Romania is followed by Greece (25.8%) and Malta (23.5%).
Per EC reports, Romania has held the top spot among EU countries every year since 2015, recording the highest VAT compliance gap.
The smallest gaps were observed in Croatia (1.0%), Sweden (1.4%), and Cyprus (2.7%). In absolute terms, the highest VAT compliance gaps were recorded in Italy (EUR30.1 billion) and Germany (EUR23.4 billion).
In most Member States, the absolute year-over-year change in the VAT Gap was lower than 2 percentage points. Overall, the VAT Gap share decreased in 18 Member States. In addition to Croatia and Cyprus, the most significant decreases in the VAT Gap occurred in Greece, Lithuania, Bulgaria and Slovakia (between –3.2 and -2.2 percentage points in these four countries). Sweden, Finland and Estonia were successful from a different perspective: in these countries, fiscal authorities have for years succeeded in limiting the loss in VAT revenues to less than 5% of the VAT due. The biggest increases in the VAT Gap were observed in Malta (+5.4 percentage points), in Slovenia (+3 percentage points) and in Romania (+2.3 percentage points).
In nominal terms, the overall EU VAT Gap decreased by almost EUR6.6 billion to EUR134 billion in 2019, a marked improvement on the previous year’s decrease of EUR4.6 billion. Though the overall VAT Gap has been improving between 2015 and 2019, the full extent of the COVID-19 pandemic on consumer demand and therefore VAT revenues in 2020 remains unknown.
Annually, the European Commission monitors the VAT collection deficit (˝the VAT gap˝) recorded by the EU Member States, which is calculated as the difference between the VAT liability and the amount of VAT actually collected. The VAT gap covers VAT losses due to evasion, fraud, insolvency, bankruptcy, administrative errors and unlawful tax advantages.