Europe, Macroeconomics and macroeconomic policy, Research, taxes

Study on the economic effects of the current VAT rules for passenger transport


Project description

In the Green paper on the future of VAT, the European Commission argues in favor of a simpler, more robust and efficient VAT system. Improving the working of the current VAT system might require a sector-specific approach. The passenger transport sector provides an excellent case to analyze the economic effects of the diversity of VAT rules applied both within and across Member States. This is the aim of the present project.

General Objectives of the Project

The objective of the study is to provide an economic assessment covering the impact of the current VAT regimes and the likely effects of alternative uniform VAT regimes on the EU passenger transport market. The study should provide the information needed to evaluate a range of policy options.

Project Structure and Involvement of CASE

The project consists of four tasks.  CASE will coordinate the entire project and contribute to Tasks 1, 3 and 4.

  • Task 1: Analysis of demand and supply of the EU passenger transport market, and of the competition between modes, addressing sensitivity to price changes, including tax-induced ones;
  • Task 2: Description of the VAT regimes currently applied by all 27 Member States for the supply of passenger transport services and other taxes applied to such services, differentiating between the different means of transport (means of road, rail, air and water transport);
  • Task 3: Estimation of the impact of exemption or reduced rates granted to some sectors for Member States and economic operators (distortion of competition between modes and distortions within a mode because of multinational presence of transport operators); and
  • Task 4: Estimation of the economic and fiscal impact of application of standard rate/reduced rate/exemption on all passenger transport modes within the EU and competition effects with regard to third country operators.


EC: DG Taxud

IHS - Institute for Advanced Studies (Austria)
TML - Transport and Mobility Leuven