REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Ninth report from the Commission on VAT registration, collection and control procedures following Article 12 of Council Regulation (EEC, EURATOM) No 1553/89
Date: 2022-04-07
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, VAT, VAT resource, financial management, information technology, tax authorities, tax collection, tax rebate, tax reform

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 7.4.2022  COM(2022) 137 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Ninth report from the Commission on VAT registration, collection and control procedures following Article 12 of Council Regulation (EEC, EURATOM) No 1553/89  
 
 
Table of content 

1. 

INTRODUCTION ................................................................................................................................. 2 

1.1. 
1.2. 

A new approach: building on success stories ......................................................... 2 
Data gathering and analysis .................................................................................... 3 

2.  A COMMON INTEREST: THE IMPORTANCE OF VAT FOR MEMBER STATES, THE 

EUROPEAN UNION AND TAXPAYERS .......................................................................................... 3 

2.1. 
2.2. 
2.3. 

Compliance gap (VAT gap) ................................................................................... 3 
The impact of VAT gap on own resources ............................................................. 6 
VAT administration and compliance burden for businesses .................................. 7 

3.  VAT REGISTRATION AND RISK ANALYSIS................................................................................. 7 

3.1. 
3.2. 

Assisting taxpayers through better communication ................................................ 8 
Completeness of the VAT-registered taxpayers database....................................... 8 

4.  VAT, INFORMATION TECHNOLOGY AND NEW TECHNOLOGIES ........................................ 16 

4.1. 
4.2. 
4.3. 
4.4. 
4.5. 
4.6. 

E-commerce .......................................................................................................... 16 
Mini One Stop Shop ............................................................................................. 17 
Digitalisation, information technology and data analytics.................................... 21 
Compliance management plans ............................................................................ 24 
Taxpayer services ................................................................................................. 25 
Use of data for VAT compliance purposes ........................................................... 27 
4.6.1. Gathering data............................................................................................................... 27 
4.6.2. Informed decision: putting data to work ....................................................................... 28 

5. 

FILING AND PAYMENT .................................................................................................................. 29 

5.1. 

5.2. 

5.1.1. 
5.1.2. 

Timeliness of filing ............................................................................................... 29 
E-filing .................................................................................................................. 29 
Monitoring VAT-filing compliance ..................................................................... 29 
Payment of VAT ................................................................................................... 32 

6. 

COLLECTION OF VAT DEBTS, REFUNDS AND AUDITS .......................................................... 34 

6.1. 
6.2. 
6.3. 

VAT debt collection ............................................................................................. 34 
VAT refunds ......................................................................................................... 35 
Completeness of reporting obligations: VAT audits ............................................ 37 

7.  VAT ACCOUNTING, ACCOUNTABILITY AND DISPUTES ....................................................... 42 

7.1. 
7.2. 

VAT accounting, internal controls and external reviews ...................................... 42 
VAT dispute resolution process............................................................................ 44 

COVID-19 AND VAT: RECOMMENDATIONS FOR VAT COLLECTION AND RECOVERY .. 45 

CONCLUSION ................................................................................................................................... 46 

8. 

9. 

ANNEX 1: INDEX OF RECOMMENDATIONS ........................................................................................ 48 

ANNEX 2: INDEX OF FIGURES AND TABLES ...................................................................................... 50 

ANNEX 3: REFERENCES........................................................................................................................... 52 

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1.  Introduction 

Public services – from medical care to infrastructure development, from education to national defence – are 
essential to our daily lives yet cost money. Taxes are needed to fund them, and value added tax (VAT) is an 
essential and often primary contributor to the budgets of Member States1. Underperforming administration of 
VAT compromises development, growth and trust in government. Effective VAT administration with efficient 
processes and procedures is therefore in everybody’s interest – national administrations, EU institutions, 
taxpayers and citizens. 

Council Regulation No 1553/89 of 29 May 19892 tasks the Commission to assess, every 3 years, the national 
procedures for registering taxable persons and for determining and collecting VAT, as well as the modalities and 
results of national VAT control systems. Possible revisions can then be considered with a view to improving the 
effectiveness of these procedures. This report complies with that mandate and examines the period 2016–2019. 

Since 1989, eight assessment reports of this kind have been issued3. The most recent report4, published in 
December 2017, advocated breaking the silos and improving VAT administration through better cooperation 
between tax administrations. The present report5 identifies some of the probable causes of revenue loss and 
explicitly outlines recommendations for measures to tackle it by strengthening VAT administration (the 
recommendations are listed in boxes in the sections below. Furthermore, for a summary of the recommendations, 
see Annex 1). This is important especially in the context of the changes that digitalisation and new technologies 
are bringing to our economies. This report also presents experiences and good practices by national VAT 
administrations. 

Fair and efficient taxation will be even more important in the months and years ahead, as the EU and the global 
community seek to recover from the fallout of the COVID-19 crisis. Member States quickly implemented VAT-
related measures together with other targeted measures to pave the way towards recovery. This report assesses 
the readiness of tax administrations to face difficult situations, including the COVID-19-related emergencies and 
continue functioning with as little disruption as possible. 

1.1. 

A new approach: building on success stories 

Tax administrations are all in the same business: collecting taxes. Especially in a rather harmonised area such as 
VAT, they have many similar functions but can vary in terms of organisation, operations, tax policy and 
priorities. 

This report takes a step back and looks at VAT administration from a broader angle to capture what Member 
States are doing. It recommends a possible course of action to achieve similar performance across the EU. It 
follows the entire VAT life cycle, from registering VAT-taxable persons to the post-refund control of VAT. 

VAT 
registration and 
risk analysis

Taxpayer 
services and 
compliance 
management

VAT filing 
and payment

VAT 
collection 
recovery and 
refund

Current VAT challenges 

1 

2 
3 
4 
5 

VAT-type taxes account for approximately 7% of gross domestic product (GDP) on average (about one fifth of total government 
revenue) and are thus one of the most important sources of revenue (https://ec.europa.eu/eurostat/statistics-
explained/index.php/Tax_revenue_statistics). 
OJ L 155, 7.6.1989, p. 9. 
The references to the eighth previous reports are listed in Annex 3: References. 
COM(2017) 780 final. 
Since VAT is also an own resource of the EU budget, the current legislative arrangements (Regulation No 1553/89) require the 
Commission to produce a report on the VAT-administering procedures applied in the Member States and to submit it to the European 
Parliament and the Council. The official text of Regulation No 1553/89 on the definitive uniform arrangements for the collection of 
own resources accruing from value added tax is available online (https://eur-lex.europa.eu/legal-
content/en/TXT/?uri=CELEX%3A31989R1553). 

2 

 
 
 
                                                      
Comparing performance information is the most straightforward way of identifying good performance and good 
practice. However, different definitions, lack of completeness and robustness of data, and the incomparability of 
similar functions in diverse environments (size, political organisation, social structures, etc.) make full 
benchmarking impossible. The existing diversity presents, indeed, the biggest challenge in comparing the costs 
and performance of tax administrations. 

Additional factors such as the behaviour of VAT payers (e.g. predisposition to pay taxes), the quality of VAT 
application law and other VAT determinants (e.g. size of retail, taxpayer structure, geography, size of the 
country, economic environment, unemployment) influence the VAT gap, but are nearly impossible to assess. 

Although the current report is not a benchmarking exercise, it nevertheless identifies opportunities for change 
and improvement while paying attention to each country’s specificities. Such opportunities are often of a 
qualitative (‘soft’) nature and difficult to spot.  

1.2. 

Data gathering and analysis 

To gather the data, the Commission submitted a survey on selected issues to all Member States. Using 109 
different question sets (free text, single and multiple choice, matrix, etc.) and tables, the Commission collected 
8 700 data entries. 

We used validating methods (e.g. cross-checks, comparisons with other sources and key verification questions) 
to verify and confirm the quality of the data received. The Commission reached out to Member States through 
multiple channels to discuss detected anomalies. All Member States had the opportunity to review their answers. 
The quality and accuracy of the data still vary significantly. Member States should strive to provide high-quality 
data within the set time frame. 

The United Kingdom withdrew from the European Union on 31 January 2020. Since the period reflected in the 
report is 2016–2019, and Union law remained fully applicable to and in the United Kingdom throughout the 
transition period, any reference to ‘Member States’ and all calculations (e.g. different ratios and percentages) 
include the United Kingdom. The United Kingdom fully participated in the exercise. 

2.  A common interest: the importance of VAT for Member States, the European Union and taxpayers 

2.1. 

Compliance gap (VAT gap) 

The capacity of tax administrations to collect value added tax (VAT) is an urgent matter for the Member States, 
the EU, European businesses and citizens. VAT is an essential and major contributor to the state budgets of 
Member States6 as well as an important Own Resource of the EU budget. However, VAT due but uncollected by 
the tax authorities was estimated at EUR 134 billion in nominal terms and 10.3% expressed as a share of the 
VAT Total Tax Liability in 20197 (Figure 1). This is what is referred to as the ‘VAT gap’: the difference 
between the VAT total tax liability (VTTL) and what is actually collected by the Member States’ tax authorities 
and as such, represents VAT revenues lost compared to a theoretical VAT calculation. The Commission 
calculates and publishes the VAT gap annually8, with a view to gathering comparable data and indicators on the 
scale of VAT revenue losses. The VAT gap provides an estimate of revenue loss to reasons that can be grouped 
into four broad categories: (1) VAT fraud and VAT evasion, (2) VAT avoidance practices and optimisation, (3) 
bankruptcies and financial insolvencies, and (4) administrative errors. Furthermore, it should be noted that the 
VAT gap estimates are calculated based on national statistics9. Finally, Member States administrative capacity to 

6  

The VAT type taxes account for approx. 7% GDP on average (about one-fifth of total government revenue), thus being one of the most 
important sources of revenue: https://ec.europa.eu/eurostat/statistics-explained/index.php/Tax_revenue_statistics In 2018, the EU VAT 
revenue amounted to EUR 1,132 billion. 

7   VAT gap in the EU – Report 2021 
8 

The VAT gap estimation made by the Commission is based on a top-down methodology and on national accounts data and own 
resource submissions (i.e. VAT statements) provided by the Member States. These figures are used to estimate the theoretical VAT 
liability generated by different subaggregates of the economy compared with actual VAT collection. 
The methodology used for the calculation of the VAT Gap relies on the national accounts figures compiled by the national statistical 
authorities. Additional data that could be used for a more precise estimate on the VAT Gap, such as the benefits in kind or more 
detailed statistical classification of products by activity (CPA) are not always available. Moreover, the national statistics institutes use 

9  

3 

 
 
                                                      
ease compliance and fight against VAT fraud is a factor of the utmost importance in this regard. While each of 
these reasons for the VAT gap calls for a different policy response, even under the best circumstances the VAT 
gap could not be completely eliminated, for instance as regards foregone VAT due to bankruptcies and financial 
insolvencies. Quantifying and monitoring the VAT gap can help to develop well-targeted measures and monitor 
their effectiveness. As such, the VAT gap can be considered as an indicator to measure the effectiveness of VAT 
enforcement and compliance measures in each Member State. 

Figure 1: Evolution of the VAT gap in the EU 

150

125

100

75

50

25

0

EUR billion (left axis)

% of VTTL (right axis)

15,0%

12,5%

10,0%

7,5%

5,0%

2,5%

0,0%

2016

2017

2018

2019

Source: European Commission (2021) – VAT gap in the EU report 2021 

While the EU-wide picture shows improvement over time, statistics vary significantly when comparing Member 
States, ranging from as low as 1% to up to 35% of the national VAT total theoretical liability (VTTL) (Figure 2).  
There are good examples that progress can be made and the VAT gap can be reduced: Overall, compared to 
2018 the VAT Gap share decreased in 18 Member States. In addition to Croatia and Cyprus, the most significant 
decreases in the VAT Gap occurred in Greece, Lithuania, Bulgaria and Slovakia (the four of which reduced the 
VAT gap by between 3.2 and 2.2 (-3 percentage points). Another group of countries consists of Sweden, Finland 
and Estonia. In these Member States, the loss in VAT revenues is estimated already for years at less than 5% of 
the VAT due. The biggest increases in the VAT Gap, apart from Malta, were observed for Slovenia (+3 
percentage points) and Romania (+2.3 percentage points). 

Figure 2: VAT gap as share of the VTTL, 2018 and 2019 – in % 

40

35

30

25

20

15

10

5

0

2018

2019

median

34,9

25,8

23,5

21,4

21,3

6,6 6,9 7,1 7,4 7,9

8,3 8,3

8,7 8,8

8,6

4,4 4,5

1,0 1,4

2,72,9

16,1

14,3

10,111,312,3

8,9 9,6

HR SE CY FI NL EE LU ES SI FR PT LV BG DK AT DE UK HU IE PL BE CZ SK IT LT MT EL RO

Annotation: Data labels refer to the VAT gap as share of VTTL in 2019 
Source: European Commission (2021) – VAT gap in the EU report 2021 

different methodologies to estimate the informal economy and to reflect it in their national accounts, thus indirectly affecting the VAT 
gap figures. 

4 

 
  
 
                                                                                                                                                                      
The variations of VAT gap estimations between the Member States reflect differences in terms of tax 
compliance, fraud, avoidance, bankruptcies, insolvencies and administrative capacity. Even if other factors such 
as the economic evolution and the organisation of national statistics have an impact on the estimates, the size and 
especially the trend of the VAT gap provides an indication of the performance of national tax administrations. 

Table 1: VAT gap for 2016–2019 (in million EUR and as percentage of VAT total tax liability) 

Year 

2016 

2017 

2018 

2019 

Member  
State 

Belgium 

Bulgaria 

Czechia 

Denmark 

Germany 

Estonia 

Ireland 

Greece 

Spain 

France 

Croatia 

Italy 

Cyprus 

Latvia 

Mill EUR 

% 

Mill EUR 

% 

Mill EUR 

% 

Mill EUR 

% 

3 513 

10.9% 

4 126 

12.2% 

4 007 

11.4% 

4 444 

12.3% 

621 

12.3% 

648 

12.2% 

617 

10.8% 

508 

8.3% 

2 499 

16.0% 

2 223 

13.1% 

2 567 

13.8% 

2 835 

14.3% 

2 539 

8.7% 

2 528 

8.3% 

2 516 

7.9% 

2 778 

8.6% 

22 091 

9.2% 

23 212 

9.3% 

24 291 

9.4% 

23 443 

8.8% 

115 

5.5% 

117 

5.2% 

98 

4.0% 

116 

4.5% 

1 426 

10.2% 

1 910 

12.8% 

1 541 

9.8% 

1 721 

10.1% 

5 374 

27.3% 

6 730 

31.5% 

6 237 

29.0% 

5 350 

25.8% 

4 577 

6.1% 

5 411 

6.8% 

5 252 

6.3% 

5 840 

6.9% 

14 852 

8.8% 

15 329 

8.6% 

14 428 

7.9% 

13 858 

7.4% 

553 

8.4% 

482 

6.9% 

553 

7.4% 

77 

1.0% 

36 852 

26.5% 

32 611 

23.3% 

32 415 

22.9% 

30 106 

21.3% 

47 

2.7% 

169 

9.4% 

171 

8.6% 

54 

2.7% 

309 

13.2% 

402 

15.7% 

277 

10.2% 

237 

8.3% 

Lithuania 

1 070 

26.1% 

1 116 

25.2% 

1 137 

24.4% 

1 048 

21.4% 

Luxembourg 

589 

15.8% 

226 

6.3% 

333 

8.5% 

267 

6.6% 

Hungary 

Malta 

1 748 

14.2% 

1 891 

13.9% 

1 261 

8.9% 

1 483 

9.6% 

244 

25.6% 

225 

21.7% 

203 

18.1% 

287 

23.5% 

Netherlands 

2 651 

5.3% 

3 190 

6.0% 

3 039 

5.5% 

2 660 

4.4% 

Austria 

Poland 

Portugal 

Romania 

Slovenia 

Slovakia 

Finland 

Sweden 

2 466 

8.3% 

2 605 

8.4% 

3 033 

9.4% 

2 895 

8.7% 

7 880 

20.3% 

6 810 

15.8% 

5 288 

11.6% 

5 379 

11.3% 

2 123 

11.9% 

1 847 

9.9% 

1 759 

9.0% 

1 609 

7.9% 

6 453 

37.0% 

6 797 

36.8% 

6 258 

32.7% 

7 411 

34.9% 

186 

5.3% 

142 

3.9% 

163 

4.1% 

298 

7.1% 

1 360 

20.0% 

1 206 

16.9% 

1 414 

18.3% 

1 313 

16.1% 

985 

4.8% 

1 320 

6.1% 

884 

4.0% 

1 228 

2.8% 

1 713 

3.7% 

1 483 

3.3% 

646 

597 

2.9% 

1.4% 

5 

 
Year 

2016 

2017 

2018 

2019 

Member  
State 

Mill EUR 

% 

Mill EUR 

% 

Mill EUR 

% 

Mill EUR 

% 

United Kingdom 

20 102 

10.7% 

20 714 

11.3% 

19 835 

10.5% 

17 176 

8.9% 

EU 

144 452 

12.1% 

145 698 

11.5% 

141 059 

11.1% 

134 436 

10.3% 

Source: European Commission (2021) – VAT gap in the EU  

25 out of 28 Member States include VAT gap estimates in their various methods of monitoring the level of 
inaccurate reporting (with the exception being Germany, Malta and Sweden). Fourteen Member States use both 
internal and Commission estimates, whereas eight Member States, namely Czechia, Ireland, Spain, Luxembourg, 
Hungary, the Netherlands, Austria and Portugal, rely on the EU figures alone. Bulgaria, Estonia and the United 
Kingdom use their internal estimates only. The Commission maintains the recommendation of the previous 
report that Member States should invest or continue investing in estimating their own VAT gaps and analyse 
them in more detail. Insights into the VAT gap allow national policymakers to gauge the impact of their policy 
measures and adjust them to increase VAT compliance. 

