BUCHAREST – Romania‘s tax authority, ANAF, confirmed that even seemingly small-scale economic activity-like unrecorded sales of homemade goods-is now factored into the nation’s calculation of its substantial Value added Tax (VAT) gap. The startling admission came during a recent public discussion, raising questions about the scope of tax collection efforts.
In 2022, Romania registered the largest VAT gap in the European Union, the difference between expected and actual VAT revenue. This gap, a key metric for measuring tax fraud, evasion, and administrative failings, is now inclusive of previously overlooked informal economic transactions. ANAF head Adrian Nica stated plainly, “Unfortunately, today, yes. Yes, it is calculated today at the VAT GAP,” when asked if such activities contribute to the overall figure.
The broadening of the VAT gap calculation signals a more aggressive approach to identifying and quantifying uncollected tax revenue. Specialists define the VAT gap as encompassing not only large-scale fraud and evasion but also insolvencies and simple administrative errors. This expanded definition could impact individuals engaged in small-scale, unregistered economic activity, such as selling homemade products like jams or baked goods.
Nica’s comments followed reports focusing on ANAF’s increased scrutiny of high-value assets possibly purchased with undeclared income-specifically, luxury vehicles. He cautioned individuals without verifiable income sources against acquiring expensive assets, suggesting a wider crackdown on undeclared earnings is underway. The inclusion of informal economic activity in the VAT gap calculation underscores the government’s commitment to reducing the notable tax shortfall and aligning Romania with EU standards.
