Annex A. Methodological considerations

AuthorAdam Smietanka - Mikhail Bonch-Osmolovskiy - Grzegorz Poniatowski
VAT Gap in the EU-28 Member States
page 78 of 99
Annex A. Methodological Considerations
This section of the Annex is based to a large extent on the methodological considerations
already presented in earlier VAT Gap Reports. More detailed considerations regarding the
approaches to estimate the VAT Gap are presented in the seminal VAT Gap Report
(Barbone et al., 2013).
a. Source of Revisions of VAT Gap Estimates
Every year, the estimates of the VAT Gap are updated and revised backwards. There are
three different sources of such revisions:
1) Updates in the underlying national accounts data published by Eurostat: updates in VAT
revenues, new supply and use tables, and revised industry-specific growth rates, among
2) Updates in the estimated GFCF liability, based on the new information from the own
resource submissions (ORS) on taxable shares of GFCF by five sectors: households,
government, NPISH, and exempt financial and non-financial enterprises.
3) Revision of the parameters of the VTTL model: effective rates, pro-rata coefficients, and
net adjustments, either due to new information from ORS or due to correcting errors in the
previous computation.
In nominal terms, the most significant revisions in 2018 concerned Malta. The revision of
the VTTL in Malta resulted from the availability of data from fiscal registers allowing for a
more accurate estimation of the effective rates and propexes for four sectors crucial for the
Maltese economy and its output, namely Financial services, except insurance and pension
funding (NACE and CPA 64), Insurance, reinsurance and pension funding services, except
compulsory social security (NACE and CPA 65), Services auxiliary to financial services and
insurance services (NACE and CPA 66), and Gambling and betting services (NACE and
CPA 92). Another noteworthy revision concerned Ireland and Germany. The estimates for
these two countries were revised backwards due to an improved methodology for imputing
missing and confidential values in Eurostat’s SUT.

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