Italy tops the table for tax dodging in Europe – again

Italy tops the table for tax dodging in Europe - again
Photo: Ina Fassbender/AFP
The amount of lost VAT revenue in Italy was once again found to be the biggest in Europe, with the UK in second place.

Italy held on to the top spot in Europe’s rankings for VAT evasion once again, the European Commission said on Thursday.

The Italian state lost 35.4 billion euros in dodged VAT revenue, marking the biggest loss in absolute terms, according to a new EC study.

The figures, the most recent available, dated from 2018 and so were not impacted by the coronavirus pandemic.

Lost tax revenue in Italy was up from 35.3 billion euros in 2017.

The United Kingdom was in second place with a loss worth €23.5 billion, followed by Germany with €22 billion.

As a percentage, Italy’s tax gap was fourth-biggest at just over 24 percent, behind Romania (33.8%), Greece (30.1%) and Lithuania (25.9%).

“Today's figures show that efforts to shut down opportunities for VAT fraud and evasion have been making gradual progress – but also that much more work is needed,” commented Paolo Gentiloni, EC Commissioner for Economy.

“At this time more than ever, EU countries simply cannot afford such losses,” he said, urging countries to “step up the fight against VAT fraud with renewed determination.”

READ ALSO: Could coronavirus push Italy to adopt card payments at last?

Prime Minister Giuseppe Conte is looking at introducing measures encouraging electronic payments as part of his Progetto Italia Cashless, or Project Cashless Italy. 

Following the meetings on Tuesday, Conte spoke of the “importance for the country of encouraging everyone to use digital payments.”
“It will not only mean making the payment system more efficient, more transparent and traceable: it also means laying the foundations for recovering the underground economy, discouraging payments 'in the black'.”
Some studies estimate that up to 86 percent of all point-of-sale payments made in Italy in 2018 were in cash – the third-highest in Europe after Spain and Greece, where the figure is 87 and 88 percent respectively.
This compares to just 15 percent in Sweden and 34 percent in the UK. 
Photo: AFP
Several measures encouraging cashless payments were included in the 2020 budget last November, including the promise of tax incentives for those who pay by electronic – and therefore traceable – means, as authorities try to tackle widespread tax evasion.
The government also stated it would slash the maximum cash payment allowed from the current 3,000 euros down to 1,000 euros by 2022.
Italy has long been relatively resistant to adopting forms of cashless payment. But ministers may now be hoping that the public is more open to switching to electronic payments – either due to hygiene concerns, or after shopping online for the first time during lockdown.
As elsewhere in the world, some Italian shops and businesses had already taken it upon themselves to start asking customers to use contactless payments to avoid handling bills possibly touched by an infected person.
This includes payment via apps in some restaurants, as well as requests for customers in shops to use contactless payment methods.


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