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Possibilities and risks of the introduction of a cross-border prior-tax deduction at the European level

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  • Andrea Gebauer
  • Doina Radulescu
  • Doina Maria Radulescu

Abstract

The European Commission proposed changing the prior-tax rebate method. Currently the prior-tax rebate occurs not domestically but at enterprises resident in another EU Member State in the form of payments on application via a central authority in the country where VAT is charged. The European Commission recommended introducing a cross-border prior-tax deduction in its proposal of June 1998. The planned procedure will enable those entitled to the prior-tax deduction to deduct the VAT paid in a Member State in which they are not resident from the VAT debt declared in their periodic tax returns in their home country. After examining the possibilities and risks resulting from an introduction of this system, the Ifo Institute advises against implementation of this proposal. Instead, the existing system should be optimised, for example by using harmonised forms and a uniform language as well as briefer periods for processing the forms.

Suggested Citation

  • Andrea Gebauer & Doina Radulescu & Doina Maria Radulescu, 2002. "Possibilities and risks of the introduction of a cross-border prior-tax deduction at the European level," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(19), pages 22-30, October.
  • Handle: RePEc:ces:ifosdt:v:55:y:2002:i:19:p:22-30
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    References listed on IDEAS

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    1. Chang Woon Nam & Rüdiger Parsche & Barbara Schaden, 2001. "Measurement of Value Added Tax Evasion in Selected EU Countries on the Basis of National Accounts Data," CESifo Working Paper Series 431, CESifo.
    2. Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche & Doina Radulescu & Bettina Reichl, 2002. "Possibilities and Risks of the Introduction of Cross-border Input VAT Deduction System in the EU," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 12.
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    Cited by:

    1. Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche, 2006. "VAT Evasion and Its Consequences for Macroeconomic Clearing in the EU," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(4), pages 462-487, February.
    2. Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche, 2007. "Can Reform Models of Value Added Taxation Stop the VAT Evasion and Revenue Shortfalls in the EU?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(1), pages 1-13.
    3. Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche, 2007. "Can Reform Models of Value Added Taxation Stop the VAT Evasion and Revenue Shortfalls in the EU?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(1), pages 1-13.

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    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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