France’s DGFiP estimate of missing VAT revenues at €6bn to €10bn per annum
The Direction générale des Finances publiques tax authorities has published an in-depth study on the loss of Value Added Tax (VAT) receipts resulting from errors or omissions in reporting – including evasion. This estimate is based on the results of the controls carried out by the DGFiP and is validated by a random control experiment carried out in 2022.
The EU VAT Gap estimated the missing French VAT at €10-15 billion in 2020 and 2021
According to this study, the under-declaration of VAT by companies could represent a loss of revenue of between €6bn and €10bn, or 4 to 5% of the total amount collected. This estimate does not take into account companies that do not declare VAT at all or irregularities that would escape tax audits.
France B2B e-invoicing and B2C reporting is being introduced from September 2026 to help fight VAT fraud. It has already introduced French SAF-T transaction reporting in 2014 for audit purposes.
Breakdown of VAT losses reasons
The report estimates the losses arrive under the following activities:
- 46% Concealment of transactions subject to VAT
- 18% VAT wrongly deducted
- 12% Irregularity on specific devices (real estate VAT, etc.)
- 12% Irregularities relating to territoriality obligations
- 8% Delay in payment of VAT
- 1% Wrongly exempted operations
- 1% Intra-Community fraud
- 1% Operations wrongly exempted as exports
- 1% Carousel fraud
- 1% Taxpayers not eligible for an exemption or a reduced rate
French missing VAT by sector:
- The retail sector is responsible for 30% of this shortfall, corresponding to its weight in the VAT collected.
- Construction sector comes in at 15% VAT Gap
- The real estate and accommodation & catering sectors have the highest under-reporting rates, reaching 13% of the VAT due in each sector.
- 44% of the loss of income comes from the concealment or omission of transactions subject to VAT.
The fight against VAT fraud and under-declaration is a priority for the Directorate-General for Public Finances, in order to guarantee tax justice.
Read more in our French VAT Guide.
France versus other countries’ VAT gap
The report gives an interesting comparison on the VAT losses from other countries:
- Italy: 19%
- France: 15%
- Sweden 14%
- EU 27: 9%
- UK 7%
- Canada 7%
- Australia 3%
