Portugal lost €1.6 billion in VAT leakage – Observer
You have free access to all Observer articles by being our subscriber.
Portugal lost 1.6 billion euros with the avoidance of VAT in 2019, according to an estimate by the European Commission. This is the difference between the amount of VAT that the State must receive and the address, the so-called “gap” of VAT.
The European Commission announced this Thursday that the VAT deviation reached, in the European Union, 134 billion euros in 2019, an amount that “represents as revenue losses due to VAT fraud and evasion, to the avoidance and optimization practices in matters of VAT, bankruptcies and financial insolvencies, as well as calculation and administrative errors”, reads the communiqué issued by Brussels. Faced with a diversion, it was reduced in 2018 by 6.6 billion euros. There were 18 Member States to reduce this “gap” in 2019.
There is, however, an improvement trend over the years. Both at community level and in Portugal.
The report presented revelation that in Portugal was lost in 2019, 1.6 billion euros, which means that the deviation was 7.9% compared to what it should have received – 20.4 million euros. But Irish alone 18.8 billion.
It is still a deviation that represents a drop compared to previous years. The deviation in 2016 was 12.7%, falling in the following years to 11.9%, 9.9% and 9%, until reaching 7.9% in 2019.
In absolute terms, the loss in 2015 reached 2.23 million euros, falling since then until reaching 1.6 billion in 2019.
Portugal thus appears in 18th place in VAT deviation among the countries of the European Union. The biggest “gap” happens in Romania (34.9%).
In a statement, the European Commissioner for Economy, Paolo Gentiloni, is quoted as saying that “despite the positive trend registered over the years, the VAT deviation remains a major concern – especially given the huge investment needs that our States -Members have to face in years. This year’s numbers represent a loss of more than 4,000 euros per second. These are unacceptable losses for national budgets; they mean that it is citizens and businesses who have to close the gap through other taxes to pay for vital public services. We must join forces to combat VAT fraud, a serious crime that weighs heavily on consumers’ pockets, undermines our social protection systems and impoverishes the public purse. ”
The European Commission warns that “although the global VAT deviation has improved between 2015 and 2019, the full extent of the Covid-19 pandemic in consumer demand and, consequently, VAT receipts in 2020 remains to be known”. And it is already contributing that in 2022 “legislative proposals will come from Brussels to continue modernizing the VAT system, including the reinforcement of Eurofisc”, which is a decentralized network of anti-tax fraud experts from the European Union.