Towards a single EU VAT area
VAT is a key revenue source for governments, accounting for 17.5 % of total tax revenue in the EU27, and one of the own resources of the EU budget. Billions of VAT revenues are lost each year due to tax fraud and inadequate collection systems. The current VAT system, created in 1993 and intended as a transitional system, is fragmented, complex for the growing number of businesses operating cross-border and prone to tax fraud.
In 2016, the Commission presented an action plan on VAT to create a definitive system. Various legislative proposals were put forward in 2017 and 2018, including a reform of the system of VAT rates, on cross-border cooperation and on simplified VAT rules for SMEs.
The European Parliament adopted many resolutions in the past, expressing support inter alia for a system based on the destination principle, for narrowing the VAT rate variation between countries and reducing the number of exemptions. On 16 February 2022, the Parliament adopted an implementation report on the VAT Directive which was prepared by the FISC Subcommittee to take stock of what has been achieved and still needs to be done to reduce the EU VAT gap.
(last updated: September 2022)
Own Initiative report
Own Initiative report on "Implementation of the 6th VAT Directive: what is the missing part to reduce the EU VAT gap?"
- Rapporteur: Olivier Chastel - Renew Europe Group
- Procedure file (2020/2263(INI)
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Draft report EN (PDF - 640 KB) | FR (PDF - 193 KB)
- Amendments to the draft report (PDF - 304 KB)
- Final report as adopted by ECON on 6/12/2021 (A9-0355/2021) (PDF - 224 KB)
- Text adopted in plenary on 16 February 2022 (P9_TA(2022)0034)
EPRS Study
EPRS Study on "VAT gap, reduced VAT rates and their impact on compliance costs for businesses and on consumers"