Some Member States (11/28) shared their internal VAT gap estimates. Generally, there were no significant 
differences (1–2 percentage points on average) between the internal estimates and those produced by the 
Commission. This demonstrates once again the accuracy of the annual figures published by the Commission. 

Almost all Member States consider the VAT gap studies and estimates to be beneficial for a better grasp of the 
level of inaccurate reporting of VAT obligations, but the degree of appreciation varies. It is worth noting that 
Member States that do not invest much in estimating the VAT gap consider this endeavour to be helpful, but to a 
lesser extent. 

Figure 3: Perceived usefulness of the VAT gap estimates in relation to the compliance work of tax 
administrations in the Member States 
Question 4.8: ‘To what extent the VAT gap studies/estimations helped your tax administration to better focus 
your future compliance work?’ 

4%

29%

21%

To a large extent
(BG, EL, HU, IT, PL, UK)

To a certain extent
(AT, BE, HR, CZ, DK, EE, IE, LV, LT, MT, RO, SK, ES)

To a little extent
(CY, FI, DE, LU, NL, PT, SI, SE)

46%

Not at all
(FR)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

2.2. 

The impact of VAT gap on own resources 

VAT own resources for the Union budget are levied on each Member State’s VAT base. The VAT bases are first 
harmonised in accordance with EU rules before the VAT own resource to be paid is calculated 10. The same 
percentage is then levied on the harmonised base of each Member State, which, however, is capped at 50% of 
the Member State’s gross national income (GNI)11. 

10 

11 

To minimise distortions due to diverging VAT rates and structures in the Member States, the VAT base is notionally harmonised for 
the purpose of own resource calculations. This harmonised VAT base is calculated by dividing the total annual net VAT revenue 
collected by each Member State by the weighted average rate of VAT to obtain the intermediate VAT base. The intermediate base is 
subsequently adjusted with negative or positive compensations. 
This rule is intended to avoid less prosperous Member States with higher shares of consumption paying amounts out of proportion to 
their own capacity to contribute (thus remedying the regressive aspects of the VAT-based resource), since consumption and, hence, 

6 

 
  
                                                      
The performance of VAT administration in Member States directly affects the EU’s revenues. Since net VAT 
revenue collected by each Member State is used to determine the harmonised base, the VAT gap influences both 
Member States’ revenue and the EU’s VAT own resource amounts. From a legal point of view, the European 
Court of Justice made a clear link between national VAT collection and the availability of the corresponding 
resources to the EU budget12. 

The share of VAT-based contributions has been declining over time and any drop in the VAT own resources 
must be compensated by a corresponding increase in GNI-based contributions13 that are paid by each of the 
Member States. 

The VAT gap figures in Member States can be regarded from different angles, such as the percentage of the gap 
or its size in absolute value, all of which render the same general picture of missing revenues. 

Figure 4: The VAT gap in the EU in average value over the reporting period 
a. VAT gap as percentage of VAT total tax liability (VTTL) 

b. VAT gap in Million EUR 

Source: European Commission (2021) – VAT gap in the EU 

2.3. 

VAT administration and compliance burden for businesses 

Although the principles of the VAT are harmonised, the rules can be enacted and implemented differently in 
different Member States so that the compliance burden on business varies considerably. 

The efficiency and effectiveness of tax administrations influence both the costs of tax administration to 
governments and the compliance costs for businesses. Since VAT constitutes a large part of the administrative 
burden for businesses, it is equally important to improve the quality of VAT administration. Assessing the 
administrative burden for VAT payers, however, is outside the scope of this report. 

Recommendation 1: Calculate and analyse the national VAT gap and its different components (missing 
trader intra-community fraud, e-commerce, etc.). 

3.  VAT registration and risk analysis 

The registration and numbering of taxpayers (businesses, individuals and other entities registered for VAT) 
represent a fundamental initial step in administering VAT, which strengthens key administrative processes if the 
information in the registration database is complete, accurate and up to date. On registration, VAT payers are 
included in national VAT databases. 

In the previous report, the Commission recommended that Member States: 

VAT tend to account for a higher percentage of a country’s national income at relatively lower levels of prosperity. Five Member States 
benefited from the 50% cap (Croatia, Cyprus, Luxembourg, Malta and Slovenia). 
Judgment of 26 February 2013, Åkerberg v Fransson, C-617/10, EU:C:2013:105, paragraph 26: ‘revenue from application of a uniform 
rate to the harmonised VAT assessment bases determined according to EU rules, there is thus a direct link between the collection of 
VAT revenue in compliance with the EU law applicable and the availability to the EU budget of the corresponding VAT resources, 
since any lacuna in the collection of the first potentially causes a reduction in the second’. 
The GNI-based resource is an additional resource that provides the revenue required to cover expenditure in excess of the amount 
financed by traditional own resources, VAT-based contributions and other revenue in any year. 

12 

13 

7 

 
 
 
                                                                                                                                                                      
 

 

 

invest more in assisting taxpayers, especially foreign, in fulfilling their VAT registration obligations 
(Recommendation 4); 
reflect on the allocation of VAT identification numbers and VAT Information Exchange System 
(VIES) registration numbers (Recommendation 5); 
verify the validity of VAT and VIES registration data in a more systematic way (Recommendation 6). 

3.1. 

Assisting taxpayers through better communication 

Since Member States were advised in the previous report to invest more in assisting taxpayers with their VAT 
registration obligations, a follow-up question was included to assess progress in this matter. Member States 
indicated in their answers that online registration is largely available, and that taxpayers are informed of the 
online registration and related obligations. 

Figure 5: Online information on VAT registration obligations 
Question 3.3: ‘Does the Tax Administration inform taxpayers about their VAT registration obligations and the 
registration procedure online? For instance via a web page, applications etc.’ 

4%

96%

Yes (27 Member States)

No (RO)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Figure 6: The availability of online registration in the EU Member States 
Question 3.8: ‘Is online registration …’ 

Non-mandatory, but possible
(AT, BG, HR, EE, FI, DE, EL, IT, LV, LU, PT, ES,
SE, UK)
Mandatory
(CZ, DK, HU, IE, LT, MT, NL, SK, SI)

Not possible
(BE, CY, FR, PL, RO)

14

9

5

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 2: Inform taxpayers online about their VAT-related obligations and provide for online 
registration. 

3.2. 

Completeness of the VAT-registered taxpayers database 

A balance needs to be found between, on the one hand, facilitating newly emerging economic activity through 
easy VAT registration and, on the other hand, fighting VAT fraud. Carrying out an economic activity in an EU 
Member State is possible with just an active VAT number, even without a permanent establishment there. 
Careful evaluation of applicants at the registration stage is therefore a critical step in the identification of 
potential fraud cases. 

Fighting VAT fraud can require the rejection of an application for a VAT number under certain conditions. The 
registration procedure should incorporate a risk analysis14 element based on information submitted by the 

14 

Ideally, the risk analysis should not have a large impact on the overall length of the registration process. It should take into account 
different realities in the Member State, such as the incidence of fraud, the availability and accuracy of third-party information, and the 
maturity of tax administration. Moreover, businesses should be able to clarify the rejection of their applications swiftly and to submit 
another application immediately, even if from an anti-fraud point of view it may be preferable that the tax administration ‘remembers’ 
the rejected applications. 

8 

 
 
  
                                                      
applicant at the registration stage, which is cross-checked with information obtained from third parties and, if 
necessary, filtered after a clarification process with the taxpayer. 

Member States should ensure that the information held in their VAT databases is complete, accurate and 
regularly updated. To achieve this, they should have a versatile IT registration subsystem that interfaces with 
other IT subsystems in the tax administration and allows them to suspend the receipt of VAT returns, issue 
reminders, estimate assessments and take other actions in respect of taxpayers who are temporarily inactive. 
They should be able to generate VAT registration-related management information and to examine regularly the 
extent to which the VIES database provides certainty of its validity. 

To determine the integrity of VAT registration databases, the Commission also inquired about the number of 
taxpayers, VAT and Mini One Stop Shop (MOSS) registration, the registration checks performed and the 
expected VAT declarations and revenue15. 

The previous report acknowledged that registration procedures are in place in the Member States and online 
registration is becoming increasingly popular. In addition, ‘one-stop-shop’ registration facilities are available in 
some Member States, and several offices such as chambers of commerce are involved in the VAT registration 
process. Member States were surveyed about the automatic exchange of information between tax administrations 
and different bodies in charge of business registration. 

Figure 7: Automatic exchange of information between tax administrations and other national bodies in 
charge of registration 
Question 3.2: ‘3.2. Is there an automatic exchange of information between the tax administration and these 
bodies [in charge of business registration, for example: chamber of commerce]?’ 

11%

No
(CZ, MT, UK)

21%

Yes, with some of them
(AT, HR, CY, HU, SK, ES)

68%

Yes, with all of them
(BG, DE, EE, FI, FR, DE, EL, IE, IT, LV, LT, LU, NL, PL, PT, RO,
SI, SE)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

To ensure the completeness and the accuracy of VAT databases, greater integration of relevant databases and a 
real exchange of information between national actors involved are essential. 

Recommendation 3: Improve automatic exchange of information between tax administrations and other 
national bodies. 

Member States’ registration databases should contain minimum information about the taxpayer to meet the 
standard of being complete and accurate. Most of the relevant details on taxpayers should be in the VAT 
database from the moment of registration. 

15  Although the accuracy and reliability of the information received in the survey cannot be determined, the comparison of the answers 

and the yearly variation in the data offer valuable insights in several areas; for example, if taxpayers’ data is cleaned of inactive or 
duplicate records, if dormant records are identified, and if the IT system provides a complete view of taxpayers’ data to frontline staff 
and valuable arguments for management action. If there is no variation in taxpayers’ data over the years, if the information is missing 
or not available, or if the values are implausible, it may be an indication that the VAT registration database is corrupted or at least 
unreliable. 

9 

 
  
                                                      
Figure 8: Information required for new VAT registration in the EU Member States 
Question 3.4: ‘Which information is required when registering a new taxable person (MOSS excluded)? 
(Multiple answers possible)’ 

Taxpayer's full name
(all Member States)

Nature of business activity (NACE
sector)
(all Member States except SI)

Business and postal address
(all Member States except SK)

Contact details
(all Member States except IT, PL, SE)

Date of registration
(AT, HR, CY, CZ, DK, FI, FR, EL,
HU, IE, IT, LT, LU, MT, NL, PL, PT,
RO, SI, ES, UK)
VAT obligations applicable
(AT, BE, HR, CY, DK, EE, FI, FR,
DE, EL, HU, IE, LT, LU, PL, PT,
RO, ES, SE, UK)
Identity of associated entities
(AT, DE, CY, DK, EL, HU, HR, IE,
IT, LT, NL, PT, SI, UK)

Taxpayer segment
(LU, LT, SI, AT, ES, BE, DK, HR,
PT)

28

27

27

25

21

20

14

9

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Generally, the databases of VAT-registered taxpayers are well maintained in the Member States. They include 
most of the relevant details on taxpayers, and the information contained is adequate for effective interaction with 
them. Most Member States (24/28) require the majority of the information fields when registering a new VAT 
payer. Ten Member States, namely Denmark, Ireland, Greece, Croatia, Cyprus, Lithuania, Hungary, Austria, 
Portugal and the United Kingdom, included all the fields. Most Member States that do not include the minimally 
required fields in their database require other fields or substitute information such as bank account details, 
expected turnover, identification data of the legal representative(s), financing sources and data on employees. 
Efficiency gains could be achieved by integrating those fields at the moment of registration, ensuring that they 
appear immediately in the database. This would save national tax administrations from having to obtain 
additional information through individual queries. 

Recommendation 4: Maintain an accurate and complete VAT database. 

Analysis revealed no systematic correlation between the VAT gap and indicators such as the number of 
registered taxpayers, the number of VAT-registered businesses and the information requested at the registration. 
There may be a slight correlation between the size of the VAT gap and the average value of VAT collection per 
taxpayer. Member States with the highest value of revenue per VAT-registered taxpayer (Luxembourg, Ireland, 
Denmark and the United Kingdom) appear to have a relatively lower VAT gap. 

Figure 9 shows the extent to which Member States perform VAT registration checks and verify if registration 
applications are authentic and if applicants meet the legal requirements for registration. 

10 

 
  
Figure 9: Verifications and preliminary checks regarding VAT registration 
a. Question 3.5: 'Which information is required when registering a new taxable person (MOSS excluded)? 
(Multiple answers possible)' 

Verification of the applicant's identity
(all Member States except CZ and ES)

Legal verification
(AT, BE, HR, CY, DK, EE, FI, FR, DE, EL,
HU, IE, IT, LV, LT, LU, PL, PT, SK, SI)
Other preliminary checks
(AT, BE, BG, HR, CZ, DK, HU, IE, LV, NL,
PL, RO, ES, SE)

26

20

14

b. Question 3.6: ‘Does your Tax Administration carry out preliminary checks before VAT registration?  
(Multiple answers possible)’ 

Yes, based on risk indicators
(AT, BE, BG, DK, EE, ES, FI, FR, IE, LU,
LV, MT, NL, PL, RO, SE, SI, SK, UK)
Yes, systematically
(AT, BE, BG, ES, DK, FI, DE, HR, HU, LT,
LU, SE, SI, SK, UK)
Yes, including visits on the spot/to premises
(AT, BE, BG, CZ, DK, DE, IE, LV, LU, MT,
PL, SK, SI)
Yes, other preliminary checks
(HR, CZ, FR, IE, MT, NL, SK, ES)

Yes, coccasionally
(EL, MT)

No
(CY, IT, PT)

8

2

3

19

15

13

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

In general, Member States use risk indicators; verifications are carried out systematically and can include visits 
to the premises of a taxpayer if needed. Procedures are in place to ensure that applications for registration are 
authentic and that applicants meet the legal requirements. 

However, Greece, Italy, Cyprus, Malta and Portugal could benefit from more consistency in the preliminary 
checks. Czechia and Spain are advised to better verify the applicant’s identity (ID), while Bulgaria, Czechia, 
Spain, Malta, the Netherlands, Romania and Sweden may want to revisit their provisions on legal verification of 
VAT registrations. 

Some Member States reported other preliminary verifications. These are based on different sources such as desk 
research, public information, pre-registration site visits and criminal records. Information requests to other 
national agencies, interviews/meetings with directors or their authorised representatives, or using dedicated 
questionnaires for risk assessment are also common practice. A good practice could also be to ensure the 
interoperability between taxation and customs risk criteria relevant to VAT (e.g. signals related to customs 
procedure 42 could also relate to VAT fraud risk). 

Several answers referred to administrative and international cooperation as an additional source of verification. 

Recommendation 5: Perform legal and ID verifications and systematic preliminary checks based on risk 
indicators. 

The percentage of VAT registration requests refused offers some indication of the quality of the risk assessment 
process and varies from 0% in Italy to > 20% in Latvia and Lithuania. Member States with a low rate of refused 
VAT registrations tend to have a higher VAT gap, and those with a higher rate of refusals tend to perform better 
in this respect. Italy and Greece, for example, replied ‘zero’ and ‘data not available’, respectively; in Romania 
the total share of refused VAT registrations went down from 14.5% in 2016 to 2.2% in 201916. 

16 

Two other Member States displayed the same trend as Romania in refused registrations between 2016 and 2019: Bulgaria (from 22.8% 
to 11.1%) and the United Kingdom (from 11.8% to 4.4%). While Romania has an estimated VAT gap of > 33%, Bulgaria and the 
United Kingdom have estimated gaps of 10% and 12%, respectively. 

11 

 
  
  
                                                      
Member States may benefit from building an institutional memory of registration requests, especially of rejected 
ones, to improve knowledge of an applicant’s legitimate interest in performing an economic activity, and 
capacity to perform it. 

Figure 10: Record of applicants to whom registration has not been granted 
Question 3.7: Does your administration keep a record of applicants for whom registration has not been 
granted? 

Yes
(AT, BE, BG; CZ, DE, DK, ES, FR, HU, IE,
LT, LU, LV, MT, NL, PL, SI, SK, UK)
No
(CZ, EE, EL, FI, IT, PT, RO)

No, the legislation does not allow it
(HR, SE)

2

7

19

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Most Member States (19/28) keep a record of applicants to whom registration has not been granted. All Member 
States should adopt this good practice, considering a change of the national legislation if needed. 

Recommendation 6: Keep a record of applicants to whom registration has not been granted. 

Most Member States cross-check the information held in the VAT registration database against third-party 
information sources, such as other government registries, to improve the integrity and accuracy of their 
databases. This is a good practice, and Member States should follow the example of Denmark, Estonia, Ireland, 
Greece, France, Croatia, Latvia, Lithuania, Luxembourg, Romania and Sweden. 

