EU Member States still losing almost €150 billion in revenues

in Business · 27-09-2018 10:47:00 · 0 Comments
EU Member States still losing almost €150 billion in revenues

EU countries lost almost €150 billion in Value-Added Tax (VAT) revenues in 2016, according to a new study published this week by the European Commission.

The so-called ‘VAT Gap’ shows the difference between the expected VAT revenue and the amount actually collected. While Member States have carried out a lot of work to improve VAT collection, today’s figures show that reform of the current EU VAT system, combined with better cooperation at EU level, are needed so that Member States can make full use of VAT revenues in their budgets.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said: ”Member States have been improving VAT collection throughout the EU. This must be recognised and commended. But a loss of €150 billion per year for national budgets remains unacceptable, especially when €50 billion of this is lining the pockets of criminals, fraudsters and probably even terrorists. A substantial improvement will only come with the adoption of the VAT reform we proposed a year ago. I urge Member States to move forward on the definitive VAT system before the European Parliament elections in 2019.”

In nominal terms, the VAT Gap decreased by €10.5 billion to €147.1 billion in 2016, a drop to 12.3 percent of total VAT revenues compared to 13.2 percent the year before. The individual performance of the Member States still varies significantly. The VAT Gap decreased in 22 Member States with Bulgaria, Latvia, Cyprus, and the Netherlands displaying strong performances, with a decrease in each case of more than 5 percentage points in VAT losses. However, the VAT Gap did increase in six Member States: Romania, Finland, the UK, Ireland, Estonia, and France.
While much progress has been achieved to improve VAT collection and administration at the EU level, Member States should now move forward and agree as soon as possible on the much broader reform to cut down on VAT fraud in the EU’s system, as proposed last year by the Commission. The reboot would improve and modernise the system for governments and businesses alike, making the system more robust and simpler to use for companies.



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