Tax gaps can emerge due to taxpayer non-compliance, such as tax evasion and avoidance, or in relation to tax policy choices, such as tax reliefs or concessions. The Mind the Gap report, along with the complementary research in the VAT Gap report, and the CIT Gap report, reveals critical insights into tax compliance challenges and policy choices, which impact fiscal sustainability and competitiveness. As the first country-by-country overview to underpin the analysis of tax gaps and the effectiveness of tax administrations in the EU, the report builds a basis for future action at EU level.
Key Findings
Tax compliance gaps remain difficult to measure, as they stem from activities that tax authorities cannot easily observe. The VAT compliance gap, estimated in yearly studies since 2013, reached 128 billion EUR in 2023, reversing the progress observed during the pandemic. For CIT, the estimated average compliance gap using the latest available data (for 23 Member States) stands at 10.9% of collected revenues. This money is lost as public revenue and is not available for funding vital public services and investments. Furthermore, there are several thousand tax expenditure provisions across 27 tax systems. At a time of fiscal constraints, there is a strong case for regular evaluations of their effectiveness to serve their policy objectives.
You can find the main results in the short report below. For more details, including a country fiche for each Member State and the methodology, see the full report.
As the first country-by-country overview to underpin the analysis of tax gaps and the effectiveness of tax administrations in the EU, the report builds a basis for future action at EU level. The report highlights the benefits of reducing tax compliance gaps, including fostering fairer tax systems and sounder public finances.
Actions to reduce the tax gaps
The report outlines actionable strategies across the EU and pinpoints country-specific areas of strength and areas for improvement to tackle tax gaps and compliance challenges across a range of priority areas:
- Build Estimation Capacity: Strengthen tax administrations with skilled teams and robust data systems to enable regular tax gap estimates across tax types.
- Review past policy choices: Monitor, evaluate and report tax policy-induced gaps, such as tax reliefs or concessions, to check whether they serve their purpose and deliver value for money.
- Systematic Reporting and Evaluation: Implement regular tax gap reporting (CIT/PIT) to build public trust and guide targeted strategies.
- Adopt Common Frameworks: Harmonize methodologies for tax gap estimation among Member States to ensure consistency and comparability across the EU.
- Invest in Tax Collection and Recovery: Automate, digitize, and integrate IT systems; link with other stakeholders to improve tax collection and recovery of overdue taxes. Address old/disputed debts through improved practices.
- Leverage Digitalisation and Cooperation: Accelerate digitalization (e.g., AI) and international cooperation (e.g., DAC 1-9) to enhance compliance. The VAT in the Digital Age (ViDA) reform will combat VAT gaps via e-invoicing, real-time reporting, and cross-border data matching.
Detailed results per Member States
- Austria
- Belgium
- Bulgaria
- Croatia
- Cyrprus
- Czechia
- Denmark
- Estonia
- Finland
- Germany
- Hungary
- Ireland
- Lithuania
- Luxembourg
- Netherlands
- Portugal
- Romania
- Slovakia
- Slovenia
Background information
Published on 11 December 2025, the report is flanked by two technical reports, which provide evidence of substantial tax revenue losses that occur due to non-compliance across the EU, specifically related to Value-Added Tax (VAT) and Corporate Income Tax (CIT).
The reports outline actionable strategies across the EU and pinpoint country-specific areas of strength and areas for improvement.
The VAT Gap report
The 2025 report offers fresh VAT compliance gap estimates, a more detailed breakdown of the VAT policy gap, and, for the first time: coverage of EU candidate countries. The report adds new case studies, clearer methodological explanations, and updated past estimates, providing the most comprehensive overview yet of VAT performance across Europe.
The CIT Gap report
‘The Corporate Income Tax Gap, A European approach to measuring losses in corporate tax revenues’ includes corporate income tax compliance gap estimations for 23 Member States based on a novel approach developed by the Joint Research Centre. The study is part of the Commission’s efforts to support capacity building on tax gap estimation. For more details on methodology and results please download the full report.
This report presents a detailed analysis of the Corporate Income Tax (CIT) compliance gap across 23 EU Member States, Norway, and Iceland. The CIT compliance gap represents the difference between the tax revenue that should be collected under full compliance with existing tax laws and the amount actually collected.
Factsheet
More information
- European Commission releases report on tax gaps to support competitiveness and fairer tax systems
- VAT gap in Europe
- The Corporate Income Tax Gap, A European approach to measuring losses in corporate tax revenues
- Tax Administration EU Summit (TADEUS)
- Towards a common approach to tax gap estimation in the EU