Romania Loses Billions in VAT Revenue Due to Fraud

Strategic Insights -

Romania's struggle to tackle the issue of value-added tax (VAT) fraud has resulted in significant revenue losses, with European Chief Prosecutor Laura Kovesi stating that the country loses at least EUR 9 billion annually. A recent European Commission report highlighted a shortfall of EUR 8.4 billion in 2022 alone, primarily due to VAT fraud, tax evasion, and miscalculations. The lack of attention given to addressing this issue by the Romanian authorities has reignited public debate, especially as the country negotiates a new government and aims to reduce its budget deficit.

Key Takeaways:

  • Romania loses at least EUR 9 billion per year due to VAT fraud, according to European Chief Prosecutor Laura Kovesi.
  • The European Commission's latest report states that Romania lost EUR 8.4 billion in 2022 alone due to uncollected VAT.
  • The main factors contributing to the shortfall are VAT fraud, tax evasion, miscalculations, and other factors.
  • Romanian authorities have not prioritized tackling VAT-related fraud.
  • Romania's current budget deficit is 7.5% of GDP, requiring a return to its EC-agreed target.
  • Newly elected President Nicusor Dan has stated that his government does not intend to implement a standard VAT rate increase.
  • Romania's National Bank Director Eugen Radulescu emphasized the importance of addressing VAT collection issues, as Bulgaria collects nearly 90% of its VAT revenue, compared to Romania's 70%.

Statistics:

  • Romania loses at least EUR 9 billion per year due to VAT fraud.
  • EUR 8.4 billion in 2022 was lost due to uncollected VAT, according to the European Commission's report.
  • VAT fraud, tax evasion, and miscalculations account for the majority of the revenue shortfall.
  • Romania's budget deficit stand at 7.5% of GDP.
  • Bulgaria collects approximately 90% of its VAT revenue, while Romania collects 70%.
  • The Romanian government aims to secure RON 30 billion (approximately EUR 6 billion) to return to its EC-agreed budget deficit target.

Sources:

  • European Commission report on VAT collection deficits (December 2024)
  • Interview with European Chief Prosecutor Laura Kovesi for Digi24
  • Comments from Romanian National Bank Director Eugen Radulescu
  • Public statements by newly elected President Nicusor Dan