According to the last report from the European Commission of the European Union, approx. 134 billion Euros is the difference between expected VAT revenue and the amount that is actually collected.
This latest difference recorded for 2019, equating to a total VAT revenue loss of 10.3% across the EU, is known as the VAT gap. It is typically caused by a combination of fraud and tax evasion, corporate insolvency, corporate bankruptcy, maladministration and legal tax optimization, among other activities.
The largest VAT gap, according to the community denomination, was suffered by Romania, which lost 36% of its income. Next on the list are Greece (34%) and Lithuania (25%) while Sweden, Luxembourg and Cyprus (1%) are the most effective tax authorities in this field. By volume, in any case, the biggest problem is suffered by Italy, with a loss of collection of 33,629 million Euros, although these represent 24% of its potential collection.
In order to fight this major problem, electronic invoicing is the main tool in the European Union for standardized e-invoicing that will ensure transparency across EU borders,. Italy and Hungary having successfully introduced compulsory e-invoicing already. Meanwhile, many other European nations including Germany, France and Poland have outlined their intention to instate mandatory e-invoicing in the coming years.
The European Commission itself is considering the creation of a harmonized framework for standardized e-invoicing that will ensure transparency across EU borders, as well as exploring the possibility of a gradual introduction of obligatory e-invoicing across its member states come 2023.
The e-invoicing can improve security thanks to the integration of encryption technology, digital signatures and secure networks, making it not only the fastest but equally the safest way to send and receive invoices.
Approx. 134 billion Euros is the difference between expected VAT revenue and the amount that is actually collected