Slight decline in VAT evasion in 2005

In 2001 there was a surprising decline in VAT, which continued in the following years, evidently unrelated to economic developments. As a result, the Ifo Institute has closely examined the rate of VAT evasion by comparing actual with the theoretically possible revenue. The Ifo quantification shows that since 2001 no further major increase in the evasion rate occurred, having remained unchanged at 10%. For 2005 a slight improvement was registered for the first time in years. The value of the forecasted evasion rate is now 9½%. This could be an indication that recent legislative measures have been effective, albeit with a time lag, and have contributed to helping stabilize VAT revenue and to ending the disconnect with economic development.