Lessons of the 1999 Abolition of Intra-Eu Duty Free Sales for Eastern European EU Candidates

29 Pages Posted: 16 Jan 2003

See all articles by Andrea Gebauer

Andrea Gebauer

Ifo Institute, Germany

Chang Woon Nam

CESifo (Center for Economic Studies and Ifo Institute); Ifo Institute, Germany; University of Applied Management (UAM)

Rüdiger Parsche

Ifo Institute, Germany

Date Written: December 2002

Abstract

At the end of June 1999 the intra-EU duty free shopping was abolished among the fifteen member nations. The opponents of this resolution argued that such a tax-free sales sector created jobs EU-wide and hardly reduced the value added and excise tax revenue of individual countries. In their opinion, the duty free trade not only contributed to the reduction of the travel fare within the EU but also could be characterised as a supplement to the normal retail trade for some products. Such "old" ideas are increasingly gaining popularity in some Eastern European EU candidates in the context of the preparation process for the introduction of the Single Market and the EU membership in the near future. This study primarily shows that the arguments mentioned above were neither significant enough nor conclusive to maintain the intra-EU duty free shopping. Furthermore, the abolition of such tax free sales was approved in the EU in order to ensure the allocation efficiency of the VAT and excise tax system within a single market. Several arguments against the intra-EU tax free shopping examined in the study provide some helpful policy orientations for EU membership candidates.

Keywords: Duty Free Shopping, EU Single Market, Value Added and Excise Tax Harmonisation, Eeastern European Candidates

JEL Classification: F10, F15, F18, E62, P20

Suggested Citation

Gebauer, Andrea and Nam, Chang Woon and Parsche, Rüdiger, Lessons of the 1999 Abolition of Intra-Eu Duty Free Sales for Eastern European EU Candidates (December 2002). CESifo Working Paper Series No. 828. Available at SSRN: https://ssrn.com/abstract=367464

Andrea Gebauer

Ifo Institute, Germany ( email )

Poschinger Str. 5
Munich, 01069
Germany

Chang Woon Nam (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Ifo Institute, Germany

Munich
Germany

University of Applied Management (UAM) ( email )

Am Bahnhof 2
Erding, 85435
Germany

Rüdiger Parsche

Ifo Institute, Germany ( email )

Poschinger Str. 5
Munich, 01069
Germany

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