European Commission: Despite measures European VAT has not improved

September 4, 2015  |  Compliance, Europe, Government

VAT revenue collection has failed to show significant improvement across EU Member States according to the latest figures released by the European Commission.

Based on VAT collection figures from 2013, the overall difference between the expected VAT revenue and the amount actually collected (the so-called “VAT Gap”) did not improve on 2012. While 15 Member States including Latvia, Malta and Slovakia saw an improvement in their figures, 11 Member States such as Estonia and Poland saw deterioration.

The total amount of VAT lost across the EU is estimated at €168 billion, according to the report. This equates to 15.2% of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies and miscalculation in 26 Member States.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs:
“This important study highlights once again the need for further reform in VAT collection systems across the EU. I urge Member States to take the steps needed to fight tax evasion and tax fraud at all levels. This remains a burning issue and is at the top of this Commission’s agenda.”    

As well as setting out detailed data on the difference between the amount of VAT due and the amount actually collected in Member States in 2013, the latest VAT Gap study gives an indication of the effectiveness of VAT enforcement and compliance measures. The main trends in VAT collection are also presented, along with an analysis of the impact of the economic climate and policy decisions on VAT revenues.

In 2013, the estimated VAT gaps of Member States ranged between 4 percent in Finland, the Netherlands and Sweden to 41 percent in Romania.


The VAT Gap study is funded by the Commission as part of its work to reform the VAT system in Europe and to clamp down on tax fraud and evasion. The Commission has already identified key actions and taken a number of measures to assist Member States to this effect.

A tougher stance against evasion and stronger enforcement at national level are essential. The VAT reform launched in December 2011 has already delivered important tools to ensure better protection against VAT fraud, while the Quick Reaction Mechanism allows Member States to react much more swiftly and effectively to sudden, large-scale cases of VAT fraud. The Commission also supports the Eurofisc network in order to strengthen Member States’ capacities to fight cross-border fraudulent networks through the exchange of operational information.
The Commission has worked to help simplify tax systems, making it easier for taxpayers to comply with the rules. For example, measures to facilitate electronic invoicing and special provisions for small businesses came into force in 2013. Since 1 January 2015, a One Stop Shop enables businesses providing e-services, broadcasting and telecoms services to file a single VAT return for all their activities across the EU.
Member States need to reform their national tax systems and modernise their administrations in order to reduce the VAT Gap. The Commission has set out possible measures to meet these objectives and, where requested, supports Member States by coordinating technical assistance activities.

Useful links

The full report is available here.

For more information, see our FAQ.


Related posts

1 Comment

  1. The fight against VAT-gap woken up already large corporations as J&J to check incoming invoice systematically on the legal compliance of the content. If we want to come to a real automation of the end to end process, we need more attention to VAT treatment in the processing. We need to pay more attention, in the ongoing CEN BII standardization debates, for fields necessary to determine the VAT-nature of the parties and the products to be able to automate VAT treatment. More and more data mining actions and SAF-t obligations makes more transaction based control on VAT treatment necessary. The complexity of VAT-treatment makes it nearly impossible to permanent monitoring on legal compliance without VAT-engines built in into the process.
    More in the copy of a post I recently made:

    David Gustin from Trade Financing Matters , asked me in the Supply Chain Finance Group in LinkedIn: Thanks for sharing Jos. Billentis report is always worth a read. Did you find anything that popped out this year?
    This year to me popped up the increased attention to Tax compliance. Indeed the authorities are fighting more and more the Tax-evasion (as we all are shouting to reduce the tax-level), rules are more and more complex. Data mining is also known by the tax-authorities, and a lot of business decision makers are underestimating what Tax-administrations can combine and analyses. So I’m really the same opinion as in the report is stated that we should pay more attention on the Tax Process (especially VAT and Sales-tax) as part of the OtoC and PtoP process. Than corporates expect more than just integrity and authenticity validation from service providers. They want 100% compliant invoices (correct content, all mandatory data available, correct and tested). This liability weighs on the shoulders of the sender, but also (and independent ) on those of the receiver (PtoP). More and more companies will ask for Vat and Sales-tax engines, who are dealing with automated checks on content compliance. Corporates want to receive from the service-providers invoices which are validated on the content.
    At the moment Avalara ( provide such engines that can be built-in in the end to end process for Sales Tax, and the Belgian iVAT (www.VATAT.COM) for VAT (> 35 Countries) .

    We also should take the opportunity of the new CENBII EU standardization process, that should be available by 2017. We should put more attention to the necessary mandatory field to be able to check invoices on the correctness of the applicated invoice- and VAT-legislation. Therefor we need more detail on classification of products/services and more also more details about the Vat-status of the business partners. Prof. Patrick Wille and Isabelle Desmeytere could be the correct sparring partners to collaborate at the definitions of those metadata.