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What did you do in this research?
In the Netherlands, there is a differentiated VAT rate. The general rate is set at 21% for all goods and services, with the exception being the reduced rate of 9%. This 9% rate applies to food, water, ornamental horticulture products, and medicinal and aid products. We conducted research for the Ministry of Finance to examine whether the reduced VAT rate helps achieve the set goals and whether this is done in the most efficient manner.
What made this research interesting for you?
The societal and broad impact of the reduced VAT rate. In 2023, there was a benefit of €13.4 billion associated with the reduced VAT rate. This impacts various sectors ranging from the food industry to the cultural sector, the pharmaceutical industry, and hairdressers.
What were the challenges in the research?
The reduced VAT rate was introduced in 1969, along with the implementation of the VAT system. The initial aim of the reduced VAT rate was to alleviate the burden of turnover tax for those with lower incomes. Over the years, the products eligible for the reduced VAT rate and the goals of the reduced rate have evolved.
During the research, we found that historical data was not always readily available to accurately measure the effects. The changing products and goals required a comprehensive research approach. Each product category eligible for the reduced VAT rate has its own specific goals and nuances.
What have you learned from this research?
Primarily, how complex the reduced VAT rate and its associated goals are. It is always fascinating to see the intricate fiscal rules we have in the Netherlands. Additionally, it was interesting to see the interests involved with the reduced VAT rate and how much effort various sectors put into convincing us of the importance and relevance of the reduced rate for their sector.
Why could Dialogic provide answers to these questions?
By combining qualitative and quantitative research methods, we were able to systematically and thoroughly answer the research questions. Our experience in conducting research on fiscal and economic schemes was beneficial, as it allowed us to quickly grasp complex subjects.
How was the research received?
Our client was satisfied with the research. We also delivered a separate presentation to certain members of the Dutch Parliament, enabling them to ask in-depth questions about our research. Moreover, the research received considerable media attention, such as from NOS.
