Paolo Soro

VAT: EU Member States still losing almost €150 billion in revenues

Commission calls on Member States to agree as soon as possible on the reform to cut down on VAT fraud in the EU's system

EU countries lost almost €150 billion in Value-Added Tax revenues in 2016, according to a new study published today 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, today's figures show that reform of the current EU VAT system combined with better cooperation at EU level are needed so that Member States can make full use of VAT revenues in their budgets.

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, Latvia, Cyprus, and the Netherlands displaying strong performances, with a decrease in each case of more than 5 percentage points in VAT losses.

However, the VAT Gap did increase in six Member States: Romania, Finland, the UK, Ireland, Estonia, and France.

While much progress has been achieved to improve VAT collection and administration at the EU level, Member States should now move forward and agree as soon as possible on the much broader reform to cut down on VAT fraud in the EU's system, as proposed last year by the Commission.

The reboot would improve and modernise the system for governments and businesses alike, making the system more robust and simpler to use for companies.

Source: EU Commission News

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