VAT Listings within the EU Member States and Their Impact on Tax Evasion

Abstract

VAT represents one of the most important taxes in the EU; however, this tax is highly affected by tax evasion. To combat these frauds, almost all the member states have implemented anti-fraud measures. This article focuses on the regular reports required from VAT payers in some EU member states. This tool is called differently in various countries; this article adopts the name VAT listing. The main aim of this article is to find out whether these measures contribute to a better collection of VAT. The level of VAT collection is within the analysis expressed by the VAT gap. In the panel regression model, the effect of the introduction of VAT listings on the size of the VAT gap was determined using control variables potentially affecting the VAT gap. The results were then verified using an alternative difference-in-differences design with multiple time periods. The results showed that VAT listings reduce the value of the VAT gap, as does using of credit cards for payments and low corruption in the country. On the other hand, the implicit rate of consumption taxes, the final consumption, imports from EU countries, and the number of items in the reverse charge increase the VAT gap. (JEL codes: C33, H26)

Cashless Payments and Tax Evasion: Evidence From VAT Gaps in the EU

“…While cash usage and VAT gaps evolve almost in parallel, e-money usage is clearly negatively correlated with the VAT gap (see Figure 1). This corresponds to the time period after which tax authorities rely increasingly more on third-party information and implement tax administration reforms such as VAT listings to combat VAT evasion (Holá et al, 2022). The focus of this study is the relationship between VAT compliance and e-money usage.…”

“…Survey measures of tax morale are based on the Eurobarometer. Policy changes that introduce more sophisticated tax reporting systems are accounted for by an indicator of "VAT listings" from Holá et al (2022). These publicly-accessible data sources are reported in detail in Table 5.…”

“…This analysis is particularly important as tax administrations around the world are investing heavily in modernizing IT infrastructure and are implementing reforms that will enable them to harness increasingly-available transaction data from financial institutions and reduce the tax gap (Treasury, 2021;Bellon et al, 2022;Waseem, 2023). This policy development is also gaining ground in the European Union (EU), where 18 of the 27 member states have adopted tax information reporting systems of varying sophistication that range from standardized accounting standards to real time e-invoicing (Holá et al, 2022).…”

Modelling the Impact of VAT Fiscality on Branch-Level Performance in the Construction Industry—Evidence from Romania

“…The aim of these policies is to ensure fair competition for businesses and minimize the chances of VAT-related fraud. Holá et al (2022) argued that VAT is an important tax within the EU that is significantly affected by tax evasion. Member states have implemented measures to combat fraud, such as VAT registration, to prevent this.…”

Detection of tax evasion using tax audits in the Slovak Republic

“…Tax evasion is a negative phenomenon in Slovakia and throughout the world (Terzic & Berger, 2020;Li et al, 2021;Ermasova, Haumann & Burke, 2021;Alstadsaeter et al, 2022). It is not entirely possible to eliminate tax evasion, but it is possible to reduce the incidence of tax evasion (Ngah, Ismail & Abd Hamid, 2021;Hungerman, 2022;Rashid et al, 2022;Hola, Zidkova, & Arltova, 2022;Mu, Fentaw, & Zhang, 2022;Slemrod & Velayudhan 2022).…”