• Reasons for and objectives of the proposal
Value added tax (VAT) is a major source of revenue in all EU Member States [Eurostat]. It is also a key source of financing for the EU budget since 0.3%of VAT collected at national level is transferred to the EU as own resources, representing 12% of the total EU budget. Despite the key importance of VAT in budgetary policymaking, the VAT system is hampered by sub- optimal VAT collection and control methods. It also imposes excessive burdens and compliance costs.
The revenue loss, known as the 'VAT gap [The VAT Gap is the overall difference between the expected VAT revenue based on VAT legislation and ancillary regulations and the amount actually collected.]', delineates the issues caused by sub-optimal VAT collection and control. Estimated at EUR 93 billion in total for 2020, a significant part of this loss is due to missing trader intra-Community (MTIC) fraud [Europol.]. The VAT gap also includes revenues lost to domestic VAT fraud and ev
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