The Mind the Gap report, together with the VAT and CIT Gap reports, highlights how tax gaps arise from both taxpayer non-compliance and policy choices, revealing key challenges that affect fiscal sustainability and competitiveness.
The European Commission published its Mind the Gap Report on 11 December 2025, which offers a detailed evaluation of tax gaps across the EU and its 27 Member States.
Tax gaps can emerge due to taxpayer non-compliance, such as tax evasion and avoidance, or in relation to tax policy choices, such as tax reliefs or concessions. The Mind the Gap report, along with the complementary research in the VAT Gap report and the CIT Gap report, reveals critical insights into tax compliance challenges and policy choices, which impact fiscal sustainability and competitiveness.
As the first country-by-country overview to underpin the analysis of tax gaps and the effectiveness of tax administrations in the EU, the report builds a basis for future action at EU level.
The European Commission released its first Mind the Gap Report, which builds on the experience so far with Value-Added Tax (VAT) gaps reports and extends now to direct taxation. It offers a comprehensive assessment of tax gaps in the EU and its 27 Member States while providing opportunities to support key policy priorities in the EU and its Member States.
The reports show that the estimates of tax compliance gaps, which amounted to hundreds of billions of euros in 2023.
Tax gaps can emerge due to tax evasion and avoidance. Tax gaps such as tax expenditures, tax reliefs or concessions can be an important policy tool if carefully designed. Tax compliance gaps induced by tax evasion and avoidance weaken public finances and erode trust in tax systems. The VAT compliance gap reached EUR 128 billion in 2023, reversing the progress observed during the pandemic. For Corporate Income Tax (CIT), the estimated average compliance gap using the latest available data stands at 10.9% of collected revenues.
The reports detail practical strategies throughout the EU, highlighting each country’s strengths and areas that need improvement. Addressing tax gaps requires action in various priority areas, including enhancing tax administrations through skill development and data utilisation and review of past policy choices to ensure that measures remain efficient and well-targeted.
The report is accompanied by two technical reports, which provide evidence of substantial tax revenue losses that occur due to non-compliance across the EU, related to VAT and CIT.
Commissioner for Climate, Net Zero and Clean Growth, Wopke Hoekstra, said: “Every year, billions of public revenues are lost to governments, taxpayers and institutions. In a time when Europe needs to be more competitive, reducing tax gaps is critical and we’re working towards this. In the area of VAT, we recently adopted VIDA, which will allow to exchange information about transactions in real time. With these types of measures, we will boost compliance to ensure we don’t miss out on vital revenue.”
More information is available in the Mind the Gap Report and on a dedicated website.
