Pushing the Wrong Buttons: VAT Evasion by Misclassification of Meal Consumption Type

Forthcoming, European Accounting Review

42 Pages Posted: 20 Sep 2017 Last revised: 22 Nov 2019

See all articles by Arnt Hopland

Arnt Hopland

Norwegian School of Economics (NHH)

Robert Ullmann

University of Augsburg; Norwegian Center for Taxation

Date Written: November 11, 2019


We use rich, micro-level tax return data for the entire population of small and mediumsized German restaurants and find empirical evidence that these firms employ the misclassification of meal consumption type as a VAT evasion strategy. Using difference-in-differences as well as triple-difference-in-differences specifications, we find that a ceteris paribus increase in the standard VAT rate significantly increases the declared sales volume of take-away consumption (reduced rate) relative to on-site consumption (standard rate), even though gross prices are customarily identical for both consumption types.

Keywords: value-added tax, tax evasion, tax base shifting, small and medium-sized enterprises

JEL Classification: H26, H25, H32, L83

Suggested Citation

Hopland, Arnt and Ullmann, Robert, Pushing the Wrong Buttons: VAT Evasion by Misclassification of Meal Consumption Type (November 11, 2019). Forthcoming, European Accounting Review, Available at SSRN: https://ssrn.com/abstract=3039449 or http://dx.doi.org/10.2139/ssrn.3039449

Arnt Hopland

Norwegian School of Economics (NHH)

Helleveien 30
Bergen, NO-5045

Robert Ullmann (Contact Author)

University of Augsburg ( email )

Universitätsstr. 16
Augsburg, 86159

HOME PAGE: http://www.wiwi.uni-augsburg.de/bwl/ullmann/Team/Prof_-Dr_-Robert-Ullmann/

Norwegian Center for Taxation ( email )

Helleveien 30
Bergen, Bergen 5045

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