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PwC Romania: Romania again with the biggest VAT gap in the EU
Romania is still first among the member states of the European Union for non-collection of VAT with an estimated deficit of 36.7% at the level of 2021, dropping slightly from 37.3% in 2020, according to a recent report of the European Commission which analyses the data in the mentioned years, shows an article made by Daniel Anghel, partner and leader for Fiscal and judicial services, PwC Romania.
According to him, Romania increases its losses from VAT in nominal terms at nine billion euro in 2021 against 7.9 billion euro in 2020, the previous year in the report.
‘Every year, the European Commission monitors the deficit of VAT collection as this is the tax most vulnerable to fraud, and at the same time, it is among the main resources for the European budget. The deficit represents the loss the budgets of the states have for VAT due to multiple causes: evasion, fraud, insolvency, bankruptcy, administrative errors. We see, that unfortunately, Romania continues to the first for VAT losses, with nine billion euro in 2021. If we report this sum to the budgetary deficit of the country of the same year, of 80 billion lei, we see that half of this could have been covered if VAT had been collected at the level of the Netherlands or Finland. Practically a better collection of the VAT is not only something to wish for, but an imperative. The VAT deficit is not only the highest in the EU, but at a large distance from the second in line, Greece which registers a gap of ten percentage points lower than Romania’s. Let us hope that next year the programmes implemented or underway for implementation of ANAF, such as e-invoice, electronic cash registers, SAF-T will provide sufficient relevant data to the authorities to support them in identifying the areas of evasion or non-conformity with VAT payment’ Daniel Anghel explains.
According to the reports of the European Commission, starting with 2015, Romania has been first, every year, among the member states, with the highest VAT gap. EC says that the gap has remained important, despite the favourable conditions to improve conformity.
As a total, between 2013 and 2021, Romania’s economy has increased by 34% in real terms. Moreover, the government reduced significantly the VAT burden through the reduction of the standard quota by four percentage points in January 2016 and with another percentage point in 2017. This drop did not have a visible impact on the evolution of the conformity gap.
The lowest VAT gap is registered in the Netherlands (0.2%), Finland (0.4%), Spain (0.8%) and the highest in Romania (36.7%), Malta *25.7%), Greece (17.8%) and Lithuania (14.5%).
The VAT Gap registered in the EU member states is an indicator calculated by the EC as a difference between the income from VAT estimated to be collected and the income collected for the states’ budgets.