Supermarkets have passed on Germany’s lower value-added tax to customers, one of Germany’s leading economic institutes said in a study.
The Munich-based Ifo Institute said that prices fell by an average of 2%, according to its analysis of 60,000 products in the online store of the German retail chain Rewe. The study also said that for product groups with strong competition, the VAT cut caused greater price cuts than was the case for product groups with weaker competition.
The study concluded that supermarkets passed on to customers nearly all of the VAT reduction that came into effect July 1.
The authors found this development surprising “because studies of other temporary reductions in VAT show that these were passed on only partially and at a reducing rate over time.”
Source Tax360
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