EU countries lost almost €150 billion in VAT revenues in 2016 according to the European Commission. The so-called ‘VAT Gap’ shows the difference between the expected VAT revenue and the amount actually collected. The VAT Gap increased in six Member States in 2016 which included Ireland.

The EU Commission reported that in nominal terms, the VAT Gap decreased by €10.5 billion to €147.1 billion in 2016, a drop to 12.3% of total VAT revenues compared to 13.2% the year before. The VAT Gap decreased in 22 Member States with Bulgaria, Latvia, Cyprus, and the Netherlands displaying strong performances, with a decrease in each case of more than 5 percentage points in VAT losses.

The VAT gap in Ireland was 11% in 2016. The Commission’s report notes that in response to VAT fraud concerns, Ireland introduced a reverse charge on the provision of wholesale power, electricity, and gas supplies and tightened the rules related to VAT on the capital goods scheme