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EU VAT Gap Initiative 2022

Sharing best practices on tax administration and collections to reduce missing VAT

The European Commission is developing its VAT Gap Initiative in the third quarter of 2022 to help exchange ideas between EU member states’ tax administrations to help close the EU VAT GAP.  This is an estimate of missing Value Added Tax revenues, with a latest estimate of €136 billion per annum.

This initiative will help EU countries by sharing best practices and supporting implementation. Many countries, such as Poland, have proven very successful at cutting their VAT gaps, and the EC wants to facilitate replicating this elsewhere. For example, Poland is not starting its SLIM VAT 3 program of VAT

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DG Taxud run initiative

Dovetails of VAT in the Digital Age wider reforms being operated by the EC’s Taxud – The Directorate General Taxation and Customs Union’s mission is to develop and manage the Customs Union, a foundation of the EU, and to develop and implement tax policy across the EU for the benefit of citizens, businesses and the Member States.

The VAT Gap Initiative will run alongside the EU VAT in the Digital Age with reforms include a channel for harmonised Digital Reporting Requirements (DRR) and  Continuous Transaction Controls (CTC) by EU states. This grew from the 2020 EU Tax Action Plan  proposals for a fairer and more efficient EU tax regime.

The EC will also look at how administrative cooperation in the area of VAT can be strengthened and enhanced, to improve the fight against fraud and evasion. cooperation between administrations and anti-fraud officials – including greater interaction between the EU’s anti-VAT fraud network (Eurofisc) and OLAF and Europol.

EU VAT reforms

Reform (click for details) Update
2025 VAT registration thresholds equivalence foreign businesses On track
Virtual events VAT rule changes Agreed
2024 Payment providers' seller transaction reporting and bookkeeping obligations On track
Digital Reporting Requirements (DRR), e-invoicing and live transaction reporting Implementation of VAT in the Digital Age?
2023 DAC 7 - marketplace reporting obligations on sellers' activities On track
Financial Services VAT exemption reform proposals Consultation complete; proposal 2023
Tour operator margin scheme VAT reforms EC undertaking fresh review
2022 EU definitive VAT system Member states not agreed on format
EU reduced VAT rate freedoms Enter into force 6 April 2022
IOSS reforms to prevent double taxation Proposals early 2022
VAT in the Digital Age proposals On track for Q3 2022 detailed proposal
Single EU VAT registration - extension of OSS for B2B and B2C On track for Q3 2022 detailed proposal
Proposal for VAT treatment of the platform economy On track for Q3 2022 detailed proposal
VAT Gap Initiative Q3 2022
2021 One-Stop-Shop (OSS) single EU VAT return In effect
Ending €22 import VAT exemption; new IOSS return In effect
Marketplace deemed supplier EU VAT reforms In effect
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option
EU Generalised Domestic Reverse Charge VAT Mechanism In effect, although no country has adopted this voluntary option
2015 B2C electronic services VAT reforms - MOSS return In effect

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