One hundred thirty-seven billion euros: that is the amount of value-added tax (VAT) revenue that EU countries lost in 2017 according to a new study published by the European Commission on Thursday, 5 September.
The overall VAT Gap—i.e., the difference between the expected VAT revenue and the amount actually collected—decreased slightly compared to 2016, dropping from 12.2% to 11.2%, which resulted in a decrease of €8 billion in nominal value (see EUROPE 12101/3).
New this year, the study includes “fast estimates” for 2018. According to these estimates, the VAT Gap will continue to decrease and will be less than €130 billion in 2018.
The study shows that in 2017, the VAT Gap decreased in 25 Member States—notably, in Malta, Cyprus, and Poland; in each case, VAT losses fell more than four percentage points. The VAT Gap increased in only three Member States, namely Greece (2.6%), Latvia (1.9%), and Germany (0.2%).
Romania is the Member State that recorded the largest VAT Gap in 2017, with a VAT revenue loss of 36%. The country is followed by Greece (34%) and Lithuania (25%), whereas negligible differences were recorded in Sweden, Luxembourg, and Cyprus, where an average of only 1% of VAT revenue was not collected. Looking strictly at losses, Italy is still at the top of the list, with €35.5 million.
Recognising the improvement in VAT collection by Member States, European Commissioner for Taxation Pierre Moscovici once again called for “a thorough reform of the VAT system to make it more fraud-proof”.
“Our proposals to introduce a definitive and business-friendly VAT system remain on the table. Member States cannot afford to stand by while billions are lost to illegal VAT carousel fraud and inconsistencies in the system”, he declared in a statement.
See the study: http://bit.ly/2lAqSLs (Original version in French by Marion Fontana)