Determinanty VAT gap

This master’s thesis examines the determinants of the VAT gap in the Member States of the European Union. The objective of the study is to identify and econometrically test selected factors influencing the discrepancy between the theoretical and the actual collection of value added tax. The empirical analysis is based on panel data for EU Member States over the period 2000–2023. The resulting model is estimated as a fixed-effects panel model. The findings confirm that the VAT gap exhibits significant persistence over time, as its lagged value positively affects the current level. A higher share of construction in GDP, higher inflation, and higher unemployment are associated with an increase in the VAT gap. Conversely, growth in GDP per capita and the introduction of VAT control statements contribute to its reduction. The study demonstrates that the VAT gap is driven by a combination of macroeconomic, structural, and institutional factors. The results suggest that its reduction may be supported in particular by more effective use of data and audit tools by tax administrations, targeted attention to high-risk sectors, and consideration of prevailing macroeconomic conditions.