Fight against fraud: new study confirms billions lost in VAT Gap

An estimated €193 billion in VAT revenues (1.5% of GDP) was lost due to non-compliance or non-collection in 2011, according to a new study on the VAT Gap in Member States. The study was funded by Commission as part of its work to reform the VAT system in Europe, as well as its wider campaign to clamp down on tax evasion.

The study sets out detailed data on the gap between the amount of VAT due and the amount actually collected in 26 Member States between2000-2011. The main factors contributing to the VAT Gap are also presented, along with an overview of the effect of the economic crisis on VAT revenues.

Algirdas Šemeta, Commissioner for Taxation, said: "The amount of VAT that is slipping through the net is unacceptable; particularly given the impact such sums could have in bolstering public finances."

The VAT Gap is the difference between the expected VAT revenue and VAT actually collected by national authorities. While non-compliance is certainly an important contributor to this revenue shortfall, the VAT Gap is not only due to fraud. Unpaid VAT also results from bankruptcies and insolvencies, statistical errors, delayed payments and legal avoidance, amongst other things. Therefore, effectively tackling the VAT Gap requires a multi-pronged approach.

Full study available here.

Last update: 20/09/2013 |  Top