€164 billion: this is the amount of value added tax (VAT) revenue that EU countries could potentially lose in 2020 as a result of the Covid-19 pandemic, according to a new study published by the European Commission on Thursday, 10 September.
The study, which looks at the overall VAT gap - the difference between expected VAT receipts and the amount actually collected - in 2018, this year includes a projection of the potential impact of the Covid-19 recession on the evolution of the VAT gap.
If the EU economy shrinks by 7.4% in 2020 and the overall government deficit increases as forecast in the spring economic forecasts, the VAT gap could, according to the Commission, increase by 4.1 percentage points over the previous year to 13.7%.
The Covid-19 crisis is therefore likely to reverse the trend towards a narrowing of the VAT gap observed in recent years. The overall VAT gap in the EU Member States fell slightly from €140.9 billion in 2017 to €140.0 billion in 2018.
As in 2017, Romania is the Member State with the largest VAT gap in 2018, with a loss of VAT revenue of 33.8%. Strictly from the point of view of losses, Italy is still at the top of the ranking, with €35.4 billion.
For the Commission, the 2018 results as well as the forecasts for 2020 further reinforce the need for a comprehensive reform of EU VAT rules.
See the study: https://bit.ly/3ihTW2F (Original version in French by Marion Fontana)