Romania lost more than EUR 10 billion in 2011 due to uncollected VAT, the largest loss of any European Union (EU) member state relative to GDP.

A report by the European Commission, quoted by French publication Le Monde, shows that Romania's EUR 10.3 billion uncollected VAT loss represented 7.8 percent of the country’s EUR 131.3 billion GDP in 2011.

The loss represents the difference between revenues on paper and the revenues actually cashed in by the state.

According to the report, Greece and Latvia are the two other member states most affected by this phenomenon. Greece lost EUR 9.8 billion in 2011 due to uncollected VAT - representing 4.7 percent of its GDP, while Latvia lost EUR 1 billion.

At the EU level, the uncollected amounts reach EUR 193 billion, namely some 1.5 percent of the region's GDP.

However, the largest losses in terms of value are registered by the major EU economies, even if the amounts are small relative to their GDP.

Italy recorded losses of EUR 36.1 billion in 2011, followed by France with EUR 32.2 billion, Germany - EUR 27 billion and UK with losses of EUR 19.5 billion.

According to the recent estimations made by the Romania’s Fiscal Council, tax evasion reached 13.8 percent of GDP last year in Romania, a figure of EUR 19 billion (RON 84.14 billion).

More than half of this amount came from the VAT evasion, which represented 8.3 percent of GDP in 2011-2012, down from the peak of 9.6 percent recorded in 2010, the year when the legal VAT rate went up from 19 percent to 24 percent.

Irina Popescu, irina.popescu@romania-insider.com