BUDAPEST: Compared to 2013, the 2014 VAT GAP has decreased by EUR 2.5 billion but individual performances of Member States still vary enormously when it comes to VAT compliance. Some 18 Member States, including Hungary showed an improvement in their figures, while eight Member States failed to collect more VAT revenues than the year before.
According to data published by the EU executive 17.95% of VAT revenues, a total of about EUR 2.1 billion (HUF 651 bn) in Hungary could not be collected in 2014.
The VAT Gap rate ranged from a high of 37.9% of uncollected VAT in Romania to a low of only 1.2% in Sweden. In absolute terms, the highest VAT Gap of EUR 36.9 billion was recorded in Italy while Luxembourg had the lowest of EUR 147 million.
The VAT Gap study is funded by the Commission as part of its work to reform the VAT system in Europe and to clamp down on tax fraud and evasion. Today’s report is evidence that while some Member States have improved their VAT revenue collection, substantial progress can only be achieved if Member States agree to make the current EU VAT system simpler, more fraud-proof and business-friendly.
said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs. After a period (2010-2013) of a virtually stable VAT Gap, VAT compliance in Hungary in 2014 saw a significant improvement, the Commission said in the report.
With the highest standard rate in the EU (27%), the VAT Gap in Hungary remains relatively high (ranking 18 out of the 27 analysed Member States).
In 2014, Hungary introduced numerous measures to fight VAT fraud and evasion. Among others, it extended the use of the VAT reverse charge mechanism, reclassified a number of goods subject to reduced rates, and increased the powers of the VAT inspectors, the EC noted.