Figure 11: Third-party cross-check of VAT registration information 
Question 3.9: ‘Is the information held in the VAT registration database crosschecked against third party 
information sources (e.g. other government registries such as the registrar of companies) to ensure that the 
information held is up-to-date?’ 

Yes, cross-checks are carried out on a large scale,
using automated processes
(HR, DK, EE, FR, EL, IE, LV, LT, LU, RO, SE)
Yes, on a routine basis
(BE, BG, NL, PT, SK, SI, ES)

Yes, on an ad hoc basis
(CY, CZ, DE, IT, MT, PL)

No
(FI, HU)

10

8

6

2

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 7: Cross-check the information held in the VAT registration database against third-
party information sources. 

In addition, the Commission sought to find out more about the existence and the type of processes used to detect 
businesses and individuals who are required to register but fail to do so, and, equally importantly, the results 
generated by these processes. The tax administrations that replied ‘Yes’ to the first question have different 
processes in place to detect unregistered businesses. 

12 

 
  
  
Figure 12: Processes to detect taxpayers who fail to register and the economic sectors with a significant 
number of unregistered businesses 
Question 3.11.a: ‘Please specify which type of initiatives your tax administration used.  
(Multiple answers possible)’ 

Third party information
(AT, BE, BG, CY, FI, FR, DE, EL, ES, HR, HU,
IE, IT, LT, LU, LV, PT, SE, SK, UK)

A program of inspections of business premises and
tranders, including unannounced visits to
commercial districts to detect unregistered
businesses
(AT, BE, BG, CY, DE, EL, ES, FI, FR, HR, HU,
IE, IT, LT, MT, PT, RO, SE, SK, UK)

Other initiatives
(AT, BE, BG, CZ, DK, EE, ES,  FR, IE, LV, NL,
PL, PT, SE, SI, SK)

20

20

16

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Figure 13 provides more information on the economic sectors concerned. 

Figure 13: Processes to detect taxpayers who fail to register and the economic sectors with a significant 
number of unregistered businesses 
Question 3.11.b: ’For which economic sectors did your tax administration identify a significant number of 
unregistered businesses based on those initiatives? (Multiple answers possible)’ 

Accomodation and food service activities
(AT, BE, BG, CY, CZ, DE, EL, ES, HR,
HU, IE, IT, LT, LU, LV, MT, PT, RO, SE,
SK)
E-commerce, as part of retail trade
(AT, BE, BG, CY, FI, FR, DE, EL, ES, HR,
HU, IE, IT, LT, LU, LV, MT, PT, RO, SE)

Construction
(AT, BE, BG, CY, DE, ES, FI, HR, IE, IT,
LT, LU, LV, MT, RO, SE, SK)

Wholesale and retail trade, repair of motor
vehicles and motorcycles
(BE, BG, CZ, DE, EL, ES, HR, HU, IT, LT,
LU, LV, PT, RO, SK)
Transporting and storage
(AT, BE, DE, ES, FI, IT, LU, LV, RO, SE)

Agriculture, forestry and fishing
(BE, BG, DE, ES, HR, IT, LV, PT, RO)

Professional, scientific and technical
acvitivies
(BE, DE, HR, IE, IT, LV, RO, SK)

Manufacturing (BE, BG, DE; IT, LV, RO)

Other sectors
(BE, DE, EE, EL, ES, FR, LV, SE)

No sector
(DK, NL, PL, SI, UK)

20

20

17

15

10

9

8

8

6

5

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

13 

 
  
  
Recommendation 8: Have in place processes to detect taxpayers who fail to register and focus on the 
specific economic sectors with a significant number of unregistered businesses. 

As noticed in the previous report, Member States are gradually moving towards a registration procedure based 
on risk assessment. To assess if this causes significant delays for taxpayers applying for VAT and VIES 
registration numbers, the time needed for processing a request was compared with the data from the previous 
period. 

Figure 14: Time (days) needed to obtain VAT and VIES registration numbers in EU Member States 
Question 2.2.g: 'Minimum days needed for obtaining a …' 

4,7

3,4

4,4

3,5

3,5

2,6

5

4

3

2

1

0

2,5

1,9

2,3

1,9

2,3

1,9

2,1

1,9

… VAT number (TIN)

… VIES number

2013

2014

2015

2016

2017

2018

2019

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

The longer-period view validates previous findings: the risk assessment approach does not significantly delay the 
registration process, and tax administrations are moving towards consolidating the VAT identification number 
and VIES registration number in a unique identifier. 

Recommendation 9: Integrate a risk assessment procedure in the registration process. 

The VAT system exempts intra-EU supplies of goods from VAT in the Member State of supply when they are 
made to a taxpayer located in another Member State. The Member State where a taxpayer is located will account 
for the input VAT. Therefore, any taxpayer making such supplies must be able to check that their customers in 
another Member State are taxable persons and hold a valid VAT identification number. 

For that purpose, each tax administration maintains an electronic database containing the VAT registration data 
of traders located in the Member State, including the VAT identification number, the trader’s name and the 
trader’s address. The computerised VIES was set up to allow national tax administrations to exchange data on 
intra-EU supplies. Taxpayers can consult VIES-on-the-Web to obtain confirmation of the VAT numbers of their 
trading partners. 

To assess their response to the recommendation of more systematic verification of the validity of the VAT and 
VIES registration data, Member States were asked about the existence of a follow-up check after VIES 
registration. 

14 

 
  
Figure 15: Follow-up check on VIES registration numbers in EU Member States 
a. Question 3.12: 'Is there a follow-up check on its validity after the VIES registration?' 

29%

21%

Yes, systematically
(AT, BG, CZ, EE, ES, FI, FR, HR, HU, IT, LT, LV, PL, PT, RO, SI, SK)

Yes, occasionally
(BE, EL, IE, LU, MT, NL)

No
(CY, DE, DK, SE, UK)

46%

b. Question 3.13: ‘Does your tax administration remove the VIES identification number from the VIES system in 
case of fraud?’  

29%

71%

Yes
(AT, BE, CY, CZ, DK, EL, ES, FR, HR, HU, IE, IT, LT, LU, LV, MT,
NL, PT, RO, SI)
No
(BG, DE, EE, FI, PL, SE, SK, UK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

According to Article 22 of Council Regulation (EU) 904/2010, Member States are obliged to conduct post-
registration controls if they have only preliminary checks before registration. Only a minority of Member States 
(18%) responded that they do not verify these data, compared with > 30% of the tax administrations that did not 
implement post-registration control procedures in the previous report. 

Twenty Member States have provisions in place allowing the removal of the VIES number in the event of fraud, 
which the Commission considers good practice. Denmark and Cyprus indicated that they do not verify the 
validity of the VIES number after registration, and Bulgaria, Estonia, Poland, Slovakia and Finland indicated that 
they do not remove the VIES numbers in cases of fraud. Germany, Sweden and the United Kingdom indicated 
that they do not verify the validity of the VIES number after registration and do not remove the VIES number in 
the event of fraud. 

Member States are advised to follow the example of the majority. The VAT system supports the EU internal 
market, and the VAT fraud chain is usually long and involves two or more countries; sometimes it is necessary 
to act against the internal traders to prevent the VAT fraud from being ‘exported’ to another Member State. 

Recommendation 10: Perform a follow-up check on VIES registration numbers and analyse the possibility 
of the suspension or removal of the VIES number in the event of fraud. 

A successful tax administration should monitor the VAT registration process and evaluate the outcome of its 
VAT compliance measures. The IT plays an essential role here, assisting tax administrations in the cross-
checking of data, risk detection and analysis. Therefore, the registration information should be linked to other IT 
subsystems, such as filing and payment, collection and audit, and generate management information that 
supports the decision-making process. 

15 

 
 
  
  
Figure 16: Analysis of the main components of the registration IT subsystem 

Question 3.15.a: 'Does the tax administration
VAT registration IT sub-system interfaces
with other IT sub-systems (e.g. filing and
payment processing)?' - 'Yes'
(No: CY, CZ, EE, MT)

Question 3.15.c: 'Does the tax administration
registration IT system generate VAT
registration-related management information
(e.g. statistics of registered taxpayers by
entity type, location, and economic sector)?' -
'Yes'
(No: AT, CY, EE, MT, PL)

Question 3.15.d: 'Does the tax administration
management examine regularly the extent to
which the VIES database provides certainty
as to the validity of the VIES identification
number of VAT taxpayers?' - 'Yes'
(No: DK, FR, HR, LT, NL, SE, UK)

Question 3.15.b: 'Does the tax administration
IT sub-system allow to suspend the receipt of
VAT returns and the issuing of reminders,
estimated assessments and other actions in
respect of dormant taxpayers?' - 'Yes'
(No: BG, CZ, EE, HR, IT, NL, SE, SI)

24

23

21

20

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Since the Commission cannot directly assess the interconnection of internal subsystems, Member States were 
asked if the VAT registration IT subsystem of their tax administration interfaced with other IT subsystems. The 
majority (90%) confirmed that it did; only in Czechia, Estonia, Cyprus and Malta is such an interface not 
available. 

Moreover, Denmark, Estonia, Ireland, Greece and Croatia answered ‘Yes’ to most of the questions aimed at 
identifying an effective IT subsystem of VAT filing and processing, while Bulgaria, Czechia, Italy, Malta, the 
Netherlands and Poland indicated that they have a system with fewer components in place. 

Recommendation 11: Link the IT registration information system with other subsystems of the tax 
administration, such as filing and payment, collection and audit. 

Regarding good practice in registration, the general observation is that Member States tend to advance towards 
an integrated system of risk assessment and to create an online interface for taxpayers to report any change in 
their data immediately. 

Recommendation 12: Allow VAT payers to access, visualise and modify their VAT-relevant data via a 
secure online connection. 

4.  VAT, information technology and new technologies 

4.1. 

E-commerce 

E-commerce makes trading more accessible but also offers some opportunities for fraud. The European Court of 
Auditors noted that ‘many of the challenges of collecting VAT… remain to be resolved’ and asked the 
Commission to ‘monitor the functioning of the intra-EU distance sales of goods and of Mini One Stop Shop 
(MOSS)’ 17. 

17 

European Court of Auditors, Special Report No 12/2019 https://op.europa.eu/webpub/eca/special-reports/e-commerce-12-2019/en. In a 
continuous effort of modernising VAT for cross-border e-commerce, the Mini One Stop Shop was extended from 01.07.2021 to include 
all cross-border transactions. This builds on the successful launch of the single VAT return for B2C digital services in 2015, referred to 
as the MOSS return. 

16 

 
  
                                                      
Tax administrations should know their taxpayers and keep records of the businesses supplying goods and 
services to customers (business to consumer) online. However, only half of the Member States (Belgium, 
Bulgaria, Czechia, Denmark, Ireland, Greece, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Austria 
and Slovakia) confirmed that they keep a record of the number of VAT-registered taxpayers selling goods or 
services online. 

Figure 17: Member States that keep a record of the VAT-registered taxpayers selling online 
Question 3.14: ‘Does your tax administration keep record of the number of VAT registered taxpayers selling 
goods or services via the internet?’ 

No
(DE, EE, ES, FI, FR, HR, MT, NL, PL, PT,
RO, SE, SI, UK)

No, we have estimates only
(BE, CY, CZ, HU, IE, LT, LU, SK)

Yes
(AT, BG, DK, EL, IT, LV)

14

8

6

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Moreover, the numbers (or the estimates) of e-commerce taxpayers vary significantly from > 10 000 in Bulgaria, 
Czechia, Greece and Latvia to < 100 in Italy (71), Belgium (25) and Austria (5). 

Recommendation 13: Create or maintain a register of e-commerce taxpayers. 

4.2. 

Mini One Stop Shop 

The VAT MOSS is an optional scheme for taxpayers that allows them to account for VAT in only one EU 
Member State instead of multiple EU Member States. It applies to cross-border telecommunication, television 
and radio broadcasting, and digital services to non-taxable persons. The MOSS18 allows operators of such 
services to submit their VAT returns and to pay the applicable VAT due to a number of EU Member States 
(Member States of consumption (MSCs)) through an online system in one of the EU Member States (Member 
State of identification (MSI)). 

Figure 18: MOSS total amounts 2019 (Union and non-Union schemes) in the EU Member States  
b. Member State of identification 
a. Member State of consumption 

Annotation:Values are in EUR million 
Source:   European Commission (2021) – Monitoring of the Mini One Stop Shop 

The launch of MOSS in 2015 was a success. Because of the differences between the Member State of 
Identification and Member States of Consumption, a high level of trust on all sides is essential for its 

18 

EU-based businesses that would like to opt for the MOSS online platform have to register in the country in which they are established 
or have their head offices. Non-EU businesses can use the MOSS system of a Member State in which they have fixed establishments. 
Only a single MOSS registration per company is allowed across the entire EU. 

17 

 
  
 
                                                      
functioning. This trust builds on the diligence of the Member States, especially in their communication 
(preferably by a dedicated channel) with businesses using the scheme, in the registration process (checks on 
traders before they register for MOSS)19 and in controls (which can lead to deregistration, e.g. of inactive taxable 
persons). 

Figure 19: MOSS – VAT registration verifications 
Question 2.4: ‘What kind of registration checks for MOSS purposes are systematically performed in your 
country (as Member State of identification)? (Multiple answers possible)’ 

26

Contact details
(all Member States except AT and
EL)

Date of incorporation/registration
(BE, BG, CY, DK, EE, FI, FR, HU,
IE, IT, LV, MT, NL, PL, PT, RO, SE,
SI, SK)

Nature of activity and/or economic
sector classification
(BE, CZ, DE, DK, FI, FR, IE, IT, LT,
LU, MT, NL, PL, PT, SE, SI, SK)

VAT filing and payment obligations
applicable
(AT, BE, CY, EE, ES, FR, HR, IE,
LU, MT, PL, SE)

Identity of associated entities and
related parties of the taxpayer
(AT, BE, DK, LT, LU, LV, PL, SE)

Taxpayer segmentation (e.g. by size)
(NL, SE)

2

Other preliminary checks
(BE, BG, DE, EL, ES, FI, HU, IE,
LU, LV, MT, PL, RO, SE, SI, SK,
UK)

12

8

19

17

17

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Figure 20: MOSS – dedicated information channels 
Question 4.4: ‘Taxpayer services: Your tax administration … has a dedicated information channel’ 

25%

75%

Yes
(BG, CY, CZ, DE, DK, EE, EL, ES, FR, HR, HU, IE,
IT, LT, LU, LV, MT, PT, RO, SI, SK)
No
(AT, BE, FI, NL, PL, SE, UK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Most Member States require only basic data, such as contact details (taxpayer’s full name, business and postal 
address, etc.), date of incorporation/registration, nature of the activity and economic-sector classification. 
Therefore, they sometimes have only limited knowledge of MOSS-registered businesses. 

19 

In Special Report No 12/2019, the European Court of Auditors recommends that by the end of 2020 the Member States ‘perform the 
necessary checks, when receiving a registration request for the non-EU scheme of MOSS’ and ‘increase their audit activity on MOSS 
traders’. 

18 

 
  
  
                                                      
Seventeen Member States (Belgium, Bulgaria, Germany, Ireland, Greece, Spain, Latvia, Luxembourg, Hungary, 
Malta, Poland, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom) gather other 
information, such as: 

 
 
 
 
 

previous registrations and use of the MOSS scheme; 
queries about persons deregistered owing to change of MSI; 
search by identification number for multiple registrations (more than one Member State); 
verification of whether or not the business has a fixed establishment in the country; 
bank account data, etc. 

Some Member States (Slovenia, Sweden and the United Kingdom) also check the existence of a web page or 
other means of distributing electronic services, third-country public registries and the type of supply. 

Recommendation 14: Set up a dedicated information channel for MOSS and systematically perform 
preliminary registration checks for MOSS purposes. 

Member States’ answers reveal that the number of MOSS-registered businesses increased over 2016–2019 as 
regards the Union scheme. The relative growth of the non-Union scheme was more substantial, as it also reflects 
the base effect representing the small registration numbers at the start of the analysed period. Lately, the 
ascending trend of MOSS-registered taxpayers appears to be reversed, which could indicate greater rigour in the 
deregistration of inactive taxpayers. 

Figure 21: MOSS – development of registration/deregistration at EU level (2016–2019) 
a. Union scheme 

15 000

12 000

9 000

6 000

3 000

 0

9 108

836

444
2016

b. Non-Union scheme 

10 502

1 305

698

2017

12 163

11 966

2 806

1 873

1 854

1 320

2018

2019

1 000

 750

 500

 250

 0

552

142

563

206

670

146

44
2016

52

2017

52

2018

783

134

115

2019

Source:  European Commission (2020) – VAT MOSS statistics 

5 000

4 000

3 000

2 000

1 000

 400

 300

 200

 100

MOSS registration
(left axis)

MOSS deregistrationg upon request
(right axis)

MOSS deregistrationg "ex officio"
(right axis)

MOSS registration
(left axis)

MOSS deregistrationg upon request
(right axis)

MOSS deregistrationg "ex officio"
(right axis)

However, the development at Member State level looks different: some countries, such as Estonia and the 
Netherlands, saw a significant increase over the period, while others, such as Germany, Ireland, France, Poland 
and Slovakia, saw a decrease in their MOSS registrations. 

