EU - Latest VAT Gap Report

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EU countries lost almost €150 billion in VAT revenues in 2016 according to a new study, published on 21 September 2018, by the European Commission.

The so-called 'VAT Gap' shows the difference between the expected VAT revenue and the amount actually collected. While Member States' have carried out a lot of work to improve VAT collection, the figures show that reform of the current EU VAT system, combined with better cooperation at EU level, is needed so that Member States can make full use of VAT revenues in their budgets.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said: "Member States have been improving VAT collection throughout the EU. This must be recognised and commended. But a loss of €150 billion per year for national budgets remains unacceptable”.

In nominal terms, the VAT Gap decreased by €10.5 billion to €147.1 billion in 2016, a drop to 12.3% of total VAT revenues compared to 13.2% the year before. The individual performance of the Member States still varies significantly. The VAT Gap decreased in 22 Member States with Bulgaria, Cyprus, Latvia and the Netherlands displaying strong performances, with a decrease in each case of more than 5% in VAT losses. However, the VAT Gap did increase in six Member States - Estonia, Finland, France, Ireland, Romania and the UK.

The full report and a factsheet can be read here.

Should you require any VAT assistance in the EU, or require any international VAT assistance, please contact us.

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