Research

VAT Gap in the EU (2024 Report)

The European Commission's VAT Gap in the EU – 2024 Report puts a number on what after-the-fact collection leaves on the table. It estimates the EU VAT compliance gap for 2023 at €128 billion, and that figure is the clearest evidence base for why assurance needs to move earlier.

Printed record sheet, halftone print treatment

What the report says

The VAT gap is the difference between the VAT that member states should collect under their own rules and what they actually receive. The 2024 edition, which reports on the 2023 tax year, puts that gap at €128 billion across the EU, equivalent to about 9.5 per cent of the total VAT due. The shortfall reflects a mix of causes: fraud and evasion, insolvencies and bankruptcies, administrative errors, and the practical limits of enforcement.

The report is produced for the Commission's Directorate-General for Taxation and Customs Union by external economists, with the analytical work carried out by CASE and Oxford Economics. It tracks the gap year by year across every member state, which lets it show both the long-run downward trend in many countries and the year-to-year movements that reveal where compliance is improving or slipping.

One point of precision matters. The €128 billion headline is the 2023 figure, published in the 2024 report. The Commission's own communications also discuss earlier years in the same release, so the year attached to the number should always be 2023.

Why it matters for real-time taxation

A gap of this size is, at bottom, a timing problem. Most VAT control happens after returns are filed, by which point the money may already have moved beyond reach, the trader may have disappeared, or the error may have compounded across a chain of transactions. Detection after the fact recovers only part of what is lost, and it costs administrations heavily to pursue.

Real-time taxation attacks the same problem from the other end. When the tax portion of a payment is verified and settled as the transaction happens, the most common routes to a gap, missing trader fraud, undeclared sales, and simple mistakes, close before they can open. This report is the reason the case for real-time controls is not just about efficiency. It is about a measurable €128 billion that the current design does not capture, and it moves the argument from more data after the fact to more certainty up front.

Who wrote it

The report was commissioned by the European Commission, Directorate-General for Taxation and Customs Union, with the study conducted by CASE (Centre for Social and Economic Research) and Oxford Economics.

Citation

We link to the Commission's own pages and cite the €128 billion figure with its source and year.

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