EU countries lost 168 billion euros ($187 billion) in sales-tax revenue in 2013 mostly due to fraud and errors, the European Commission said on Thursday.
According to a commission study which covered 26 of the EU's current 28 members, a total 15 percent of potential revenue was lost.
"This important study highlights once again the need for further reform in VAT collection systems across the EU," the bloc's Economics Affairs Commissioner Pierre Moscovici said in a statement.
"I urge member states to take the steps needed to fight tax evasion and tax fraud at all levels. This remains a burning issue and is at the top of this Commission's agenda," he said.
The losses in pure money terms were worst among the biggest and richer economies -- 47.5 billion euros for Italy, 14 billion euros for France and 24.8 billion euros for Germany.
But as a percentage of potential VAT lost, lower-income countries were way ahead, with Romania showing a 41 percent loss, Slovakia 34.9 percent and Greece 34 percent.
In comparison, Finland, the Netherlands and Sweden excelled with only a 4-percent VAT gap.
Powerhouse Germany saw 11 percent less VAT than expected and France even lower at 9 percent.
The topic is a sensitive one for many tax-starved countries and the European Union as an institution in particular. Plagued by debt problems, strapped governments have latched on to boosting VAT as a way to bolster their strained public finances.
The EU bureaucracy itself is financed in part by a sizeable share of VAT collected on the national level. Missing revenue in member countries means less cash for Brussels as well.
Other than fraud, late payments, bankruptcies and administrative errors also play an important role, the report said.