VAT evasion and VAT avoidance: Is there a European Laffer curve for VAT?

Research output: Journal PublicationArticlepeer-review

24 Citations (Scopus)


This paper estimates the VAT revenue maximising rate of VAT for the European Union for given conditions of non-compliance and other black economy transactions. It estimates a Laffer curve for the standard rate of VAT using a pooled sample of data of revenue statistics for 14 countries in the EU. The results confirm that the efficiency of the VAT system declines as the VAT rate increases. The decline in efficiency is due to a mixture of a reduction in the VAT base, and VAT evasion and avoidance. As a result of the single market, the EU Commission has proposed a common or closely converged rate of VAT within Europe. The actual common rate of VAT has yet to be decided. This paper contributes to this policy debate.

Original languageEnglish
Pages (from-to)105-114
Number of pages10
JournalInternational Review of Applied Economics
Issue number1
Publication statusPublished - Jan 2003
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics


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