19 

 
  
  
Figure 22: Individual evolution of MOSS registrations in the EU Member States 

150%

100%

50%

0%

-50%

-100%

AT BE BG HR CY CZ DK EE FI FR DE EL HU IE IT LV LT LU MT NL PL PT RO SK SI ES SE UK EU

Union scheme

non-Union scheme

Annotation: Columns compare MOSS registrations in 2019 with the average of MOSS registrations during the period 2016–2019 
Source:  European Commission (2020) – VAT MOSS statistics 

MOSS deregistration takes place at either the request of the taxpayer or the initiative of the tax administration. 
The latter offers a good indication of the efforts of tax administrations to maintain the accuracy of the MOSS 
database. The answers from the Member States show limited progress in this area, especially towards the end of 
the period analysed. 

Figure 23: MOSS deregistration 

50%

40%

30%

20%

10%

0%

Request by taxpayer

Ex officio

EU average 
(request by taxpayer)

EU average 
(Ex officio)

AT BE BG CY CZ DE DK EE EL ES FI FR HR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK

Annotation: Columns indicate the share of deregistrations in total number of registered businesses, average during the period 2016-2019. 
Source:  European Commission (2020) – VAT MOSS statistics 

The figures, however, vary significantly. Almost half of the Member States (Denmark, Estonia, Greece, Croatia, 
Italy, Lithuania, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden) appear to be doing no 
MOSS ex officio deregistration at all; the others (especially Belgium, Spain, Czechia, France, the United 
Kingdom, Cyprus, Ireland and Latvia) are cleaning their MOSS databases through ex officio deregistration. 

Recommendation 15: Increase efforts to keep the MOSS database accurate. 

Not all registrations translate into audits. By corroborating the answers with other internal data sources available, 
it clearly appears that Member States are not auditing MOSS-taxable persons. 

20 

 
 
 
Figure 24: Number of VAT audits carried out on MOSS-taxable persons in 2019 

15

10

5

0

As a MSC on Non- Union Scheme
As a MSC on Union Scheme
As a MSI on Non- Union Scheme
As a MSI on Union Scheme
Average

AT BE BG CY CZ DE DK EE EL ES FI FR HR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK

Source:  European Commission (2020) – VAT MOSS statistics 

The number of audits of MOSS-registered taxable persons in EU Member States is very low, totalling only 47 in 
2019 in both the Union and non-Union schemes as MSI and MSC, while the median for the EU is zero. This 
means that audit is currently the exception in a general ‘non-auditing of MOSS’ reality at EU level. 

Only Belgium (7 audits as MSI and 4 audits as MSC on Union scheme), Denmark (14 audits as MSC on non-
Union scheme), Finland (7 audits as MSI on non-Union scheme) and Spain (5 audits as MSC on Union scheme) 
reported some activity in the area. The vast majority of Member States (16/28) did not perform any MOSS audits 
in 2019. Some explained that they were not in a position to provide a figure because they operate a fully 
integrated risk analysis and compliance management regime for all taxes, so MOSS audits are not separately 
identified in the national statistics. 

Recommendation 16: Improve the audit activity on MOSS-registered businesses. 

4.3. 

Digitalisation, information technology and data analytics 

In the previous report, the Commission recommended that Member States increase the digitalisation and 
automation of tax administrations and exchange/sharing of data (Recommendations 2 and 11). As a follow-up, 
Member States were asked about a major IT improvement (e.g. digitalisation projects, new functionalities) in 
their tax administration during 2016–2019. 

The majority of Member States answered positively, which appears to correlate with individual performance in 
(1) average VAT gap reduction and (2) average increase in VAT revenue over the same period. 

21 

 
 
Figure 25: Major IT initiatives and average VAT performance in EU Member States (2016–2019) 
a. Question 1.10: ‘Has there been any major IT improvement (e.g. digitalisation projects, new functionalities) in 
your Member State’s tax administration (2016–2019 period)?’ 

25%

Yes
(BE, BG, CY, CZ, DE, DK, EE, EL, ES, FI, FR, HR, HU,
IE, IT, LT, LU, LV, MT, PL, PT, RO, SI, SK, UK)

75%

No
(AT, NL, SE)

b. Major IT initiative (‘Yes’/’No’) vs. change in VAT revenues and in VAT gap 

VAT revenue (increase in %)

VAT gap (decrease in %points)

Yes

No

-3,5

-0,9

6,3

4,6

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

-6

-4

-2

+0

+2

+4

+6

+8

It appears that IT improvements achieve a more consistent reduction of the VAT gap and a greater increase in 
VAT revenue. The Member States that indicated a major IT improvement were almost four times more 
successful in reducing the VAT gap over the same period. 

The average increase in VAT collection of Member States indicating major IT improvements was 37% more 
over the analysed period. However, the data include the influence of the base effect (Member States were not at 
the same level of IT development at the beginning of the analysis, so some had more room for major 
improvements) and other parameters such as changes in VAT rates over the period. 

The econometric models constructed in previous VAT gap studies (2018, 2020) indicate statistical significance 
of the share of IT expenditure in explaining the size of the VAT gap. According to the estimation results of the 
baseline specification, a decrease in the VAT gap by 1 percentage point requires an increase in the share of IT 
expenditure in the overall expenditure of tax administrations of roughly 5.4 percentage points.  

However, IT expenditure is not a silver bullet, and its influence has limitations: at a certain level, increased 
investments in IT have no more positive impact. A concave relationship between the share of IT expenditure and 
the VAT gap can be observed. Indeed, the gains start vanishing when the IT expenditure is approximately 9.8% 
of the total expenditure of the tax administration. 

Based on the data received from tax administrations and other sources (OECD), the share of total IT expenditure 
(investment and maintenance) adjusted to VAT collection was greater for 10 Member States: Ireland, Finland, 
Latvia, Hungary, Lithuania, Bulgaria, Czechia, Malta, Italy and Poland (for the purpose of analysis clustered in 
an ‘IT expenditure group’). 

22 

 
 
 
Recommendation 17: Invest in substantial IT upgrades, while maintaining existing IT systems based on 
overall needs analysis. 

Figure 26: Change in VAT gap (p.p.) and VAT revenue increase (%) (2016–2019) 
Top 10 ‘IT expenditure group’ compared with EU average 

VAT revenue (increase in %)

4,7

8,5

VAT gap (decrease in %points)

-2,3

Other EU Member State

-4,9

Top 10 IT expenditure group

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

-6

-4

-2

+0

+2

+4

+6

+8

If the analysis is repeated for the total IT expenditure over the period, the top 10 Member States investing 
more in IT did significantly better in both VAT revenue (81% greater increase) and VAT gap (double decrease 
in percentage points). Again, IT expenditure and especially IT investment are not linearly distributed and can 
vary considerably over the years. 

The digitalisation of tax administrations includes two main components: expenditure on IT (investment and 
maintenance) and people (IT experts). The average increase in human resources dedicated to IT in the EU was 
13% during 2016–2019, with Bulgaria, Hungary, Finland, Romania and Spain being above the average number 
of IT staff (in full-time employment). Cyprus, Croatia, Estonia, Spain, Sweden and especially Poland registered 
significant increases in the number of IT staff over this period. However, it is impossible to perform an 
assessment of IT skills, although tax administrations could benefit from such an exercise to calibrate their 
strategies. 

EU Member States use different IT development models, in-house or outsourced, depending on several internal 
factors and decisions. Neither model is ideal, both having advantages and disadvantages in terms of time, risks 
and costs (e.g. when tax administrations use in-house IT developers, they incur the entire risk in terms of their 
abilities, whereas with an external developer they do not). 

In general, tax administrations are increasing the IT expenditure and the hiring of IT experts, an investment that 
usually pays off. The Commission therefore maintains its previous recommendation to increase the level of 
digitalisation and to invest in data automation and data exchange. 

As stated in the previous report, Member States could also benefit from closer cooperation and co-investing in 
compatible IT solutions that prevent the duplication of efforts and systems and allow reductions in IT costs20. 

Recommendation 18: Invest in IT staff with a view to improving both their number and their skills. 

To achieve a consistently high level of compliance, Member States balance and combine two elements in a sort 
of ‘carrot and stick’ approach: improvement of services offered to compliant taxpayers (‘the carrot’) and 
identification and correction of non-compliant taxpayers (‘the stick’). These two strategic courses of action have 
one thing in common: data. Effective use of data supports faster, fairer and more informed decisions, the 
delivery of better services to taxpayers and the detection of non-compliant taxpayers. 

The analysis in the section below starts with (1) the tax administration’s compliance management plans, then 
moves on to (2) taxpayers’ services and ends with (3) data used by the tax administration for VAT compliance. 

20  Under the Fiscalis 2020 programme, the Commission established an ‘IT Catalyst Group’ (FPG/037) to translate the clear interest in IT 

collaboration among Member States into a new way of working together towards delivering IT systems more efficiently and 
effectively. The group enabled Member States to become informed about current and future IT activities, to promote IT collaboration 
by Member States, and to launch new collaborative IT projects and initiatives. 

23 

 
 
                                                      
4.4. 

Compliance management plans 

VAT administration should start with a good compliance plan. A taxpayer compliance program is ‘a high-level 
plan, which brings together in a single document a description of the most significant compliance risks identified 
in the tax system and sets out the broad detail of how the revenue agency intends to respond to those risks’ (IMF, 
2010)21. 

In the previous report, the Commission recommended that the Member States ‘should ensure that their audit 
strategy is part of an overall (VAT) compliance strategy and not a stand-alone approach’. Assessing if Member 
Sates meet this requirement depends on the existence of such a document, its approval at the appropriate senior 
level and its integration with the annual operational planning of the tax administration. 

Figure 27: VAT compliance plans in the EU Member States 
Question 4.1: ‘Does your tax administration have a compliance improvement plan?’ 

28%

61%

Yes, the plan is approved at senior level
and integrated with the annual operational planning
(AT, BE, BG, CY, DK, EL, ES, FI, HR, IE, LT, MT, NL, RO, SE, SK, UK)

Yes
(CZ, EE, FR, HU, IT, LV, PL, SI)

11%

No
(DE, LU, PT)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Having a compliance plan in place is one of the steps in the right direction. However, what is in the plan is even 
more important for the VAT management process. The Commission asked for more information about the 
inclusion of the most significant VAT compliance risks and responses, audit plans, mitigation actions and other 
elements in the Member States’ compliance plans. The findings are summarised in Figure 28. 

Figure 28: Tax compliance plans in the EU Member States (content) 
Question 4.1.a. ‘The tax compliance plan of your tax administration … (Multiple answers possible)’ 

… explains how the tax administration intends to 
respond to tax compliance risks

… contains dedicated actions addressed to the key 
taxpayer segments

… describes the most significant compliance risks 
identified in the tax system (including risks for 
VAT compliance)

… links with the audit strategy / annual audit 
programme

… makes use of a cooperative compliance 
approach towards taxpayers

… includes planned mitigation actions in respect of 
VAT compliance risks

… contains risks associated with the registration, 
filing, payment, and accurate reporting in 
declarations

… covers also less serious risks

20

19

19

17

16

16

15

14

… is public and available to taxpayers

8

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

21  

https://www.imf.org/external/pubs/ft/tnm/2010/tnm1017.pdf  

24 

 
 
  
                                                      
Based on the responses to the questions regarding their compliance plans, eight Member States indicated that 
their compliance plans are fully transparent/public and available to taxpayers. Six of these Member States 
(Ireland, Spain, Croatia, Italy, the Netherlands and Slovakia) went further with this transparency exercise by 
making the documents publicly available. Moreover, some EU Member States, such as Bulgaria and Spain, 
include all the above elements in their plans. At the same time, Germany, Luxembourg and Portugal answered 
‘No’ to the question ‘Does your tax administration have a compliance improvement plan?’ 

Recommendation 19: Mitigate risks through a compliance management plan that includes the main 
compliance threats and monitor its implementation on a regular basis. 

4.5. 

Taxpayer services 

Taxpayers must have easy access to information and support needed to comply voluntarily at a reasonable cost. 
‘Developing taxpayer services and reducing taxpayers’ administrative burdens is one of the best strategies 
against VAT fraud’ (IMF, EU Commission, OECD, World Bank). Since VAT administration can be very 
complex, taxpayers need adequate assistance. They have a right to suitable services helping them comply with 
their VAT-related obligations. 

The Commission surveyed Member States’ tax administrations on the existence of taxpayer services, such as: 

 
 
 
 
 
 

a publicly available service delivery channel strategy or a catalogue of services offered to taxpayers; 
procedures ensuring regular and systematic updates of information on VAT rules for taxpayers; 
information on VAT rules available in foreign languages; 
a dedicated information channel for MOSS; 
service delivery standards in relation to the time taken to respond to taxpayers’ enquiries; 
simplified record-keeping and reporting arrangements available to small taxpayers. 

Figure 29 aggregates the answers received from the Member States. 

Figure 29: Taxpayer services in the EU Member States 
Question 4.4: ‘Taxpayer services: Your tax administration … (Multiple answers possible)’ 

… has procedures ensuring regular and systematic 
update of information on VAT rules for taxpayers

… has service delivery standards in relation to time 
taken to respond to taxpayer enquires

… has a dedicated information channel for MOSS

… makes a service delivery channel strategy or a 
catalogue of services offered to taxpayers publicly 
available

… makes simplified record keeping and reporting 
arrangements available to small taxpayers

… makes information on VAT rules also available 
in foreign languages (except MOSS)

… publishes reports (e.g. on the tax 
administration’s web site) on the performance 
achieved in providing taxpayer services during the 
period 2016-2019

23

22

21

21

20

19

17

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Only Greece, Spain, Latvia and Portugal provide all the taxpayer services listed above. A large majority of 
Member States offer most of the services, whereas Czechia, Cyprus, Poland, Romania and Finland provide fewer 
types of taxpayer services. 

A tax administration should be transparent in the conduct of its activities and publish reports (e.g. on its website) 
on its performance in providing taxpayer services. VAT payers will develop trust and consolidate their 

25 

 
  
relationship with the tax administration. The Commission asked Member States about the publication of 
performance reports in the area of taxpayer services during 2016–2019. 

Figure 30: Publication of reports on performance in providing taxpayer services (2016–2019) 
Question 4.4: ‘Taxpayer services. Your tax administration … publishes reports (e.g. on the tax administration’s 
web site) on the performance achieved in providing taxpayer services during the period 2016-2019.’ 

39%

61%

Yes
(AT, BE, BG, CZ, DE, EE, EL, ES, FI, FR, IE, LV, MT, NL, PT, RO, UK)

No
(CY, DK, HR, HU, IT, LT, LU, PL, SE, SI, SK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

The Commission surveyed only the existence of taxpayer services and did not attempt to fully assess the quality 
of the assistance provided. However, the websites of all Member States were visited (see the Annex 3: List of 
web pages on VAT obligation). The Commission ‘walked in the shoes’ of a foreign taxpayer and tried to locate 
the relevant VAT registration information available online. 

The weighted scoring in Figure 31 takes into account different dimensions of informing taxpayers about VAT 
registration obligations, such as the existence of online information, its availability in a foreign language and 
perception of the completeness of the information. 

Figure 31: Taxpayer services: VAT registration information available online 

100%

50%

0%

AT BE BG CY CZ DE DK EE EL ES FI FR HR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Generally, Member States actively inform taxpayers about their VAT obligations. Only Romania answered ‘No’ 
in this survey. A minority of Member States (Greece, Romania, the United Kingdom and, partly, Bulgaria, 
Ireland and Cyprus) had little or no information available in a foreign language. Usually, the foreign language 
used to inform taxpayers is English, which explains the United Kingdom’s relatively low score. 

Member States have made real progress on the inclusiveness of VAT information and the general navigation 
experience, with Denmark, Estonia, Ireland, Latvia, Lithuania, the Netherlands, Poland, Finland and the United 
Kingdom being at the top of the list. 

Some Member States (Bulgaria, Greece, Cyprus, Romania and, partly, Germany, France and Slovakia) are 
lagging behind. It should be noted that better and more accessible information about VAT obligations and 
applicable legislation requires minimal investment and improves tax compliance in the relatively short term. 

26 

 
 
 
Recommendation 20: Adopt a service-oriented attitude towards VAT payers and use the opportunity 
offered by the interaction with taxpayers to provide high-quality VAT administration services. 

4.6. 

Use of data for VAT compliance purposes 

4.6.1. Gathering data 

A modern tax administration must live up to the growing demand for digitalised services in the VAT 
administration area and use the opportunities presented by the new IT developments in this domain. On the one 
hand, VAT payers have greater expectations of tax administration services. On the other hand, the growing 
demand increases the pressure on tax administrations to put more services at VAT payers’ disposal. 

Better services ask for more and qualitative data. Nowadays, massive amounts of data are generated, which 
offers opportunities for tax administrations to use these data for compliance purposes. The Commission wanted 
to find out which data are accessible for VAT compliance purposes. 

Tax administrations use data from various sources, such as invoices, internet platforms, behavioural and 
environmental studies, third-party information, information exchanged with other countries and mutual 
assistance agreements with other countries. 

