Study and Reports on the VAT Gap in the EU-28 Member States: 2020 Final Report

Grzegorz Poniatowski, Adam Åšmietanka and Mikhail Mikhail Bonch-Osmolovskiy

No 503, CASE Reports from CASE-Center for Social and Economic Research

Abstract: This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported. In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019.

Keywords: consumption taxation; VAT; tax fraud; tax evasion; tax avoidance; tax gap; tax non-compliance; policy gap (search for similar items in EconPapers)
JEL-codes: H24 H26 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-iue and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:sec:report:0503

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