Is the Completion of EU Single Market Hindered by VAT Evasion?
The planned movement to the origin principle with the cross-border pre-tax system on a full-scale would lead, ceteris paribus, to changes in VAT revenues in the individual EU countries. For instance, the member countries with trade surpluses and higher VAT rates would be significantly better off. For this reason, a clearing mechanism is necessary to rectify this type of revenue imbalance among the EU nations. The introduction of the Single Market in 1993 appears to have further encouraged firms’ and households’ evasive behaviour in paying VAT in the EU. In order to estimate its relevance, this study quantifies the annual amount of hypothetical VAT revenues for the individual countries on the basis of the national accounts data. The relation between the calculated hypothetical and the (current) collected revenues in a fiscal year largely determines the extent of VAT evasion of a country when the time-lag problem between the creation of tax liability and the VAT collection in cash terms can be adjusted. The macroeconomic clearing is supposed to take place based on the share of hypothetical revenues of the member countries. Consequently, such a system seriously suffers from the adverse incentives for the individual nations since countries with a lower evasion ratio than the weighted average of all EU countries would lose the VAT revenues, whereas those with a higher evasion ratio would gain.
|Date of creation:||2003|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edgar L. Feige, 2005. "Overseas Holdings Of U.S.Currency And The Underground Economy," Macroeconomics 0501022, EconWPA.
- James Andreoni & Brian Erard & Jonathan Feinstein, 1998.
Journal of Economic Literature,
American Economic Association, vol. 36(2), pages 818-860, June.
- Contini, Bruno B, 1981. "Labor Market Segmentation and the Development of the Parallel Economy-The Italian Experience," Oxford Economic Papers, Oxford University Press, vol. 33(3), pages 401-412, November.
- Genser, Bernd, 2003.
"Coordinating VATs between EU Member States,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 10(6), pages 735-752, November.
- Friedrich Schneider, 2000.
"The Increase of the Size of the Shadow Economy of 18 OECD Countries: Some Preliminary Explanations,"
CESifo Working Paper Series
306, CESifo Group Munich.
- Friedrich Schneider, 2000. "The Increase of the size of the shadow economy of 18 OECD countries: Some preliminary explanations," Economics working papers 2000-08, Department of Economics, Johannes Kepler University Linz, Austria.
- 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.
- Friedrich Schneider, 2000.
"Illegal activities, but still values added ones (?): size, causes, and measurement of the shadow economies all over the world,"
Economics working papers
2000-10, Department of Economics, Johannes Kepler University Linz, Austria.
- Friedrich Schneider, 2000. "Illegal Activities, but Still Value Added Ones (?): Size, Causes, and Measurement of the Shadow Economies all over the World," CESifo Working Paper Series 305, CESifo Group Munich.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
- Andrea Gebauer & Doina Maria Radulescu, 2002.
"Möglichkeiten und Risiken der Einführung eines grenzüberschreitenden Vorsteuerabzugs auf europäischer Ebene,"
Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(19), pages 22-30, October.
- Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche & Doina Radulescu & Bettina Reichl, 2002. "Möglichkeiten und Risiken der Einführung eines grenzüberschreitenden Vorsteuerabzugs auf europäischer Ebene," ifo Forschungsberichte, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 12, February.
- Dieter Dziadkowski & Andrea Gebauer & W. Christian Lohse & Chang Woon Nam & Rüdiger Parsche, 2002. "Entwicklung des Umsatzsteueraufkommens und finanzielle Auswirkungen neuerer Modelle bei der Umsatzbesteuerung," ifo Forschungsberichte, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 13, February.
- Frey, Bruno S & Pommerehne, Werner W, 1984. "The Hidden Economy: State and Prospects for Measurement," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(1), pages 1-23, March.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_974. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If references are entirely missing, you can add them using this form.