European Commission (EC) President Jose-Manuel Barroso described the figure as 'unacceptable' and said it was a result of 'illegal fraud'.
The Portuguese politician, who revealed the loss in a speech yesterday, said the figure was almost double the budget deficit of all member states.
Mr Barroso said: "The total loss of revenue due to illegal fraud and unacceptable evasion is estimated to be around one trillion euros a year.
"Let’s put that into some perspective: one trillion euros is nearly double the 2012 combined annual budget deficit of all the Member States."
The 57-year-old said it was a huge amount of money to be 'slipped through the net'.
The 11th President of the EC, the executive arm of the EU, was speaking a day before a summit of member states on how to tackle tax evasion.
The comments come after big multi-nationals Google, Amazon and Starbucks have been quizzed on their tax policy.
Mr Barroso added: "It is more than the total spent on health across the EU in 2008.
"It is more than six times the size of the annual budget of the EU."