site.btaEnforcement of VAT Compliance Improving in EU, Bulgaria - European Commission's 2023 VAT Gap Report

Most EU Member States made progress in the enforcement of Value-Added Tax (VAT) compliance in 2021, according to the 2023 VAT Gap report released by the European Commission on Tuesday. The annual study, which is an estimate of the overall difference between the expected theoretical VAT revenue and the amount actually collected, shows that Member States lost around EUR 61 billion in VAT in 2021, compared to EUR 99 billion in 2020.

This figure represents revenues lost mainly to VAT fraud, evasion and avoidance, non-fraudulent bankruptcies, miscalculations and financial insolvencies, among other drivers.

In Bulgaria, the collected VAT was by 4.9% below the maximum sum the State could have collected, meaning that BGN 678 million from VAT did not enter the Exchequer. In comparison, the VAT revenues lost amounted to BGN 864 million (7.3% of the maximum sum) in 2020, BGN 1,331,000,000 (10.7%) in 2019, and BGN 1,277,000,000 (11.3%) in 2018.

The resources from VAT that the legislators could have increased by lifting reduced tax rates and exemptions, are estimated at BGN 976 million in 2021. In comparison, they stood at BGN 731 million in 2020, BGN 652 million in 2019, and BGN 560 million in 2018.

For 2022, Bulgaria is expected to report 5.6% of VAT revenues lost, the report reads.