Figure 32: Data used by EU tax administrations for VAT compliance purposes 
Question 4.3: ‘What categories of data are accessible and used by the tax administration for VAT compliance 
purposes? (Multiple answers possible)‘ 

28

27

18

Exchange of information and mutual assistance
agreements with other countries
(all Member States)

Analysis of third party information
(all Member States except NL)

Invoices data
(AT, BG, CZ, DK, EE, EL, ES, FR, HR, HU, IT,
LT, LV, MT, PT, RO, SI, SK)

Income paid by internet platforms to users in their
country
(AT, CY, CZ, EL, FR, HR, LT, PL, UK)

Behavioural data that influences taxpayer attitudes
to paying taxes
(DK, HU, IE, IT, NL, SE, UK)

Other data
(BG, DK, EE, EL, HU, IT, LV, RO, ES, SE)

9

7

10

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

The use of different data sources for VAT compliance purposes varies between Member States. Particularities in 
areas such as the legislative framework, political organisation and social structures also influence the variation. 

Although all Member States exchange information and use mutual assistance agreements and third-party 
information, only a minority use internet platform payment data or behavioural studies. These studies identify 
the socioeconomic factors (e.g. age, gender, employment status and educational attainment) and institutional 
factors (e.g. trust in government and community satisfaction with the quality of public services) that have an 
impact on a taxpayer’s motivation to comply with their VAT obligations. 

Denmark, Greece, Italy and Hungary reported that they use a wide range of data for VAT compliance purposes. 
Belgium, Germany, Luxembourg the Netherlands, and Finland indicated that they use data from only two of the 
categories listed above. 

27 

 
 
Recommendation 21: Explore the possibility of using several data sets for VAT compliance purposes and 
permanently increase the quality of the exchange of information and administrative cooperation. 

4.6.2. Informed decision: putting data to work 

High-performing tax administrations rely heavily on their data analytics and research capabilities to provide 
better services, more effective supervision and sound policy advice to government. On the one hand, the senior 
management of tax administration should have all the analytical data needed to provide input for government 
budgeting processes and to forecast tax revenue. On the other hand, the management should have a complete 
picture of the VAT administration process at any moment (dashboard). 

The majority of EU Member States (20/28) have annual targets for VAT collection. Some (Germany, Cyprus, 
Luxembourg, the Netherlands, Sweden, Finland and the United Kingdom) do not use collection targets but rely 
on estimates of VAT revenue. Ministries of finance or higher political bodies set the targets in cooperation with, 
or based on the input provided by, the tax administrations, taking into account various factors such as changes in 
the macroeconomic environment and forecasts of VAT revenue. 

Generally, the collection targets and estimates are accurate (approximately 1.2% median deviation), with some 
Member States (Denmark, Germany, Estonia, Ireland, Greece, France, Latvia, Lithuania, Luxembourg, the 
Netherlands, Austria, Slovenia, Slovakia and Sweden) being very close to the actual VAT revenue collection 
values in their predictions or target setting. 

Figure 33: Reports available to senior management in different areas of VAT administration 
Question 4.5: ‘The senior management of the tax administration regularly receives reports on…  
(Multiple answers possible)’ 

… situation of VAT payments
(all Member States)

… state and evolution of VAT arrears
(all Member States except EE, PL, PT, SE)

…. results of tax audits in the field of VAT
(all Member States except DE, EE, MT, NL, PT)

… evolution of VAT registration
(all Member States except AT, BG, EE, EL, IE, 
PL)

… analysis of main risks, developments and key 
performance indicators
(all Member States except AT, CY, DK, FI, LU, 
MT, NL, PL)

… internal audit findings on the functioning of 
VAT administration processes
(all Member States except AT, CY, CZ, EE, EL, 
FI, IT, MT, PL, SK)

28

24

23

22

20

18

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Without a good set of core data, VAT administration is less effective. Even the best data sets are of little use 
without the ability to utilise these data to build knowledge and actionable insights to support informed decisions. 
In some Member States, such as Belgium, Spain, France, Croatia, Latvia, Lithuania, Hungary, Romania, 
Slovenia and the United Kingdom, the senior management regularly receives reports. 

The Commission considers that regular reports in all areas listed above are beneficial for the senior management 
in Member States’ tax administration, as they allow for informed decisions. 

Several tax administrations provided additional information on the recent development in VAT compliance and 
taxpayer services. By comparing the initiatives in the most successful Member States in terms of reduction of the 
VAT gap (Bulgaria, Spain, France, Croatia, Latvia, Hungary, Poland, Portugal, Slovenia and Slovakia) and those 
with historically low VAT gaps (Denmark, Estonia, Finland and Sweden), the most successful measures appear 
to be: 

28 

 
  
 
 
 
 
 
 
 

the implementation of online cash registers; 
electronic reporting; 
trade control; 
e-audit and standardisation; 
transaction-based reporting; 
risk management, including segmentation and behavioural profiling; 
data-driven techniques leading to risk scoring and automated ranking. 

Recommendation 22: Collect meaningful data, balance risk evaluation analysis and profiling solutions, 
and continue investing in analytical capability. 

5.  Filing and payment 

5.1. 

Timeliness of filing 

Filing of VAT declarations remains a principal means for establishing a taxpayer’s VAT liability. In a VAT 
return, taxable persons inform the tax administration in the Member State of registration of their transactions, the 
VAT that has been charged to their customers (output VAT) or that has been charged by their suppliers (input 
VAT) and the amount of VAT payable or refundable. 

Member States have different formats for VAT declarations. They are usually submitted in electronic form 
(some Member States also allow paper-based declarations) and filed by taxpayers themselves or through an 
intermediary. 

5.1.1. E-filing 

The latest IT developments in both e-filing and the payment of taxes offer a sizable advantage to tax 
administrations in various areas such as efficiency improvement, administration costs and enforcement. E-filing 
also contributes to the overall quality of taxpayer services by reducing VAT compliance burden. To achieve 
higher e-filling rates, Member States advertise the benefits of e-filing permanently and some have made it 
mandatory. 

Figure 34: VAT e-filing in EU Member States 
Question 5.1: ‘In my country VAT electronic filing is…’ 

78%

18%

4%

… compulsory
(all Member States except BE, EE, EL, HR, MT, SE)

… compulsory for some taxpayers 
(BE, EE, EL, HR, MT)

… available (optional)
(SE)

… not available
(none)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Generally, Member States have a high e-filing rate. The EU median is close to 99% for 2019. Compared with the 
previous report, there is clear progress in e-filing: the rate increased from > 83% for 2013 to nearly 100% in 
almost all Member States for 2019. 

For five Member States (Germany, Greece, Cyprus, Malta and Sweden), the calculated e-filing rates were 
< 90%. If the data reported are correct, this lower e-filing rate needs to be addressed, especially in Member 
States where e-filing is compulsory. 

5.1.2. Monitoring VAT-filing compliance 

E-filing of VAT returns offers Member States an opportunity to better monitor taxpayers’ compliance with 
deadlines for VAT returns. Almost all Member States (25/28) answered that compliance with taxpayers’ 
deadlines for VAT filing is monitored automatically, and more than half use risk criteria or profiling techniques 
based on known circumstances and behaviour to achieve higher on-time VAT-filing rates. 

29 

 
  
Figure 35: Monitoring the compliance of VAT filing in the EU Member States 
a. Question 5.2: ‘Compliance with taxpayers' deadlines for VAT filing is …’ 

… monitored automatically
(all Member States except MT, LT, PL)

89%

11%

… monitored manually 
(MT, LT, PL)

… not monitored
(none)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

b. Question 5.3: ‘Are risk criteria or profiling techniques (based on known circumstances and behaviour) used 
for achieving on-time VAT filing?’ 

43%

Yes
(BE, BG, CZ, DK, EE, EL, ES, FI, HR, HU, IE, LT, LV, PL, SE, SK)

57%

No
(AT, CY, DE, FR, IT, LU, MT, NL, PT, RO, SI, UK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

For many taxpayers, the submission of VAT returns is their most significant contact with the tax administration. 
Member States may set their own reporting deadlines for VAT returns. Most of them expect VAT returns in the 
last 10 days of the month following the end of the return period, but there are exceptions (e.g. Germany requires 
VAT returns within 10 days of the end of the reporting period). 

Member States are free to set their VAT declaration reporting calendars, and usually require monthly reporting. 
Quarterly reporting is not uncommon, while annual reporting is an additional requirement in certain countries 
(e.g. Italy). Some countries, such as Germany, may require a single annual return if there is very limited activity. 

Other VAT declaration periods are rare, but exist (e.g. in France for companies with irregular trading, in Greece 
for small taxpayers in certain categories such as coastal fishing vessels < 12 m and in Belgium for special returns 
in cases of bankruptcy or for participation in special events). Such special arrangements sometimes affect the 
calculation of on-time filing rates (the number of declarations filed on time in relation to the number of expected 
tax declarations), which is the main indicator of compliance in the area of VAT returns. 

Member States generally have high on-time filing rates, some close to 100% (Belgium, Bulgaria, Estonia, Spain, 
Latvia, Lithuania, Austria, Slovakia, Finland and Sweden). The EU average is 93.1%. Greece (66%), Malta 
(74%) and Cyprus (86%) have the lowest on-time filing rates, and five Member States (Czechia, Germany, 
France, Croatia and Poland) were unable to provide the necessary data to calculate this indicator. 

Recommendation 23: Continue efforts for a higher on-time filing rate as a good indicator of the 
robustness of the VAT system. 

Initially, many of the VAT administration services concentrated on simpler areas such as e-filing of VAT returns 
and electronic payment of VAT. However, even with e-filing, tax administrations need to follow up when there 
is a lack of compliance. Subsequently, tax administrations adopted more two-way services, with different alerts 
and notifications. Tax administrations’ actions to enforce timely submission of VAT declaration vary, as shown 
in Figure 36. 

30 

 
  
  
Figure 36: Actions initiated by tax administrations in case of late filing or no filing of VAT declarations 
Question 5.4. ’Which actions does your tax administration initiate in case of late filing or no filing for VAT 
returns? (Multiple answers possible)’ 

Issuing reminders for late submission of VAT
returns
(AT, BG, CY, DK, DE, EE, EL, ES, FI, FR, HR,
HU, IE, LT, LU, LV, SI, SK, UK)

Issuing assessments of estimated tax liability and
late filing penalty
(AT, CY, DE, EE, ES, FI, FR, HR, IE, IT, LT, LU,
LV, PT, RO, SE, UK)

Contacting the taxpayers directly
(BR, DE, DE, DK, EE, EL, HR, HU, IE, LT, LU,
LV, PL, SI, SE, UK)

Penalties are automatically generated by the
system for non-filers
(BE, CY, DK, EL, FI, FR, HR, LU, NO, LT, RO,
SE, SK, UK)

Handing out demand notices
(BE, CZ, DK, EE, EL, FR, IE, PT, RO)

Analysis of the the circumstances and the
taxpayers filing history
(DE, DK, EE, EL, FI, HR, IE, SE)

19

18

15

14

9

8

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 24: Be proactive in reminding taxpayers of filing deadlines and use specific supporting 
tools. 

The identification of taxpayers who have failed to file VAT declarations when due should be automatised and 
the follow-up and enforcement measures by tax administrations should be tailored to the circumstances, such as 
the previous behaviour of the taxpayer (filing history). 

If no VAT returns are filed, the majority of Member States estimate the VAT due and add a penalty. However, 
the effectiveness of the penalty system for late filing of VAT should be evaluated. 

Figure 37: Member States evaluating the effectiveness of the penalty system for late filing/payment 
Question 5.5: ‘Did your administration analyse the effectiveness of the penalty system for late filing and/or late-
payment?’ 

21%

Yes
(BG, CZ, DK, FR, HR, SI)

79%

No
(All Member States except BG, CZ, DK, FR, HR, SI)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Only a minority of tax administrations (6/28) indicated that they perform such evaluation. 

31 

 
  
 
Recommendation 25: Design a penalty system for failure to submit VAT returns and failure to make 
payments on time, bearing in mind two key principles: simplicity and proportionality. 

5.2. 

Payment of VAT 

The payment of VAT is another important interaction between taxpayers and tax administrations. Being an 
indirect tax, VAT is remitted to the tax administrations by the seller (the ‘taxable person’) but is actually paid by 
the buyer as part of the price. 

Taxpayers are expected to pay VAT on time. Failure to pay VAT on time usually results in the imposition of 
interest and penalties and follow-up action by the tax administration, whose aim should be to reach the highest 
rate of voluntary on-time payment and the lowest incidence of tax arrears. 

To achieve this result, a flawless payment process and quick follow-up when payment is overdue are necessary. 
The use of IT and electronic payment solutions can deliver significant benefits to all parties involved: taxpayers, 
the tax administration and the financial sector. Traditionally, all EU tax administrations offered the possibility of 
in-person payment services or cash payments, owing in part to the absence of alternatives. With increased 
digitalisation over time, it became more cost-effective for revenue bodies to use third parties such as banks to 
collect tax payments. 

More recently, the fully electronic payment method, with taxpayers making their own payments online or 
arranging for this to be done automatically (via their bank through a direct-debit type of arrangement) became 
the norm. 

In several previous reports, the Commission advocated the introduction of e-payment solutions. In 2019, as 
expected, all EU Member States offered the possibility of electronic payment of VAT obligations, which is the 
preferred method of payment in virtually all situations. 

Figure 38: Availability of e-payment of VAT obligations in EU Member States 
Question 5.6: ‘The electronic payment of VAT obligations is …’ 

14%

47%

39%

… compulsory
(BE, DE, FI, IE, IT, LT, LU, LV, NL, PL, SE, SI, UK)

… compulsory for most taxpayers
(DK, EL, ES, FR)

... available (optional)
(AT, BG, CY, CZ, EE, HR, HU, MT, PT, RO, SK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

More and more Member States are opting to make electronic VAT payment compulsory. The previous report 
noted that, in most Member States, tax administrations offer the option to pay the VAT due electronically and in 
only 50% of Member States is electronic payment of VAT compulsory. 

Figure 39: VAT cash payments  
Question 5.7: ‘Are cash payments for settling VAT obligations allowed?’ 

11%

Yes
(AT, EE, RO)

25%

Yes,  but under a certain value
(CY, CZ, DK, EL, FR, MT, PT)

64%

No
(BE, BG, DE, ES, FI, HR, HU, IE, IT, LT, LU, LV, NL, PL,
SE, SI, SK, UK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

32 

 
  
 
Currently, almost all Member States (98%) are making e-payment of VAT compulsory22. 

Recommendation 26: Limit VAT payments in cash as much as possible. 

Tax administrations aim to attain high rates of voluntary on-time payment of VAT. This requires a high level of 
on-time VAT filing to establish the amounts due (see previous section) and quick follow-up when VAT payment 
is overdue. Therefore, tax administrations need to provide the best feedback to taxpayers on the settlement of 
VAT obligations. Member States use various channels to provide such feedback. 

Figure 40: Feedback channels available about the settlement of VAT obligations 
Question 5.8: ‘The tax administration provides feedback to taxpayers about the settlement of their VAT 
obligations through… (Multiple answers possible)’ 

21

21

… on-line taxpayer account
(All Member States except CY, CZ, IT, PL, PT, 
RO, SK)

… answer on request
(All Member States except AT, DK, EL, ES, FR, 
HR, IT)

… letter
(AT, BE, BG, EE, FI, HR, HU, IE, LV, NL, SE, 
SI)

… e-mail
(BE, BG, EE, EL, IT, LV, MT, PT, SI)

… annual statement
(EE, LU, NL, SE)

… other feedback channels
(BE, BG, IE, MT, PT, SI)

12

9

4

6

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

EU tax administrations declared their preference for an online channel to provide feedback on the settlement of 
VAT obligations. Such online channels are commonly used to communicate with VAT payers, including with 
feedback on VAT payments. 

Some Member States use ‘other’ methods (e.g. call centres) to inform taxpayers about their payment obligations. 
Portugal developed a dedicated mobile app, Situação Fiscal – Pagamentos23, providing complete information on 
VAT payments and integrating a digital wallet to simplify mobile payments. Some Member States started to use 
an individual tax account (called a ‘micro-account’ in Poland) for settlement of VAT liabilities, which also 
served for other taxes such as personal income tax and corporate income tax. 

Studies undertaken thus far clearly indicate that fully electronic payment methods are by far the most cost-
effective means of collecting tax payments (OECD, 2010). The Commission encourages all Member States to 
favour as much as possible the e-payment of VAT and to establish a permanent and automatic communication 
with VAT payers regarding their payment obligations. 

22 
23  

Some Member States reported that they allow VAT cash payments for certain small values. 
https://play.google.com/store/apps/details?id=pt.gov.portaldasfinancas.servicos.pagimp.app&hl=en&gl=US 

33 

 
 
                                                      
Recommendation 27: Use an online channel solution and maintain and upgrade other back-up 
communication channels for interaction with VAT payers. 

6.  Collection of VAT debts, refunds and audits 

6.1. 

VAT debt collection 

EU tax administrations strive to achieve the highest possible VAT compliance level. Essentially, they should 
immediately know, and sometimes even anticipate, all instances when taxpayers are struggling to pay VAT and 
should track these situations. 

Figure 41: VAT debt collection: initial reaction (in days) to late payment 
Question 6.1: ‘How much time do you allow between the statutory due date and the moment of the first measure 
to recover the arrears (e.g. first notification of the taxpayer)? (in days)’ 

s
e
t
a
t
S
r
e
b
m
e
M

f
o

r
e
m
u
N

5

4

3

2

1

0

0

20

10

50
Time allowed between the statutory due date and the moment of the first measure to recover the 
arrears in days

30

40

60

70

80

90

100

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Since a fast initial response is one of the most important aspects of VAT debt management, the Commission 
asked Member States how much time is allowed between the statutory due date and the first measure to recover 
the VAT arrears (e.g. first notification to the taxpayer). 

