Value-Added Tax Action Plan and measures against tax evasion

Harmonisation of the provisions for a better and more efficient cross-border taxation system and creation of a destination-based EU VAT System are important.

What is at stake?

Collection of value-added tax (VAT) for the EU has exhibited a significant VAT gap for many years. It amounted to € 162 billion for 2013. The European Commission deduces from this that there is a need to reform the VAT system and to take measures against tax evasion and tax fraud.

Priorities of German Business

A harmonised, destination-based EU VAT system to reduce the current risks and costs of prosecuting companies must be created.

Measures against tax evasion must be harmonised and coordinated with international initiatives in order to avoid trends in tax policy pulling in different directions.

Objectives of the OECD action plan on BEPS (Base Erosion and Profit Shifting) should be intermeshed with tax policy objectives and harmonisation efforts at EU level. This also applies for the issue of exchange of information between national financial administrations.

VAT shortfalls in the EU in 2013 (estimate)

Revenue loss as a percentage of total VAT tax debt

Source: European Commission-Study to quantify and analyse the VAT gap in the 26 EU Member States, 2015