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Lessons of the 1999 Abolition of Intra-EU Duty Free Sales for Eastern European EU Candidates


  • Andrea Gebauer
  • Chang Woon Nam


  • Rüdiger Parsche


At the end of June 1999 the intra-EU duty free shopping was abolished among the fifteen member nations. The opponents of this resolution argued that such a tax-free sales sector created jobs EU-wide and hardly reduced the value added and excise tax revenue of individual countries. In their opinion, the duty free trade not only contributed to the reduction of the travel fare within the EU but also could be characterised as a supplement to the normal retail trade for some products. Such ‘old’ ideas are increasingly gaining popularity in some Eastern European EU candidates in the context of the preparation process for the introduction of the Single Market and the EU membership in the near future. This study primarily shows that the arguments mentioned above were neither significant enough nor conclusive to maintain the intra-EU duty free shopping. Furthermore, the abolition of such tax free sales was approved in the EU in order to ensure the allocation efficiency of the VAT and excise tax system within a single market. Several arguments against the intra-EU tax free shopping examined in the study provide some helpful policy orientations for EU membership candidates.

Suggested Citation

  • Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche, 2002. "Lessons of the 1999 Abolition of Intra-EU Duty Free Sales for Eastern European EU Candidates," CESifo Working Paper Series 828, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_828

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    References listed on IDEAS

    1. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
    2. Vidar Christiansen & Stephen Smith, 2001. "The Economics of Duty-Free Shopping," CESifo Working Paper Series 595, CESifo Group Munich.
    3. 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 Group Munich.
    4. Bernd Genser & Andreas Haufler & Peter Birch Soerensen, "undated". "Indirect Taxation in an Integrated Europe. Is there a Way of Avoiding Trade Distortions Without Sacrificing National Tax Autonomy?," EPRU Working Paper Series 93-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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