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Economic Analysis of VAT Aspects of e-Commerce

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  • Deloitte

Abstract

Over the last five years, e-Commerce in Europe has grown by between 17% and 20% per year to become a key part of the digital economy and an important driver of economic growth. From 2009 to 2014, the contribution of e-Commerce to GDP has almost doubled2. Recognising the importance of eCommerce, the European Commission is committed to ensuring the free movement of goods and services and to ensuring that “individuals and businesses can seamlessly access and exercise online activities under conditions of fair competition”3 as set out in their Digital Single Market strategy. However concerns have been expressed by the Commission and other organisations, including business groups, that fragmentation and barriers continue to exist online, not least due to the burden associated with VAT compliance. The evidence presented in this report indicates that these concerns are justified, since the fixed costs associated with VAT compliance appear to represent a significant burden on firms, limiting the growth of cross-border e-Commerce in the EU. Moreover, noncompliance and VAT fraud continues to present a challenge to tax authorities across the EU

Suggested Citation

  • Deloitte, 2016. "Economic Analysis of VAT Aspects of e-Commerce," Taxation Studies 0067, Directorate General Taxation and Customs Union, European Commission.
    • Handle: RePEc:tax:taxstu:0067
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    File URL: https://ec.europa.eu/taxation_customs/sites/taxation/files/vat_aspects_cross-border_e-commerce_final_report_lot1.pdf
    File Function: final version, 2016
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    References listed on IDEAS

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    1. Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 613-646.
    2. Fabienne Ilzkovitz & Adriaan Dierx & Viktoria Kovacs & Nuno Sousa, 2007. "Steps towards a deeper economic integration: the internal market in the 21st century," European Economy - Economic Papers 2008 - 2015 271, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Gomez-Herrera, Estrella & Martens, Bertin & Turlea, Geomina, 2014. "The drivers and impediments for cross-border e-commerce in the EU," Information Economics and Policy, Elsevier, vol. 28(C), pages 83-96.
    4. Chang Woon Nam & Rüdiger Parsche, 2007. "Trotz 19% Mehrwertsteuer wird für 2007 ein weiteres Absinken der Ausfallquote erwartet," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(10), pages 41-42, May.
    5. James, Simon & Edwards, Alison, 2010. "An annotated bibliography of tax compliance and tax compliance costs," MPRA Paper 26106, University Library of Munich, Germany.
    6. Ey, 2015. "Assessment of the application and the impact of the VAT exemption for importation of small consignments," Taxation Studies 0059, Directorate General Taxation and Customs Union, European Commission.
    Full references (including those not matched with items on IDEAS)

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    3. Wang, Xia & Ding, Ying, 2022. "The impact of monetary rewards on product sales in referral programs: The role of product image aesthetics," Journal of Business Research, Elsevier, vol. 145(C), pages 828-842.

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    More about this item

    Keywords

    European Union; taxation; VAT; e-commerce; digital;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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