The VAT shortfall estimated at between 6 and 10 billion by the Direction générale des Finances publiques
This study provides an estimate of the value-added tax (VAT) that should have been collected but was not collected because of reporting errors or omissions—whether intentional or not.
This estimate is based on an extrapolation of the rates of irregularities detected by the DGFiP’s controls; it is validated by a random control experiment carried out by the DGFIP’s verification teams during 2022.
The loss of VAT revenue due to the under-declaration of companies declaring VAT would thus be included in a range of €6 to €10 billion, i.e. 4-5% of the amount of VAT actually collected.
This estimate is a reduction in the loss of revenue on VAT as a whole, as it does not include companies that do not declare VAT (wrongly or because of the VAT exemption regime), nor potential irregularities that would not be detected by tax audits.
The distributive trades sector accounts for the largest share of this shortfall (30%), in line with its share of VAT collected, while in relative terms, it is in real estate activities and in accommodation and catering that the rates of under-declaration are the highest, at 13% of the VAT of each sector. For 44% of this loss of income, the irregularities relate to the concealment or omission of transactions that should have been subject to VAT.
Authors: Nicolas Charnacé, Acher Elbaz and Pierre Barnouin
Source Frédéric Visnovsky
