International companies miss an average of €14,000 in VAT per year

Research carried out by the European Commission shows that within the EU-27 there is a large difference between the expected and actual VAT revenues: the VAT gap. In 2018, this gap was no less than €140 billion, good for 11.2% of all expected VAT revenue. An important reason for this is that companies often do not apply VAT refunds correctly or fully.

On average, an international company leaves €14,000 per year in repayable VAT.

About 80% of EU businesses does not correctly apply VAT refund. This leaves money to which they are entitled. The average non-recovered VAT is around €14,000 per company per year. The transport sector in particular stands out: Many transport operators are not sufficiently familiar with the constantly changing regulations in the countries where they operate.

Is that entirely due to the transport operator? Certainly not. transport operators often do not have enough time and resources to keep track of all changes in laws and regulations. Moreover, public authorities and tax administrations are not always clear in their communication: information is often provided only in the local language, via obscure channels, and without reminders of changes. Anyone who misses a deadline or misses a rule simply loses the right to refund VAT. Enabling a specialist then works as a form of insurance.

The report recommends:

• better cooperation between EU Member States in data collection and information exchange;
• increased checks on compliance with VAT rules in the transport sector;
• clear and accessible information to international companies. In short: the VAT gap is still a substantial problem within the EU-27. More coordination, modernisation and support are needed to effectively reduce this gap.