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Slovakia recorded a historic success in the evaluation of VAT collection for 2020. According to the evaluation by the European Commission (EC), the VAT gap was reduced to 13.9% in 2020, which is the best result since 2000. Moreover, according to the EC's preliminary estimate, the tax gap will continue to decrease in 2021, too. The EC estimates a reduction of up to 8.8%.
The EC published a VAT gap report for 2020 informing that the EU states had managed to reduce the VAT gap by approximately 2 percentage points year-on-year in 2020 (from 11.0% to 9.1%). The EC’s more detailed analysis for 2020 shows that the decrease in the VAT gap in the EU is attributable to governments’ anti-pandemic support measures, which were also reflected in a substantial year-on-year reduction (-22%) in corporate bankruptcies in the EU. On the other hand, the positive impact of increased electronic payments and reduced activities in sectors with a naturally higher gap, which was expected at the pan-EU level, was not demonstrated.
Since 2012, Slovakia has continuously improved its VAT collection rate. While in 2012 it did not manage to collect more than a third of the potential VAT revenue (35%), the VAT gap in 2020 was narrowed to 13.9%, which is Slovakia's historically best result since 2000 according to the EC’s current measurements. If we managed to achieve the average VAT collection rate of the EU countries (corresponding to a 9.1% tax gap) in 2020, additional fairly collected 380 million euros would be added to the budget wallet.
According to the preliminary estimates presented by the EC as well as the IFP and the Slovak Financial Administration, the significant decrease in the tax gap further continued in the last year (2021) and the development of the effective tax rate (EDS) for VAT indicates that we will also see a downward trend in the current year (2022).
Press Department
Ministry of Finance of the Slovak Republic
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