The answers vary between 0 (most frequent situation) and 90 days. EU tax administrations generally react 
promptly when a business misses a VAT payment deadline. Only four Member States – Bulgaria (61 days), 
Cyprus (75 days), Luxembourg (90 days) and Poland (40 days) – allow > 1 month to pass between the due date 
and the initial recovery measure. Greece, Italy, Latvia, Lithuania, Romania and the United Kingdom proceed 
with the first recovery measure immediately. 

The Commission acknowledges differences in legislation and individual procedures in Member States. However, 
tax administrations should be aware of and monitor VAT payments missed at the statutory due date and be ready 
to escalate as soon as possible, even if a certain number of days is required for formal action. 

Sometimes, and especially during unfavourable economic periods such as the pandemic recession, the VAT debt 
continues to represent an issue despite adequate debt collection strategies in place. Facing this challenge, tax 
administrations need to seek even more innovative, coordinated and cost-effective ways to deal with VAT 
arrears collection. The best response is a robust, well-functioning and user-friendly debt management IT 
subsystem. 

All EU tax administrations have put IT subsystems in place to manage VAT arrears. However, not all IT systems 
perform equally. The Commission asked the tax administrations for more information on different key aspects of 
their IT arrears management systems to try to assess their effectiveness. 

34 

 
 
 
 
 
Figure 42: Effectiveness of the VAT arrears IT management systems in EU Member States 
Question 6.2: ‘The IT system used by your tax administration to manage VAT arrears… (Multiple answers 
possible)’ 

… can prioritise cases based on the size of arrears
(AT, BE, BG, DE, DK, EE, EL, ES, FI, HR, HU, 
IE, LV, LT, LU, NL, PL, RO, SE, SI, SK, UK)

… can prioritise cases based on the age of arrears 
(AT, BE, BG, DE, DK, EE, EL, ES, FI, HR, HU, 
IE, LT, LU, NL, PL, RO, SE, SI, UK)

… allows collecting tax arrears via instalment 
plans
(AT, BE, BG, CY, DK, EE, EL, ES, FI, FR, IE, 
IT, LT, LU, MT, PL, PT, RO, SI, UK)

… iIssues automatic reminders for late VAT 
payments
(BE, BG, CY, CZ, DE, DK, EE, EL, FI, FR, IE, 
IT, LT, LU, NL, PT, SE, SI, UK)

… can determine the origin of arrears/types of 
taxes due
(AT, BE, CY, DE, EL, ES, FR, HR, HU, IE, LT, 
LU, LV, MT, RO, SE, SI, SK, UK)

… can prioritise cases based on the number of 
core taxes involved
(BE, EL, ES, FR, HU, IE, NL, RO, SE, UK)

… can prioritise cases based on the taxpayer's 
payment history
(BE, ES, IE, LU, NL, RO, SE, SK, UK)

22

20

20

19

19

10

9

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 28: Maintain a flexible IT subsystem to manage and prioritise VAT arrears. 

In this respect, Belgium, Ireland and United Kingdom set the example. Germany, Greece, Spain, France, 
Lithuania, Luxembourg, Romania, Slovenia and Sweden also indicate strong performance. 

Regarding the outstanding VAT arrears, that is, total year-end VAT debt in total revenue, a slightly positive 
trend was observed for the majority of the Member States. With the exception of Greece, Cyprus, the 
Netherlands and the United Kingdom, Member States that provided full or partial data to perform the 
calculation24 registered a positive trend. VAT arrears above the EU average existed in Greece, Cyprus, Malta, 
Poland and Slovakia. 

Poland reported that one of the most probable reasons for the high level of VAT arrears was that VAT 
assessment applied to serious tax irregularities and taxpayers who had no assets or other financial means in their 
bank accounts. This situation could also be the case in other Member States with relatively high VAT levels, 
which backs up the recommendation to monitor VAT arrears and be ready to act immediately at the statutory due 
date for the VAT payment. 

6.2. 

VAT refunds 

One of the key features of the VAT invoice–credit system is that only taxpayers making purchases pay 
substantial amounts of VAT. On average, around one third of the VAT paid is refunded at EU level. The 
generally accepted rule is that VAT refunds should be paid promptly following the receipt of VAT declarations 
giving rise to excess credit. In reality, ‘refunding of credits has been the “Achilles heel” of the VAT system … 
and has led to complex administrative measures that have significantly undermined the functioning of the VAT 
system’ (IMF). 

Paying legitimate tax refunds promptly, while having safeguards in place to prevent payment where fraudulent 
refund claims are involved, is thus essential to a sound VAT administration process and strengthens tax 
compliance. 

24 

Belgium, Denmark, Germany, France, Luxembourg and Sweden did not make available the minimum data needed to calculate the 
share of VAT arrears. 

35 

 
  
                                                      
Generally, refunds are paid on time. Several Member States (Bulgaria, Germany, Spain, France, Croatia, Latvia, 
Luxembourg, Hungary, the Netherlands, Poland, Finland and Sweden) were unable to provide the necessary data 
to calculate the rate of on-time payment of the refunds, even though the majority of them answered ‘Yes’ to the 
question if they ‘routinely monitor (e.g. each month) the time taken to pay or offset VAT refunds’ (see Figure 44 
below). 

Figure 43: Percentage of VAT refunds (value) paid by the statutory date (EU average) 

83,5%

83,4%

83,3%

83,2%

83,1%

83,0%

83,1%

2016

83,4%

83,3%

83,3%

2017

2018

2019

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Among the tax administrations that made available the data on VAT refunds paid by the statutory date, Cyprus, 
Greece, Malta and Romania were under the EU average. However, only Malta and Romania displayed a negative 
trend in the value of VAT refunds paid on time. 

Delays in processing refunds usually occur when state budgets are under pressure and tax collection targets are 
not met. Tax administrations and ministries of finance must have suitable forecasting and monitoring systems in 
place to anticipate the refund levels and set aside sufficient funds to meet legitimate refund claims when they 
occur. 

Recommendation 29: Pay legitimate tax refunds promptly, while having procedures in place to prevent 
payment of fraudulent claims for VAT refunds. 

‘When tax administrations deny on-time payment of legitimate refund claims, the nature of VAT is effectively 
altered, in part, from a tax on final consumption to a tax on production’ (IMF). Apart from verifications at the 
stage of VAT registration, such as the proof-of-identity checks (see Section 3, Figure 9), good practices to ensure 
swift payment of VAT refunds include: 

 
 

 
 
 

the existence of dedicated VAT refund units; 
a specific procedure for low-risk VAT refund requests (e.g. specific automated software reviewing the 
VAT refund claims against risk criteria to distinguish good compliance histories from poor or unknown 
compliance histories); 
specific measures for dealing with VAT refund requests submitted by exporters; 
electronic payment of the refunds, through direct credits to the taxpayer’s bank account; 
regular monitoring of the time taken to pay or offset VAT refunds. 

36 

 
 
Figure 44: VAT refund systems in EU Member States 
Question 6.3: ‘To ensure swift payment of legitimately VAT refunds, your tax administration … (Multiple 
answers possible)’ 

… has procedures based on risk assessment 
methodologies in place to ensure that a significant 
part of low-risk VAT refund requests are promptly 
processed
(All Member States except DK, EL, NL, PL, SK)

… routinely monitors (e.g. each month) the time 
taken to pay (or offset) VAT refunds
(CY, DE, EE, EL, FI, FR, HR, HU, IE, IT, LT, LU, 
LV, PT, RO, SI, SK, UK)

… pays tax refunds electronically (i.e. via direct 
credits to taxpayer bank account)
(AT, BE, CZ, DE, DK, EE, EL, FI, FR, HR, HU, 
IE, LT, LU, NL, SE, SI)

… has dedicated VAT refund units
(BE, BG, CY, DE, EL, ES, FI, FR, HU, IE, IT, LT, 
LV, PT, RO, SI)

23

18

17

16

… has a specific procedure for dealing with VAT 
refunds requests submitted by exporters
(BR, CY, ES, IT, LV, PL, PT, RO)

8

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 30: Implement the observed good practices if high values of VAT refunds are paid after 
the statutory date. 

Recommendation 31: Link the refund process with the registration component (check taxpayers’ 
identities to prevent fictitious traders from entering the VAT system) and integrate it with their 
compliance risk management system. 

6.3. 

Completeness of reporting obligations: VAT audits 

VAT payers should report complete and accurate information in their tax declarations, and tax administrations 
should regularly monitor tax revenue losses from inaccurate reporting. The consequences of inaccurate VAT 
reporting involving larger amounts specific to business taxpayers could be very severe. VAT audits and other 
verification activities promote accurate reporting and mitigate tax fraud. Audits complement other, more 
proactive compliance initiatives of taxpayer assistance (see Section 5). 

Verification activities, such as tax audits, investigations and income matching against third-party information 
sources have a triple objective: (1) remedial (additional tax penalties can be assessed to correct the 
discrepancies), (2) preventative (the perceived likelihood of detection has a deterrent effect against non-filing or 
inaccurate filing) and (3) informative (collection of tax-related information)25. This strategic approach must 
observe multiple elements: 

 

 
 

 
 

the VAT audit activity must be based on an integrated annual plan that is reviewed by senior 
management; 
specific procedures and, preferably, an audit manual should exist and be used; 
specific instructions adapted to the specificities of different industries/sectors (e.g. tourism, 
construction, telecommunications) must be in place; 
the VAT audit process should be documented and monitored for quality; 
the audit activity should make use of specific software adapted for VAT audit purposes; 

25 

Intelligence-gathering (‘know your customer’ (KYC)-like activity) is used not only to identify the incipient compliance risks and 
confirm these risks, but also to assess the incidence and outcome (revenue losses) attributable to particular risks, and to recognise and 
correct common taxpayer errors and misinterpretations of VAT law. 

37 

 
  
                                                      
 

 

the audit process should use technology that allows cross-checking of the amounts reported in tax 
declarations against information obtained from third parties on a large scale; 
the audit must sometimes be carried out in cooperation with other administrative agencies and 
governmental bodies. 

Figure 45: Characteristics of the VAT audit performed by EU VAT administrations 
Question 6.4. 'The VAT audit performed by your tax administration ... (Multiple answers possible)’ 

… uses specific software for audit purpose
(all Member States except DK, FR, SI, UK)

… uses technology to cross-check, on a large 
scale, amounts reported in tax declarations with 
information obtained from third parties
(BE, BG, CY, CZ, EE, EL, ES, FI, FR, HR, HU, 
IE, IT, LT, LU, LV, NL, PL, PT, RO, SE, SK, 
UK)
… may be carried out in cooperation with other 
governmental agencies
(BG, CZ, DE, DK, EE, EL, ES, FI, HR, HU, IE, 
IT, LT, LU, LV, NL, PL, RO, SE, SK, UK)

… is based on a specific procedure and use a 
general audit manual
(BE, BG, CY, CZ, DE, DK, EE, EL, FI, HR, IE, 
IT, LT, LU, LV, PL, RO, SE, SI, SK, UK)

… is based on an annual national tax audit plan
(AT, BE, CZ, EL, ES, FI, FR, HR, HU, IT, LT, 
LV, NL, PL, PT, RO, SE, SI, SK, UK)

… is reviewed by senior management
(AT, BE, CY, CZ, DK, ES, FI, HU, IE, LT, LU, 
MT, PL, PT, SE, SI, SK, UK)

… is monitored for quality according to a 
documented process
(BE, BG, CY, CZ, DK, EE, FI, HU, IE, NL, PL, 
SE, SI, SK, UK)

… uses different manuals with specific 
instructions for different industries/sectors (e.g. 
tourism, construction, natural resources, 
telecommunications, banking and insurance, etc.)
(DE, DK, EE, FI, HR, HU, LT, RO, SE, SI, UK)

24

23

21

21

20

18

15

11

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Generally, Member States pay close attention to the VAT audit process. Analysis of the survey replies reveals 
that Finland’s and Sweden’s audit systems incorporate all the good practices listed above. Answers from other 
Member States such as Czechia, Lithuania, Hungary, Poland, Slovakia and the United Kingdom indicate strong 
performance. Conversely, Malta (reporting only one out of the eight good practices listed above), Austria and 
France (reporting two out of the eight good practices) could make additional efforts to improve their audit 
practices. 

Tax administrations usually capture VAT audit-relevant information in special compliance databases for future 
audits of the same or related taxpayers (since discovering pertinent information about one taxpayer, when 
auditing another, is often possible). In addition, auditing taxpayers together or in cooperation with other 
institutions and/or exchanging VAT-relevant data with other institutions improves the audit function. 

A large majority of Member States (21/28) reported cooperation with other governmental bodies, such as 
customs (sometimes integrated into the tax administration), criminal investigation (police, public prosecutors, 
etc.), labour inspection and control, social inspection and protection, and even food and chemical safety 
agencies. 

38 

 
  
Several Member States (e.g. Czechia, France and Slovakia) have established special ‘VAT task forces’ through 
interministerial and operational coordination structures specifically dedicated to the fight against VAT fraud. In 
France, a tax force regularly gathers all the partners of the French tax administration (justice, police, customs and 
financial intelligence units) together with the tax audit teams to cooperate in the field of VAT audit. 

Recommendation 32: Use sector-specific audit manuals, cooperate with other agencies, update and review 
audit plans and monitor the quality of audit function in accordance with a documented process. 

Most aspects of a modern VAT audit demand the use of IT equipment and specific software, starting with audit 
selection requiring taxpayers to be classified according to the specific risk they pose to the collection of revenue. 
This task alone cannot be done manually for a large population. 

Generally, tax administrations use dedicated audit software. Only three Member States (Denmark, Slovenia and 
the United Kingdom) indicated that they do not use specialised software. A total of 17 Member States use VAT 
audit solutions developed in-house, alone or in combination with specialised or generic software. Three Member 
States (Italy, Malta and the Netherlands) indicated that they use in-house software only. 

Figure 46: VAT audit software used by EU tax administrations 
Question 6.4.b: ‘Please specify which software (programmes) are used by your tax administration for audit 
purpose (e.g. ACL, IDEA, own internal software, etc.)’ 
a. Commercial off-the-shelf vs. custom-built solutions 

11%

11%

In-house (internal software)

A combination of internal and specific audit software

28%

Specific audit software only

50%

Other software (non-specific)

b. Main audit-specific solutions used 

Arbutus

Xenon

SAS Analytics

ACL

SAF-T analysers

IDEA

ESKORT (SESAM)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Even if the Member State tax administrations have the same core functions, including audit, not all face the same 
level of complexity of IT implementation. This complexity level is a factor that can push tax administrations to 
opt for in-house software products. The level of customisation of such custom-built software also varies 
significantly between the Member States. 

Commercial off-the-shelf (COTS) solutions are also available for VAT audit. COTS solutions are also developed 
according to existing leading practice, and tax administrations with reduced need for customisation may incur 
lower implementation costs and usually have a better chance of success. However, implementation complexity, 
specific needs, different legislation and/or particular organisational aspects of a tax administration make a 
comparison of the merits of different audit software impossible. 

Overall, half of the EU tax administrations tend to use a mix of commercial and custom-built solutions. As 
mentioned in previous reports, any cooperation and pooling of resources (especially for smaller Member States’ 
tax administrations working closely together on common issues) could bring economies of scale. VAT audit, 

39 

 
  
  
especially the IT software used in this process, is one of the domains in which Member States could easily 
benefit from each other’s experience. 

There are EU tools available that can be used by Member States to finance and support the modernisation and 
reform of tax administrations. 

Recommendation 33: Make use of EU tools available, exchange experiences and good practice in the use 
of different tools and procedures and collaborate (e.g. joint audits) to increase the efficiency of the audit 
functions. 

As mentioned in the last report, ‘audit is an expensive tool as it is time-consuming and requires a large number 
of human resources. Moreover, the percentage of audit contribution to the total VAT collection is limited’. 
Therefore, an audit strategy focusing on the main risk areas increases the return on the use of limited audit means 
and other resources and facilitates voluntary compliance by reducing the perceived intrusion of the tax 
administration into the life of compliant taxpayers. 

The previous report underlined that more and more tax administrations recognised that ‘audit is no longer 
expected to be the most efficient and effective means to deter non-compliant behaviour’ and considered audit ‘an 
ultimate enforcement measure’ to be applied when other, proactive initiatives that focus on enhancing voluntary 
compliance were not, or no longer, effective. 

The previous report also mentioned the challenge of striking the right balance between compliance-increasing 
initiatives and VAT audit. Looking at the top five Member States in terms of VAT amounts assessed after audits 
(Poland, Romania, Bulgaria, Slovakia and Hungary), Figure 47 clearly shows that Member States have made 
visible progress regarding the use of the VAT audit function. 

Figure 47: VAT collection and VAT assessed after audits in 23 EU Member States26 

15%

6%

20%

15%

10%

5%

0%

Top 5 Member States

EU average

9%

4%

7%

3%

6%

3%

2016

2017

2018

2019

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

However, tax administrations should be capable of conducting multiple types of audits and ‘have a clear policy 
on the types of audits to be conducted and the circumstances in which specific types of audits are to be carried 
out, so that audit officials and managers understand what is expected of them’ (OECD). Member States should 
be able to effectively carry out punctual registration checks, advisory and record-keeping audits, specific audits 
on single issues and VAT refund audits, and should do so. They should also put in place more complex audit 
projects (for specific groups of taxpayers, an industry or a line of business such as retail, to address a particular 
risk or to establish the degree of non-compliance in a particular sector) and perform comprehensive audits and 
fraud investigations. 

