Latvia, Malta and Slovakia saw an improvement in their figures, 11 MemberStates such as Estonia and Poland saw deterioration.

The total amount of VAT lost across the EU is estimated at €168 billion, according to the report. Thisequates to 15.2% of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financialinsolvencies and miscalculation in 26 Member States[1].

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said: "Thisimportant study highlights once again the need for further reform in VAT collection systems across theEU. I urge Member States to take the steps needed to fight tax evasion and tax fraud at all levels. Thisremains a burning issue and is at the top of this Commission's agenda."

As well as setting out detailed data on the difference between the amount of VAT due and the amountactually collected in Member States in 2013, the latest VAT Gap study gives an indication of theeffectiveness of VAT enforcement and compliance measures. The main trends in VAT collection are alsopresented, along with an analysis of the impact of the economic climate and policy decisions on VATrevenues.

In 2013, the estimated VAT gaps of Member States ranged between 4 percent in Finland, theNetherlands and Sweden to 41 percent in Romania.

BackgroundThe VAT Gap study is funded by the Commission as part of its work to reform the VAT system inEurope and to clamp down on tax fraud and evasion. The Commission has already identified keyactions and taken a number of measures to assist Member States to this effect.

First, a tougher stance against evasion and stronger enforcement at national level are essential. TheVAT reform launched in December 2011 has already delivered important tools to ensure betterprotection against VAT fraud, while the Quick Reaction Mechanism allows Member States to react muchmore swiftly and effectively to sudden, large-scale cases of VAT fraud. The Commission also supportsthe Eurofisc network in order to strengthen Member States' capacities to fight cross-border fraudulentnetworks through the exchange of operational information.

Secondly, the Commission has worked to help simplify tax systems, making it easier for taxpayers tocomply with the rules. For example, measures to facilitate electronic invoicing and special provisionsfor small businesses came into force in 2013. Since 1 January 2015, a One Stop Shop enablesbusinesses providing e-services, broadcasting and telecoms services to file a single VAT return for alltheir activities across the EU.

Thirdly, Member States need to reform their national tax systems and modernise their administrationsin order to reduce the VAT Gap. The Commission has set out possible measures to meet theseobjectives and, where requested, supports Member States by coordinating technical assistanceactivities.

Useful linksThe full report is available here.

For more information, see our FAQ.

IP/15/5592

As in previous reports, it was not possible to include estimates for Croatia and Cyprus, due to as-yet-incomplete national account statistics for the two countries.

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