UK losing €16bn per year from VAT Gap says EU
The latest European Commission-sponsored estimate of the potential amount of VAT lost in the EU has grown to €168 billion per annum. This represents over 15% of the total VAT revenue across the 28 member states.
The UK’s share of losses is now €15.5billion, 15.2% of GDP. Of this, the EU estimates that €8billion is due to VAT fraud by criminal gangs exploiting holes in the European VAT system.
Annual EU VAT Gap survey
The annual survey, this year covering 2013, which is sponsored by the European Commission, attempts to estimate the VAT expected to be collected by the 28 member states compared to what is actually received. Reasons for the VAT Gap include: inefficient tax administration; VAT fraud; and companies going out of business owing VAT to the authorities.
EU VAT fraud remains high
The EU put the total amount lost to VAT fraud at between €43billion and €53billion in a report earlier this summer. Sectors such as mobile phones, laptops, trading carbon credits, pharmaceuticals and precious metals have been the most targeted.
Despite the best efforts of the UK, France and Germany, where the majority of VAT frauds are centered, the proportion of VAT lost to fraud remains disturbingly high.