In line with Article 12 of Council Regulation 1553/89 establishing harmonised arrangements for VAT collection and control procedures in EU countries, the European Commission conducts assessments of national procedures for registering taxable persons, for determining and collecting VAT, and for the operations of national VAT control systems, every three years.
These assessments result in reports released by the Commission to the European Parliament and the European Council. Simultaneously, the Commission may also make proposals for improving the effectiveness of national procedures.
Background
Value Added Tax (VAT) is an essential and often primary contributor to the budget of EU countries. Having an effective VAT administration with efficient processes and procedures is in everybody’s interests: national administrations, EU institutions, taxpayers and citizens.
However, VAT due in 2019 but uncollected by the tax authorities was estimated at EUR 134 billion or 10.3% of the VAT Total Tax Liability. This is referred to as the ‘VAT compliance gap’, or the difference between VAT total tax liability (VTTL) and what is actually collected by EU countries’ tax authorities. EU countries’ administrative capacity to ease compliance and fight against VAT fraud is a factor of the utmost importance in this regard.
2022 report
The 2022 report identifies possible causes for revenue loss and makes recommendations to tackle it by strengthening VAT administration. This is especially important in the context of digitalisation and the impact of new technologies on EU economies.
The report also presents positive experiences and good practices that have been successful in reducing revenue loss, improving VAT administration procedures and strengthening interaction with taxpayers and other stakeholders in certain national VAT administrations.
Among the key recommendations presented:
- Facilitate voluntary compliance of taxpayers through simplifications and through open and digital contacts with the tax administration.
- Develop risk management-driven tax administration.
- Invest in technology and keep tax databases updated, explore the use of several data sets and third-party data, and invest in in-depth data analyses.
- Enhance cooperation between the tax administration and other public authorities.
- Put in place an adequate sanctions system.
Previous reports
- 2017 (eighth report): COM(2017) 780
- 2014 (seventh report): COM(2014) 69 + Annex SWD(2014) 38
- 2008 (sixth report): COM(2008) 719 + Annex SEC(2008) 2759
- 2004 (fifth report): COM(2004) 0855 + Annex SEC(2004) 1721
- 2000 (fourth report): COM/00/0028
- 1998 (third report): COM/98/0490
- 1995 (second report): COM/95/354
- 1992 (first report): SEC(92) 280
Legal texts
- Council Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax