Figures released by the European Commission show that VAT revenue collection has failed to show any significant improvement across member states in recent years.
Based on VAT collection figures from 2013, the “VAT Gap” (the overall difference between the expected VAT revenue and the amount of VAT actually collected) did not improve on 2012. Although 15 of the 26 countries surveyed did see an improvement in their figures, the VAT Gap actually increased for 11 member states. Across the EU, VAT Gaps range from around 4% in Finland and the Netherlands to 41% in Romania, whilst the UK figure has remained steady at around 10% since 2011.
According to the Commission’s report, the total amount of VAT lost across the EU is estimated at €168 billion and is primarily due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies and miscalculation. Experts have suggested that this highlights the need for further reform in VAT collection systems across the EU, and it is a burning issue at the top of the European Commission’s agenda, with member states being urged to take the necessary steps to fight tax evasion and tax fraud at all levels.
The study also indicates the effectiveness of VAT enforcement and compliance measures. The European Commission has already taken a number of measures to assist member states in clamping down on tax fraud and evasion. This includes attempts to help simplify tax systems, modernise administration and granting member states greater powers to fight suspected cases of VAT fraud.
If you want to gain clarity of your VAT affairs the Bedrock team can assist by carrying out a VAT review of your business to help you avoid potential penalties and identify opportunities to mitigate VAT. Get in touch now hello@bedrocktax.co.uk
