Member states made progress in VAT compliance in 2021, though losses remain considerable

Most EU member states made progress in the enforcement of Value-Added Tax (VAT) compliance in 2021, according to a new report released by the European Commission today. The annual VAT Gap study, which measures the difference between theoretically expected VAT revenues and the amount actually collected, shows that member states lost around €61 billion in VAT in 2021, compared to €99bn in 2020.

This figure represents revenues lost mainly to VAT fraud, evasion and avoidance, non-fraudulent bankruptcies, miscalculations and financial insolvencies, among other drivers.

Economy Commissioner Paolo Gentiloni said: “The marked improvements in the latest VAT Gap figures are good news for public finances in Europe. They can be attributed mostly to well-targeted national measures that have been consistently implemented. Now we need to deliver a strong push at EU level too, which means enacting our ‘VAT in the Digital Age' proposals, which represent a real game-changer in terms of speeding up and facilitating tax authorities' access to information on business-to-business transactions. I call on member states to come to a swift agreement on the new measures so we can further reduce VAT losses – especially those caused by cross-border criminal fraud.”

The full report with detailed information per member state is available here. A press release and a factsheet are available online.

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