Croatia Among Most Efficient EU Countries in VAT Collection

ZAGREB, Sept 10, 2020  – Differences between expected VAT revenues and revenues actually collected in EU member states are still high despite a slight improvement, and Croatia is among the most efficient countries in VAT collection, the European Commission said on Thursday.

The Commission released data for 2018 showing that the member states lost an estimated €140 billion in expected Value-Added Tax (VAT) revenues. 

There were great differences among the member states. The highest national VAT gap was recorded by Romania, with 33.8% of VAT revenues going missing in 2018, followed by Greece (30.1%) and Lithuania (25.9%). The smallest gaps were in Sweden (0.7%), Croatia (3.5%), and Finland (3.6%). In absolute terms, the highest VAT gaps were recorded in Italy (€35.4 billion), the United Kingdom (€23.5 billion), and Germany (€22 billion).

In 2018, Croatia collected €252 million less VAT revenue than expected.

“Although the overall VAT Gap, which is the difference between expected VAT revenues in EU member states and those actually collected, is still extremely high, it has slightly improved in recent years. However, figures for 2020 forecast a reversal of this trend, with a potential loss of €164 billion in 2020 due to the impact of the coronavirus pandemic on the economy,” the Commission said.

“The considerable 2018 VAT Gap, coupled with forecasts for 2020 — which will be impacted by the coronavirus pandemic — highlights once again the need for a comprehensive reform of EU VAT rules to put an end to VAT fraud, and for increased cooperation between the Member States to promote VAT collection while protecting legitimate businesses,” it added.

“Today’s figures show that efforts to shut down opportunities for VAT fraud and evasion have been making gradual progress — but also that much more work is needed. The coronavirus pandemic has drastically altered the EU’s economic outlook and is set to deal a serious blow to VAT revenues too. At this time more than ever, EU countries simply cannot afford such losses. That’s why we need to do more to step up the fight against VAT fraud with renewed determination, while also simplifying procedures and improving cross-border cooperation,” said Paolo Gentiloni, Commissioner for Economy.

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