No. 669 - Mind the gap! The (unexpected) impact of Covid-19 pandemic on VAT revenue in Italy

Questioni di Economia e Finanza (Occasional papers)
by Francesco Berardini and Fabrizio Renzi
February 2022
Vai alla versione italiana Site Search

We investigate the determinants of VAT revenues in the context of the Covid-19 crisis. Contrary to expectations, the decline in VAT revenue has been smaller than the household consumption drop. This paper provides some insights on the factors underlying this result.

The Covid-19 pandemic affected consumption habits as a direct consequence of the shutdown of large parts of the economy. The overall VAT compliance increased as the most hit sectors are characterized by lower rates and a lower degree of compliance and on account of the increase in the share of cashless payments. According to our estimates, a one-percentage point increase in the share of cashless payments results in approximately 0.4% higher VAT revenue.

Full text

  1. 04 February 2022
    No. 669 - Mind the gap! The (unexpected) impact of Covid-19 pandemic on VAT revenue in Italy
    PDF 4 MB

Sezione di approfondimento