Heterogeneity and Harmonization of the Value Added Tax : A study on the EU current situation

Abstract

This study gives an overview of the structure of the Value Added Tax currently in force in the EU-28 Member States. This paper allows a comparison among direct taxes and VAT tax, evaluating the purposes and the main consequences of their impositions. This essay examines the process and the legal framework for harmonization of VAT focusing on the key aspects of this tax in EU. It provides an overview of the nature and the aims of the EU VAT framework and its ongoing process to complete the harmonization path, including the focus on the Sixth VAT Directive. It displays a reliable database and consistent system that easily provides a significant comparison of the VAT percentage rates among EU Member States.It explains the compliance costs related to the VAT imposition focusing on the VAT gap problem and the main EU actions to takle the revenue loss. Finally, the study tries to define the patterns of the VAT applications identifying if there is harmonization or not on the on the reasons behind the imposition of reduced rates, exemptions or zero VAT rates on certain categories of goods and services.