The VAT Gap study sets out detailed data on the difference between the amount of VAT due and the amount actually collected in 26 member states in 2012.
VAT deficit demonstrates whether EU's VAT collection and compliance measures are effective, said Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, Algirdas Semeta. The latest data indicate that there is still room for improvement. Member states cannot afford losing their income in such amounts. This must be stopped, and decisive measures must implemented in order to retrieve these state funds. Meanwhile, the EC still focuses on fundamental reforms of the VAT system in order to make it stronger, more effective, and less prone to fraud risks, Semeta said.
VAT collection deficit is the gap between the planned VAT income and the actual amount of VAT that state institutions collect. Fraud is not the only reason for VAT deficit; other reasons includes bankruptcy, insolvency, statistical errors, delayed payments, tax evasion, etc.
In 2012, the lowest VAT collection deficit was registered in Netherlands – 5%, Finland – 5%, Luxembourg – 6%. The largest VAT deficit was registered in Romania – 44%, Slovakia – 39%, Lithuania – 36%, and Latvia – 34%. VAT deficit in Estonia was 14%.
