E-invoicing to help reduce EU VAT Gap losses - report

According to a recent VAT Gap study by the European Commission, the lost revenue equals to 16% of total expected VAT revenue by the 26 EU Member States.

The study sets out detailed data on the difference between the amount of VAT due and the amount actually collected by the Member States in 2012. Furthermore, the study plays a key part in the Commission’s work to reform the VAT system in Europe and clamp down on tax fraud and evasion. To tackle the VAT Gap the Commission requires a multi-pronged looking at different ways to make improvements.

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, among other things.

The lowest VAT Gaps were recorded in the Netherlands (5% of expected revenues), Finland (5%) and Luxembourg (6%). The largest Gaps were in Romania (44% of expected VAT revenues), Slovakia (39%) and Lithuania (36%).