Despite increase in VAT rate to 19% in 2007, decline in revenue shortfall to 9% and an expected 9% for 2008

In 2005 for the first time in years a decline in the revenue shortfall ratio of VAT was registered. This decline in revenue shortfall also occurred in 2006 and, according to available data, also in 2007. On the basis of the available key economic data, a VAT revenue shortfall ratio of 9% was calculated, which was lower than the 11½ percent ratio in 2005 and the 9½ percent ratio in 2006. The decline in the shortfall ratio in 2007 is of particular interest, since this was the year that Germany increased its VAT rate by 3 percentage points to 19%. With this strong increase, many expected an increase in undeclared and untaxed work, and thus an increase in the revenue shortfall ratio. For 2008, a shortfall ratio of 9% is again expected.