26  Data are available for 23 out of 28 Member States (excluding Germany, France, Luxembourg, the Netherlands and the United 

Kingdom). However, since four of those Member States (Germany, France, the Netherlands and the United Kingdom) did not make 
these data available for the previous report, the results are comparable with the previous period. 

40 

 
 
                                                      
Figure 48: Types of VAT verifications/audits performed by the EU tax administrations 
Question 6.5: ‘Which types of verification/audits are performed by your tax administration in the VAT field? 
(Multiple answers possible)’ 

VAT refund audits
(All Member States)

Single (or specific) issue audits
(All Member States)

Comprehensive (or full) audits
(All Member States except EE)

Fraud investigations
(All Member States except CZ, LT, PL)

audit projects (for specific groups of taxpayers, an
industry, a line of business - e.g. retail -, to
address a particular risk or to establish the degree
of non-compliance in a particular sector)
(All Member States except AT, CZ, MT, RO)

Registration checks
(All Member States except  FR, LU, LV, MT, PL)

Record keeping audits
(All Member States except BG, CY, DK, EE, FR,
LV, MT)

Advisory audits
(BE, CY, DE, DK, EE, FI, HU, IT, LT, SE, SI)

28

28

27

25

24

23

21

11

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Generally, EU tax administrations are well equipped to perform all types of audits. The Commission 
recommends that Member States follow the example of Belgium, Germany, Italy, Hungary, Slovenia, Finland 
and Sweden and diversify their audit portfolios as much as possible. 

Recommendation 34: Adjust the scope and intensity of VAT audits to meet needs. 

Finally, as mentioned before, audits complement other compliance and analytics initiatives. Such initiatives 
closely related to the audit activity may include, but are not limited to: 

 

 
 

 

using advance rulings to provide taxpayers with certainty about the tax treatment of specific 
transactions; 
building collaborative and trust-based relationships with VAT payers (especially large taxpayers); 
complementing the audit plan with an estimate of inaccurate reporting based on a specific random audit 
programme; 
deploying other modern tools such as advanced predictive analytics and data modelling. 

41 

 
 
Figure 49: Complementary non-audit compliance measures 
Question 6.6: ‘For VAT, the tax administration … (Multiple answers possible) 

… adopts cooperative compliance approaches to 
manage risks of inaccurate reporting
(AT, BE, BG, CY, CZ, DK, EE, ES, EL, FI, FR, 
HR, HU, IE, IT, LT, LU, LV, NL, PL, PT, SE, 
UK)

… uses rulings to provide answers about the tax 
treatment of specific transactions
(BE, BG, CY, CZ, DE, DK, EE, ES, FI, HR, HU, 
IE, IT, LT, LV, MT, NL, PL, PT, RO, SE, SI, 
UK)

… engages in advanced analytics of large data 
sets (e.g. predictive modelling).
(BE, BG, CZ, DK, EE, EL, ES, FI, FR, HR, HU, 
IE, LT, LV, PL, SE, SI, SK, UK)

… estimates VAT losses caused by inaccurate 
reporting based on random audit program results
(DK, FI, HR, IE, IT, NL, SE, UK)

8

23

23

19

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Typically, cooperative compliance arrangements are based on proven good management of VAT affairs from the 
taxpayers’ side and the willingness to become and stay transparent. The analytics programmes of tax 
administrations are useful in learning more about the distribution of VAT-inherent risks. 

Member States understood this approach and demonstrated that they largely complement their audit programmes 
with other measures. Denmark, Ireland, Croatia, Finland, Sweden and the United Kingdom use all compliance 
and analytics initiatives listed above. Belgium, Bulgaria, Czechia, Estonia, Spain, Italy, Latvia, Lithuania, 
Hungary, the Netherlands and Poland indicate strong performance in this area. Only one Member State 
(Luxembourg) reported that ‘none of the above initiatives applies’. 

Recommendation 35: Complement audit measures with other, non-audit compliance measures. 

7.  VAT accounting, accountability and disputes 

7.1. 

VAT accounting, internal controls and external reviews 

Ideally, the tax revenue accounting system allows tax administrations to check on the revenue management 
progress at any point during the accounting period. An effective system, based on an IT subsystem, minimises 
accounting errors, prevents internal fraud, and registers payments and other transactions to the correct taxpayer 
account in a timely manner. The system should at least automate the book-keeping of VAT obligations, interface 
with other accounting systems of the tax administration and include procedures to routinely and systematically 
review the taxpayer ledger to correct accounting errors and omissions. 

Figure 50: Characteristics of tax revenue accounting systems in the EU 
Question 7.1: ’Within your tax administration ...’ 

… is an automated accounting system for VAT 
liabilities
(all Member States)

… is an accounting system that interfaces with 
other accounting systems in the administration
(AT; BE, BG, DE, DK, EE, EL, ES, FI, FR, HR, 
HU, IE, LT, LU, LV, MT, PL, PT, SE, UK)

… are procedures to routinely and systematically 
review the taxpayer ledger to correct accounting 
errors and omissions
(DE, EL, ES, HR, HU, IE, IT, LT, LV, MT, PT, 
SK, UK)

21

13

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

28

42 

 
 
 
All Member States operate automated accounting systems for VAT liabilities. Germany, Ireland, Greece, Spain, 
Croatia, Latvia, Lithuania, Hungary, Malta, Portugal and the United Kingdom reported that their accounting 
systems interface with other accounting systems and include procedures to systematically review the taxpayer 
record to correct any eventual accounting errors. The Commission considers this good practice and recommends 
that all Member States adopt a similar approach. 

The 21 Member States whose accounting systems interface with other accounting systems in the tax 
administration mentioned tax filing, arrears management, tax registers and customer service systems. In some 
Member States, special government information interfaces (e.g. x-roads) allow greater interoperability of their 
accounting systems, including with other national institutions such as health and social services, and with 
banking systems to exchange payment data with financial institutions. 

Recommendation 36: Ensure that accounting systems interface with other systems and include procedures 
to systematically review and correct the taxpayer record. 

An internal audit process should be in place to periodically review the accounting system to ensure its alignment 
with tax laws and accounting standards (e.g. correct calculation of tax liabilities, penalties and interest). The 
majority of Member States (17/28) reported that they have such an internal audit process in place, sometimes 
complemented by an independent external review body (e.g. government auditor or independent entity appointed 
in line with the country’s laws and regulations) that periodically audits the VAT administration in terms of 
operational performance. 

Figure 51: Internal audit processes and external audit review (overview) 
a. Question 7.1: 'Within your tax administration .... the internal audit periodically reviews its accounting system 
to ensure the alignment with the tax laws and accounting standards (e.g. the system correctly calculates tax 
liabilities, penalties and interest).' 

39%

61%

Yes
(BE, BG, DE, DK, EE, ES, FR, HR, HU, IE LT, LV, NL,
PL, PT, RO, UK)

No
(AT, CY, CZ, EL, FI, IT, LU, MT, SE, SI, SK)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

b. Question 7.3: 'Does an independent external review body (e.g. government auditor or independent entity 
appointed in line with the country’s laws and regulations) periodically audits the tax administration’s financial 
statements and operational performance, including the VAT administration?' 

96%

4%

Yes
(27 Member States)

No
(LU)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

43 

 
 
 
Recommendation 37: Put in place an adequate internal audit process for the accounting system, to ensure 
alignment with tax laws and accounting standards. 

7.2. 

VAT dispute resolution process 

In some situations, and especially after a VAT audit, taxpayers may disagree with the assessments made by the 
administration. Disputes normally arise from issues such as administrative errors or an identified discrepancy 
based on interpretation of legal provisions, facts and the relation between the two. Taxpayers should benefit from 
an independent, accessible and efficient review mechanism that safeguards their rights to challenge a VAT 
assessment and obtain a fair hearing. 

Usually, the dispute resolution mechanism falls into stages. Initially, taxpayers may ask the tax administration 
for an administrative review, usually carried out by specially designated officials from outside the audit 
department. Taxpayers who are not satisfied with an administrative review may call for a review by an 
independent body (special committee, specialised tax tribunal or court). Finally, they may refer to the judicial 
system (or an alternative, such as a dispute prevention and resolution mechanism) to resolve any remaining 
disputes. Such disputes usually concern the legal interpretation of VAT legislation and/or the facts, or the 
general treatment received from the tax administration (procedure). 

VAT dispute resolution mechanisms in the EU Member States vary according to their VAT legal provisions, 
country-specific experience and established procedures. However, all Member States have in place a VAT 
dispute resolution process that safeguards the taxpayer’s right to challenge an assessment resulting from a VAT 
audit. 

Table 2: VAT dispute resolution overview in EU Member States 

Dispute 
resolution 

Member 
State 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Taxpayers have the 
right to challenge the 
VAT assessments by 
means of an internal 
review by the tax 
administration 

The internal review is 
performed by a 
specialised unit that is 
separate from the VAT 
audit department 

Taxpayers can 
challenge the VAT 
assessments by means 
of an independent 
review by an external 
body 

Taxpayers can also 
challenge the 
independent review in 
front of a higher 
appellate court 

Yes 

Yes 

Yes 

No 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

No 

Yes 

Yes 

— 

Yes 

Yes 

Na 

Yes 

Yes 

Na 

No 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

No 

Na 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

44 

 
 
 
Dispute 
resolution 

Member 
State 

Sweden 

United Kingdom 

Taxpayers have the 
right to challenge the 
VAT assessments by 
means of an internal 
review by the tax 
administration 

The internal review is 
performed by a 
specialised unit that is 
separate from the VAT 
audit department 

Taxpayers can 
challenge the VAT 
assessments by means 
of an independent 
review by an external 
body 

Taxpayers can also 
challenge the 
independent review in 
front of a higher 
appellate court 

Yes 

Yes 

No 

Yes 

Yes 

Yes 

TOTAL 
Source:  European Commission (2019) – Survey on VAT administration, collection and control 

27 

20 

28 

Yes 

Yes 

28 

The Commission wanted to capture an overview of the dispute resolution systems in the Member States. 
However, the limits of this exercise are clear: under the Article 12 provisions, the Commission and the tax 
administrations are not competent to assess the performance of the judicial review processes. Nevertheless, as 
good practice, tax administrations could monitor the stock and flow of dispute cases under internal review, by 
number and value of taxes under dispute. 

Figure 52: Dispute resolution – monitoring process 
Question 7.4: 'Dispute resolution: Does your tax administration monitor the stock and flow of dispute cases 
under internal review, by number and value of taxes under dispute?' 

11%

Yes
(AT, BE, BG, CY, CZ, DE, DK, EE, EL, ES, FR, HR, HU,
IE, IT,LT, LU, LV, MT, NL, PL, PT, RO, SK, UK)

89%

No
(FI, SE, SI)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

Recommendation 38: Monitor the dispute resolution process, draw conclusions to support improvement 
of the general investigation methods and refine the tax assessment procedures. 

8.  COVID-19 and VAT: recommendations for VAT collection and recovery 

Most tax administrations have business continuity plans to deal with different business‑affecting events, 
including equipment failures, disruptions and other incidents. Some plans cover the range of issues relevant to a 
pandemic, particularly risks to health, impact on staff and working locations, prolonged disruptions and 
lockdowns, and pressures on IT infrastructure from general economy-wide shocks. 

Plans to ensure business continuity are usually included in risk registers. A large majority of tax administrations 
(22/28) indicated that they use a risk register, i.e. a central repository of identified risks that potentially pose a 
threat to the continuity of operations. 

45 

 
 
 
 
Figure 53: Business continuity – the existence of a central risk repository 
Question 4.2: 'Does your tax administration use a risk register (i.e. a central repository of identified risks that 
potentially pose a threat to the continuity of tax administration operations)? 

21%

Yes
(AT, BE, BG, CY, CZ, DK, EL, ES, FI, FR, HR, HU, IE,
LT, LV, PL, PT, RO, SE, SI, SK, UK)

79%

No
(DE, EE, IT, LU, MT, NL)

Source:  European Commission (2019) – Survey on VAT administration, collection and control 

The risk registers usually include a short description of the risk, a time reference, the likelihood of occurrence, 
the severity of effect and some mitigation measures. For a start, it is necessary to have a plan for continuity of 
operations in the event of disruptive actions that affect part or all of the tax administration’s assets and resources, 
including the unavailability of human resources, closure of buildings, remote access to IT and other equipment 
for permanent availability of data and other records. 

However, contingency plans need to be continually reviewed and adjusted to account for the different 
considerations that will arise in the event of a pandemic, bearing in mind the rapidity with which circumstances 
can change and planning assumptions can become outdated. 

Recommendation 39: Review and update business continuity plans and test them periodically in real-time 
scenarios. 

The COVID-19 outbreak has prompted unprecedented action at national and Union level to support Member 
States’ economies and facilitate their recovery. While tax administration and policy measures27 alone would not 
be sufficient, they played a key role in alleviating the immediate effects of the crisis. 

Member States have decisively implemented tax administration and policy measures, which appear broadly 
adequate, mainly providing businesses and households with additional time for handling their tax affairs. Thus, 
continuous liquidity is ensured. 

As Member States progress towards the recovery phase and beyond, they should avoid front-loaded fiscal 
consolidation and instead design more targeted taxation measures. These measures should ensure that the tax 
burden is shared fairly across economic actors. 

While the crisis presents a huge challenge, it also provides a window of opportunity to use tax policy for 
strengthening the resilience and competitiveness of the EU economy, in line with the transition towards a greener 
and more just and digital economy, as set out in the Commission’s policy agenda. 

Most of the recommendations presented in this report – especially those related to digitalisation, online 
registration and services, IT investments and business continuity –would help tax administrations to navigate 
safely through difficult times such as the COVID-19 pandemic. They would contribute to better VAT 
administration and collection. 

9.  Conclusion 

Inconsistent and non-optimal VAT processes and procedures diminish the tax revenue of EU Member States. 
Lower VAT revenue not only reduces the own resources for the Union budget but also shrinks national budgets, 
as VAT is an important source of national income. Imperfect VAT administration hampers the rights of honest 
VAT payers and creates incentives for fraud. To serve VAT payers well, EU tax administrations should aim at 
offering quality service and provide a fair and just VAT system. 

27 

https://ec.europa.eu/info/sites/default/files/coronovirus_policy_measures_16_november.pdf  

46 

 
 
                                                      
In the previous Report (2017)28, the Commission put forward common references for national VAT collection 
and control systems. Generally, EU tax administrations observed the previous recommendations and achieved 
some improvements, notably in revenue collection, audit and digitalisation. Nevertheless, such VAT 
administration measures must be supported by additional tax policy reforms (outside the scope of the report) to 
see much larger gains. 

This report contains a comprehensive overview of practices and recommendations that can help tax 
administrations to improve their internal processes covering all the main functions of VAT administration. 
Upgrading the interaction with taxpayers and other stakeholders, such as the national statistical authorities or tax 
administrations in other Member States, is crucial to improve the overall performance of tax administration in 
the Union. 

Tax administrations need to step up efforts in areas such as risk analysis, process automation and exchange of 
information. They need to upgrade their IT systems, increase the number of IT staff and their training, explore 
the use of several data sets and third-party data, and invest in in-depth data analysis. 

To facilitate the task of EU tax administrations, the Commission reviewed and updated the description good 
practices, increased the number of recommendations and made them more specific to better address the outliers. 

The Commission calls on EU Member States to take up current recommendations, not only to help generate the 
tax revenue needed to respond to the major challenges of the current crisis, but also to level the playing field in 
the internal market and pave the way towards a faster and more durable post-pandemic recovery. 

