(January 19, 2015) 

On January 19, 2015 European Commission published a Study on the economic effects of the current VAT rules for passenger transport. The Final report was drafted by a consortium led by the CPB (Netherlands Bureau for Economic Policy Analysis). The report consists out of 3 parts/volumes.

In the news release the European Commission issued in this respect it states the following:

“The current VAT rules for passenger transport activities can create distortions of competition, notably owing to differences among Members States in the application of VAT exemptions or reduced rates. Even where exemptions or reduced rates do not apply, the complexity of the current place-of-supply rules increase compliance costs and may cause voluntary or involuntary non-compliance. 

Since the last large-scale review in 1997, the passenger transport sector has changed in a considerable way, as a result of the greater impacts of airline deregulation, implementation of rail concessioning, and the deregulation of bus transport. The cruise industry has also changed and experienced high growth. Hence, the importance of the distortions has increased. 

This study contributes to the debate on possible options for reform by providing a summary of the current state of the passenger transport market, a review of the current VAT regime, an assessment of the impact of many of the distortions and an evaluation of some alternative VAT solutions on which a future improved VAT regime for the transport sector might be based.” 

For further information click here to be forwarded to the webpage of the European Commission where you can find the report.

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