Europe, Macroeconomics and macroeconomic policy, Research

A study on the economic effects of the current VAT rates structure


General description

In the European Union, a wide diversification of VAT rates is still applied. Currently, a zero rate is in place in 8 Member States, while Denmark is the only country that does not apply any (non-zero) reduced rates. The use of zero and reduced rates can be questioned for various reasons. In view of the drawbacks of zero and reduced rates, the study will access economic effects of the abolition of these rates.


General objectives of the project

The objective of the study is to examine the impact of reduced VAT tax rates on different types of households, sectors and revenues. Conditional on the availability and quality of the data, the study will analyze all the 27 Member States.


Project Structure and Involvement of CASE

The project consists of four tasks, CASE will perform Task 2 and contribute to Task 3

  • Task 1: Estimation of VAT payments made by households in each Member State;
  • Task 2: Estimation of VAT payments made by non-households in each Member State;
  • Task 3: Calculation of the effect on VAT revenue in each Member State for households and non-households;
  • Task 4: Effect on demand and employment for the EU as a whole.