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EU VAT Gap shrinks to €147.1billion

  • Sep 20, 2018 | Richard Asquith

EU VAT Gap shrinks to €147.1billion

The latest estimate for missing EU VAT from the European Union, the VAT Gap, has shrunk to €147.1 billion in 2016 from €157.7 billion in 2015. This represents a revenue gap of 12.2%. In terms of tax base, the gap has improved from 13.2% of VAT due down to 12.3%.

The VAT Gap is a comparison of expected VAT revenues, based on the size of the economy and tax rates, less actual collections. The gap is cause by a number of factors, including: poor administration; tax debtors going into liquidation, fraud

Overall, the VAT Gap decreased in the majority of Member States. The biggest declines in the VAT Gap—of over five percentage points—occurred in Bulgaria, Latvia, Cyprus, and the Netherlands. Only six countries saw a reversal in the gap: Romania, Finland, the UK, Ireland, Estonia, and France.

Italy now accounts for 24.4% of the total missing EU VAT. Over 25% of its anticipated VAT collections are not collected.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2019 Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.