28 

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014SC0038&from=EN   

47 

 
 
 
                                                      
Annex 1: Index of recommendations 

Recommendation 1: Calculate and analyse the national VAT gap and its different components (missing trader 

intra-community fraud, e-commerce, etc.). ................................................................................................. 11 

Recommendation 2: Inform taxpayers online about their VAT-related obligations and provide for online 

registration. .................................................................................................................................................. 12 

Recommendation 3: Improve automatic exchange of information between tax administrations and other national 
bodies. ......................................................................................................................................................... 13 

Recommendation 4: Maintain an accurate and complete VAT database. ............................................................. 14 

Recommendation 5: Perform legal and ID verifications and systematic preliminary checks based on risk 

indicators. .................................................................................................................................................... 15 

Recommendation 6: Keep a record of applicants to whom registration has not been granted. ............................. 16 

Recommendation 7: Cross-check the information held in the VAT registration database against third-party 

information sources. .................................................................................................................................... 16 

Recommendation 8: Have in place processes to detect taxpayers who fail to register and focus on the specific 

economic sectors with a significant number of unregistered businesses. .................................................... 18 

Recommendation 9: Integrate a risk assessment procedure in the registration process. ....................................... 18 

Recommendation 10: Perform a follow-up check on VIES registration numbers and analyse the possibility of the 
suspension or removal of the VIES number in the event of fraud. .............................................................. 19 

Recommendation 11: Link the IT registration information system with other subsystems of the tax 

administration, such as filing and payment, collection and audit. ............................................................... 20 

Recommendation 12: Allow VAT payers to access, visualise and modify their VAT-relevant data via a secure 

online connection. ....................................................................................................................................... 20 

Recommendation 13: Create or maintain a register of e-commerce taxpayers. .................................................... 21 

Recommendation 14: Set up a dedicated information channel for MOSS and systematically perform preliminary 
registration checks for MOSS purposes. ..................................................................................................... 23 

Recommendation 15: Increase efforts to keep the MOSS database accurate. ....................................................... 24 

Recommendation 16: Improve the audit activity on MOSS-registered businesses. .............................................. 25 

Recommendation 17: Invest in substantial IT upgrades, while maintaining existing IT systems based on overall 

needs analysis. ............................................................................................................................................. 27 

Recommendation 18: Invest in IT staff with a view to improving both their number and their skills. ................. 27 

Recommendation 19: Mitigate risks through a compliance management plan that includes the main compliance 

threats and monitor its implementation on a regular basis. ......................................................................... 29 

Recommendation 20: Adopt a service-oriented attitude towards VAT payers and use the opportunity offered by 

the interaction with taxpayers to provide high-quality VAT administration services. ................................ 31 

Recommendation 21: Explore the possibility of using several data sets for VAT compliance purposes and 

permanently increase the quality of the exchange of information and administrative cooperation. ............ 32 

Recommendation 22: Collect meaningful data, balance risk evaluation analysis and profiling solutions, and 

continue investing in analytical capability. ................................................................................................. 33 

Recommendation 23: Continue efforts for a higher on-time filing rate as a good indicator of the robustness of the 
VAT system. ................................................................................................................................................ 34 

Recommendation 24: Be proactive in reminding taxpayers of filing deadlines and use specific supporting tools.

 ..................................................................................................................................................................... 35 

48 

 
Recommendation 25: Design a penalty system for failure to submit VAT returns and failure to make payments 

on time, bearing in mind two key principles: simplicity and proportionality. ............................................. 36 

Recommendation 26: Limit VAT payments in cash as much as possible. ............................................................ 37 

Recommendation 27: Use an online channel solution and maintain and upgrade other back-up communication 

channels for interaction with VAT payers. .................................................................................................. 38 

Recommendation 28: Maintain a flexible IT subsystem to manage and prioritise VAT arrears. ......................... 39 

Recommendation 29: Pay legitimate tax refunds promptly, while having procedures in place to prevent payment 
of fraudulent claims for VAT refunds. ........................................................................................................ 40 

Recommendation 30: Implement the observed good practices if high values of VAT refunds are paid after the 

statutory date. .............................................................................................................................................. 41 

Recommendation 31: Link the refund process with the registration component (check taxpayers’ identities to 
prevent fictitious traders from entering the VAT system) and integrate it with their compliance risk 
management system..................................................................................................................................... 41 

Recommendation 32: Use sector-specific audit manuals, cooperate with other agencies, update and review audit 

plans and monitor the quality of audit function in accordance with a documented process. ....................... 43 

Recommendation 33: Make use of EU tools available, exchange experiences and good practice in the use of 
different tools and procedures and collaborate (e.g. joint audits) to increase the efficiency of the audit 
functions. ..................................................................................................................................................... 44 

Recommendation 34: Adjust the scope and intensity of VAT audits to meet needs. ............................................ 45 

Recommendation 35: Complement audit measures with other, non-audit compliance measures. ........................ 46 

Recommendation 36: Ensure that accounting systems interface with other systems and include procedures to 

systematically review and correct the taxpayer record. ............................................................................... 47 

Recommendation 37: Put in place an adequate internal audit process for the accounting system, to ensure 

alignment with tax laws and accounting standards. ..................................................................................... 48 

Recommendation 38: Monitor the dispute resolution process, draw conclusions to support improvement of the 

general investigation methods and refine the tax assessment procedures.................................................... 49 

Recommendation 39: Review and update business continuity plans and test them periodically in real-time 

scenarios. ..................................................................................................................................................... 50 

49 

 
 
 
 
Annex 2: Index of figures and tables  

Index of figures 

Figure 1: Evolution of the VAT gap in the EU ....................................................................................................... 8 

Figure 2: VAT gap as share of the VTTL, 2018 and 2019 – in % .......................................................................... 8 

Figure 3: Perceived usefulness of the VAT gap estimates in relation to the compliance work of tax 

administrations in the Member States ......................................................................................................... 10 

Figure 4: The VAT gap in the EU in average value over the reporting period ..................................................... 11 

Figure 5: Online information on VAT registration obligations ............................................................................. 12 

Figure 6: The availability of online registration in the EU Member States ........................................................... 12 

Figure 7: Automatic exchange of information between tax administrations and other national bodies in charge of 
registration ................................................................................................................................................... 13 

Figure 8: Information required for new VAT registration in the EU Member States ........................................... 14 

Figure 9: Verifications and preliminary checks regarding VAT registration ........................................................ 15 

Figure 10: Record of applicants to whom registration has not been granted ........................................................ 16 

Figure 11: Third-party cross-check of VAT registration information ................................................................... 16 

Figure 12: Processes to detect taxpayers who fail to register and the economic sectors with a significant number 

of unregistered businesses ........................................................................................................................... 17 

Figure 13: Processes to detect taxpayers who fail to register and the economic sectors with a significant number 

of unregistered businesses ........................................................................................................................... 17 

Figure 14: Time (days) needed to obtain VAT and VIES registration numbers in EU Member States ................ 18 

Figure 15: Follow-up check on VIES registration numbers in EU Member States .............................................. 19 

Figure 16: Analysis of the main components of the registration IT subsystem .................................................... 20 

Figure 17: Member States that keep a record of the VAT-registered taxpayers selling online ............................. 21 

Figure 18: MOSS total amounts 2019 (Union and non-Union schemes) in the EU Member States ..................... 21 

Figure 19: MOSS – VAT registration verifications .............................................................................................. 22 

Figure 20: MOSS – dedicated information channels ............................................................................................ 22 

Figure 21: MOSS – development of registration/deregistration at EU level (2016–2019) ................................... 23 

Figure 22: Individual evolution of MOSS registrations in the EU Member States ............................................... 24 

Figure 23: MOSS deregistration ........................................................................................................................... 24 

Figure 24: Number of VAT audits carried out on MOSS-taxable persons in 2019 .............................................. 25 

Figure 25: Major IT initiatives and average VAT performance in EU Member States (2016–2019) ................... 26 

Figure 26: Change in VAT gap (p.p.) and VAT revenue increase (%) (2016–2019) ........................................... 27 

Figure 27: VAT compliance plans in the EU Member States ............................................................................... 28 

Figure 28: Tax compliance plans in the EU Member States (content) .................................................................. 28 

Figure 29: Taxpayer services in the EU Member States ....................................................................................... 29 

Figure 30: Publication of reports on performance in providing taxpayer services (2016–2019) .......................... 30 

Figure 31: Taxpayer services: VAT registration information available online ..................................................... 30 

Figure 32: Data used by EU tax administrations for VAT compliance purposes ................................................. 31 

Figure 33: Reports available to senior management in different areas of VAT administration ............................ 32 

50 

 
Figure 34: VAT e-filing in EU Member States ..................................................................................................... 33 

Figure 35: Monitoring the compliance of VAT filing in the EU Member States .................................................. 34 

Figure 36: Actions initiated by tax administrations in case of late filing or no filing of VAT declarations ......... 35 

Figure 37: Member States evaluating the effectiveness of the penalty system for late filing/payment ................ 35 

Figure 38: Availability of e-payment of VAT obligations in EU Member States ................................................. 36 

Figure 39: VAT cash payments ............................................................................................................................. 36 

Figure 40: Feedback channels available about the settlement of VAT obligations............................................... 37 

Figure 41: VAT debt collection: initial reaction (in days) to late payment ........................................................... 38 

Figure 42: Effectiveness of the VAT arrears IT management systems in EU Member States .............................. 39 

Figure 43: Percentage of VAT refunds (value) paid by the statutory date (EU average) ...................................... 40 

Figure 44: VAT refund systems in EU Member States ......................................................................................... 41 

Figure 45: Characteristics of the VAT audit performed by EU VAT administrations .......................................... 42 

Figure 46: VAT audit software used by EU tax administrations .......................................................................... 43 

Figure 47: VAT collection and VAT assessed after audits in 23 EU Member States ........................................... 44 

Figure 48: Types of VAT verifications/audits performed by the EU tax administrations..................................... 45 

Figure 49: Complementary non-audit compliance measures ................................................................................ 46 

Figure 50: Characteristics of tax revenue accounting systems in the EU.............................................................. 46 

Figure 51: Internal audit processes and external audit review (overview) ............................................................ 47 

Figure 52: Dispute resolution – monitoring process ............................................................................................. 49 

Figure 53: Business continuity – the existence of a central risk repository .......................................................... 50 

Index of tables 

Table 1: VAT gap for 2016–2019 (in million EUR and as percentage of VAT total tax liability) ......................... 9 

Table 2: VAT dispute resolution overview in EU Member States ........................................................................ 48 

51 

 
 
 
 
 
Annex 3: References 

List of web pages on VAT obligations 

Member State 

Web pages – links verified in September 202029 

Available in a 
foreign language 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

Denmark 

Estonia 

Finland 

France 

Germany30 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

https://www.bmf.gv.at/services/publikationen/broschueren-ratgeber.html 
https://www.bmf.gv.at/en/topics/taxation/vat-assessment-refund.html 

https://finances.belgium.be/fr/entreprises/tva/declaration/debut_fin_modification_a
ctivite#q1 
https://financien.belgium.be/nl/ondernemingen/btw/aangifte/aanvang_wijziging_ei
nde_activiteit#q3 
https://business.belgium.be/en/setting_up_your_business/registration_with_the_va
t_administrations 
https://old.nra.bg/en/page?id=517  

https://www.porezna-uprava.hr/PdviEu/Stranice/PDViEU.aspx 
https://www.porezna-
uprava.hr/en/EN_porezni_sustav/Pages/value_added_tax.aspx 

https://www.mof.gov.cy/mof/tax/taxdep.nsf/All/A80CE65EF4296B63C225854A0
0316AD0?OpenDocument 

https://www.financnisprava.cz/en/taxes/vat-registration-for-non-established-per 

https://skat.dk/skat.aspx?oid=2234572 
https://skat.dk/skat.aspx?oid=2244390 
https://indberet.virk.dk/myndigheder/stat/ERST/Start_virksomhed 
https://indberet.virk.dk/myndigheder/stat/ERST/Webreg_aendre_virksomhed__luk
ke_virksomhed 

https://www.emta.ee/eng/business-client/registration-business/registration-and-
deletion-person-liable-value-added-tax 
https://www.emta.ee/eng/business-client/registration-business/registration-foreign-
traders-vat-liability 

https://www.vero.fi/en/businesses-and-corporations/about-corporate-taxes/vat/ 

https://www.impots.gouv.fr/portail/ 
https://www.impots.gouv.fr/portail/international_en/business 

https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Zielgruppen/Existenz
gruender/default.php?f=Muenchen&c=n&d=x&t=x 
https://service.berlin.de/dienstleistung/325409/ 

https://www.aade.gr/menoy/hristikoi-odigoi/forologikes-ypohreoseis-agroton 

https://en.nav.gov.hu/taxation/taxpayer_registration/general_rules.html  
https://en.nav.gov.hu/taxation/taxpayer_registration/specific_rules.html  

https://www.revenue.ie/en/vat/vat-registration/how-do-you-register-for-
vat/index.aspx 

https://www.agenziaentrate.gov.it/portale/web/guest/imprese/istanze/partita-iva 
https://www.agenziaentrate.gov.it/portale/web/english/nse/business/vat-in-
italy/vat-registration 

https://www.vid.gov.lv/en/value-added-tax  

https://www.vmi.lt/cms/en/mokesciu-moketoju-iregistravimas-pvm-moketoju-
registre 

Luxembourg 

https://guichet.public.lu/fr/citoyens/impots-taxes/exercice-activite-
independant/inscription-adm-fiscales/inscrire-tva.html 

Malta 

https://cfr.gov.mt/en/faqs/Pages/VAT/VAT-FAQs.aspx 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

No 

Yes 

No31 

Yes 

Yes 

Yes 

Yes 

No 

29 
30 

31 

The addresses of web pages were provided by the tax administrations and verified in September 2020. 
Some VAT aspects are related to the specific organisation and competencies of federal Germany. Certain designated tax offices (e.g. 
Berlin-Neukölln tax office) have central jurisdiction for sellers who are not established in Germany. For the current report we went to 
the websites of authorities in Munich and Berlin.  
Irish/Gaeilge only. 

52 

 
                                                      
Netherlands 

https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/bus
iness/vat/vat_in_the_netherlands/your_tax_office_and_registration/your_tax_offic
e_and_registration 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

https://www.biznes.gov.pl/en/firma/taxes-and-insurance-in-poland/vat 

https://info.portaldasfinancas.gov.pt/pt/docs/Conteudos_1pagina/Pages/portuguese
-tax-system.aspx 
https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/Manuais/Documents/M
anual_Inicio_PF.pdf 

NA 

https://www.financnasprava.sk/sk/podnikatelia/dane/dan-z-pridanej-
hodnoty/registracia-dph 
https://www.financnasprava.sk/en/businesses/taxes-
businesses#ZahranicnaOsobaDPH 

https://www.fu.gov.si/en/taxes_and_other_duties/areas_of_work/value_added_tax
_vat/ 

https://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/La_Agencia_Tributa
ria/Campanas/_Campanas_/Fiscalidad_de_no_residentes/_IVA___VAT_/_IVA__
_VAT_.shtml 

https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesand
employers/startingandrunningaswedishbusiness/registeringabusiness.4.12815e4f14
a62bc048f5179.html 
https://www.skatteverket.se/servicelankar/otherlanguages/inenglish/businessesand
employers/startingandrunningaswedishbusiness/declaringtaxesbusinesses/vat.4.12
815e4f14a62bc048f52be.html?q=vat  

United Kingdom 

https://www.gov.uk/vat-registration 

Yes 

Yes 

Yes 

NA 

Yes 

Yes 

Yes 

Yes 

No 

Reports from the Commission to the European Parliament and the Council on VAT registration, collection 
and control procedures following Article 12 of Council Regulation (EEC, EURATOM) No 1553/89 

  Report 2017: Report from the Commission to the Council and the European Parliament – Eighth report 
under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures, 
COM(2017) 780 final;  

  Report  2014:  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  –  Seventh 
report  under  Article  12  of  Regulation  (EEC,  Euratom)  n°  1553/89  on  VAT  collection  and  control 
procedures Seventh report, COM(2014) 69 final + Annex SWD(2014) 38 final;  

  Report 2008: Report from the Commission to the Council and the  European Parliament - Sixth Report 
under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures, 
COM(2008) 719 final + Annex SEC(2008) 2759;  

  Report 2004: Report from the Commission to the Council  and the European Parliament  - Fifth report 
under article 12 of Regulation (EEC, Euratom) No 1553/89 on VAT collection and control procedures, 
COM(2004) 0855 final + Annex SEC(2004) 1721;  

  Report 2000: Report from the Commission to the Council and the European Parliament - Third article 
14  report  on  the  application  of  Council  Regulation  (EEC)  No  218/92  of  27  January  1992  on 
administrative cooperation in the field of indirect taxation (VAT) and Fourth report under article 12 of 
Regulation  (EEC,  Euratom)  No  1553/89  on  VAT  collection  and  control  procedures,  COM/00/0028 
final;  

  Report  1998:  Report  from  the  Commission  to  the  Council  and  the  European  Parliament  -  VAT 
collection and control procedures applied in the Member States - Third Commission report [Article 12 
of Regulation (EEC, Euratom) No 1553/89], COM/98/0490 final;  

  Report  1995:  VAT  Collection  and  Control  Procedures  Applied  in  Member  States  -  2nd  Article  12 

Report, COM/95/354 final;  

  Report 1992: VAT Collection and Control Procedures Applied in Member States - First report, SEC(92) 

280 final 

53 

 
 
 
 
 
In person 

GETTING IN TOUCH WITH THE EU 

All over the European Union there are hundreds of Europe Direct information centres. You can find the 
address of the centre nearest you at: https://europa.eu/european-union/contact_en 

On the phone or by email 

Europe Direct is a service that answers your questions about the European Union. You can contact 
this service: 

– by freephone: 00 800 6 7 8 9 10 11 (certain operators may charge for these calls), 

– at the following standard number: +32 22999696 or  

– by email via: https://europa.eu/european-union/contact_en 

Online 

FINDING INFORMATION ABOUT THE EU 

Information about the European Union in all the official languages of the EU is available on the Europa 
website at: https://europa.eu/european-union/index_en 

EU publications 

You can download or order free and priced EU publications at: 
https://publications.europa.eu/en/publications. Multiple copies of free publications may be obtained by 
contacting Europe Direct or your local information centre (see https://europa.eu/european-
union/contact_en). 

EU law and related documents 

For access to legal information from the EU, including all EU law since 1952 in all the official language 
versions, go to EUR-Lex at: http://eur-lex.europa.eu 

Open data from the EU 

The EU Open Data Portal (http://data.europa.eu/euodp/en) provides access to datasets from the EU. 
Data can be downloaded and reused for free, for both commercial and non-commercial purposes. 

 
 
 
 
 
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DOI 

10.2778/23782 

ISBN 

978-92-76-30355-8