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Areas of Strength
- Estonia performs strongly regarding the digitalisation of its tax administration and is innovative in their practices. With 98% of tax returns filed electronically (EU average: 75%), and mandatory digital income reporting via employers for personal income tax (PIT), the system ensures minimal taxpayer effort and high levels of compliance. For example, Estonian taxpayers' personal income tax declaration is pre-filled, 97% of all personal income tax declarations are submitted electronically and 32% of them by one click. This digital-first approach has reduced tax compliance costs and ensures high levels of transparency.
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Areas of Strength
- According to the European Commission’s estimates, Denmark has the lowest corporate income tax (CIT) gap among Member States for which estimates are available. Denmark has a comprehensive tax gap program in place and estimates CIT and personal income tax (PIT) gaps using a bottom-up approach. However, results are not published, limiting transparency on the matter.
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Areas of Strength
- Czechia has substantially reduced its VAT compliance gap in recent years. While the VAT compliance gap stood at 14% of the VAT Total Tax Liability (VTTL) in 2014, the latest available estimates for 2023 indicate a VAT compliance gap of 8%, which is below the EU average of 9.5%.
- In addition, Czechia’s VAT administration benefits from a fully online registration system, integrated with the One-Stop-Shop (OSS) and underpinned by updated IT systems introduced in 2025. Taxpayers have access to secure e-filing, with pre-filled forms and online services supporting compliance. Refunds are generally processed promptly, complemented by automated checks for suspicious claims. The tax administration has also adopted a compliance plan outlining key VAT risks, to guide monitoring and strengthen enforcement capacity.
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Areas of Strength
- Cyprus has made progress in digitalising its tax administration, reducing the tax compliance burden for taxpayers. In 2023, Cyprus rolled out an integrated tax administration system, which has modernised the interaction of taxpayers with the tax administration. The new portal is a comprehensive system with a single unified picture of taxpayers, thereby facilitating a consolidated monitoring, assessment and inspection of taxpayers. Cyprus plans to gradually add more Artificial Intelligence elements in the “Tax for All” system by end-2025. Cyprus, among others, has a high e-filing rate for VAT, PIT and CIT, above the EU average for all tax types.
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Areas of Strength
- Croatia reports on tax expenditures across VAT, personal income taxation (PIT) - including social security contributions (SSC) - and corporate income taxation (CIT). Recent reforms have rolled back or phased out tax expenditures deemed no longer effective, notably SSC exemptions for young employees.
- Croatia has made progress in digitalisation of tax administration. It has near-universal e-filing for VAT and CIT, a robust digital tax portal (‘ePorezna’), and is rolling out the project ‘Fiscalisation 2.0’, which will introduce mandatory e-invoicing and real-time reporting by 2026-27.
- The VAT compliance gap is below the EU average, at nearly 8% in 2023. It dropped compared to the previous year in the context of strong VAT revenue growth, fiscal digitalisation, and targeted anti-fraud measures.
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Areas of Strength
- Bulgaria has made progress in digitalizing its tax administration. Bulgaria reported a 100% uptake in e-filing for CIT and VAT, with an increasing number of individuals also opting to file PIT returns electronically. There are also various online tools provided to help taxpayers comply with their tax obligations. The Bulgarian tax administration is also in the early stages of deploying AI technology.
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Areas of Strength
- Belgium is well advanced in digitalising its tax administration and has developed a digital transformation strategy. Belgium has e-filing rates in personal income tax (PIT), corporate income tax (CIT) and value-added tax (VAT) returns above the EU average. Belgium makes use of AI for predictive risk analysis, for collecting data from websites and to match these with their existing database. Belgium also makes use of advanced electronic systems to fight cross-border VAT fraud.
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Areas of Strength
- Austria comprehensively reports on tax expenditures and has a strong legal and procedural framework in place for evaluating subsidies. Ex ante and ex post impact assessments are required for direct subsidies and tax expenditures. The quality of evaluations however varies, especially for tax expenditures, limiting meaningful assessment. The Court of Audit has called for more systematic evaluation and better integration of results into the subsidy report (Förderungsbericht), so that tax expenditures can be scrutinised on par with direct spending.
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