The European Union has re-launched the challenge against VAT evasion: the electronic bill across Europe

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The European Union Commission is launching a series of measures to modernize and improve the functioning of the VAT system and make it more fraud-resistant. An issue of particular relevance to Italy which remains first in the European VAT gap.

data frame

Despite the great progress that has been made in recent years, Italy is still the European champion in absolute terms for not collecting value-added tax: in 2020 the so-called value-added tax, that is, the gap between the tax declared and paid into state coffers was 26.2 billion (20.8%). This is 12.2 billion more than France, which is next with 14 billion in absolute terms (8%). Then there is Germany with 11.1 billion, which is 4.8%. In percentage terms, according to data from the European Union Commission, Italy is ahead only of Malta (24.1%) and Romania (35.7%). In 2019, the difference between the VAT collected and the expected VAT in Italy was 31.08 billion (in absolute terms, also in that year, the highest value) which equals 21.8%.

Lost EU revenues

entirely The EU coffers gap on the uncollected VAT front alone is €93 billion in 2020. Conservative estimates suggest that a quarter of lost revenue can be directly attributed to VAT fraud related to intra-EU trade. It is clear that these losses are hurting public finances in general at a time when countries must deal with the social and economic impacts of the crisis.

New procedures

Thus, among the EU’s priorities is the recovery of VAT evasion. This also goes through the new electronic billing system, which according to European Union Commissioner for EconomicsAnd the Paul GentiloniIt will help member states recover up to €11 billion annually in revenue over the next ten years. The EU proposal would introduce an EU-wide standard for real-time communication of cross-border supplies, through transaction-based electronic invoicing.

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“This means, Gentiloni said, that every goods transaction between businesses within the EU must be accompanied by an electronic invoice submitted to national authorities through an EU-wide database. In one fell swoop, it will empower member states to tackle fraud by providing them with the real-time information they need to act on suspicious transactions. By sharing this information, the national authorities will be able to cooperate more efficiently.” Gentiloni then added: “We are working on the Italian budget law, we will adopt an opinion next week. Our principles seem clear to me, you only need to read the Pnrr or the EU recommendations to know that Electronic billing and combating tax evasion are key priorities for us.”