The Future of VAT in the EU

Martin Birch Omø & Jonas Høstrup Thøgersen

Student thesis: Master thesis


The objective of this thesis is to identify the issues in the current VAT system in the European Union. The identified issues concern VAT fraud and the complexity of the VAT system. As the European Commission want to combat these issues, they have published an action plan containing concrete options. First, the individual options are described and analysed in relation to the changes they each contribute in order to solve the issues. Moreover, the five options are evaluated according to eight evaluation criteria, which later serve as input to a comparison of the different options. Moreover, the thesis analyse how the options affect seven different areas which cover the following: VAT fraud; cost and cash flow for member states; cost and cash flow for businesses; and the internal market perspective and the macroeconomic forecast. Further, the seven areas mentioned above are compared to create a foundation for the selection of the option that works best in order to meet the outlined issues. Finally, the thesis investigates if an alternative VAT collection method will have an effect on the fight against the identified issues. Based on the analysis, it can be concluded that option 2 meets and has the biggest effect on the identified issues. The essence of option 2 is that the taxation follows the flow of goods. By implementing this option, the following improvements are expected: a reduction of VAT fraud; an increase in the cash flow for member states; and a reduction of the compliance costs for businesses.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2018
Number of pages139