Price effects and pass-through of a VAT increase on restaurants in Germany
Causal evidence for the first 12 months and a mega sports event
Bibliographic Data
| ID | 21699307 |
|---|---|
| Authors | Matthias Firgo (0000-0003-3978-3009, Munich University of Applied Sciences, corresponding author) |
| Year | 2026 |
| Volume | 29 |
| Issue | 8 |
| Pages | 1447-1454 |
| Publication date | 2026-04-18 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Current Issues in Tourism (JOURNAL) |
| Journal identifiers | ISSN: 1368-3500 • E-ISSN: 1747-7603 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/13683500.2025.2492384 |
| OpenAlex | W4409455939 |
| Language | EN |
| References cited | 13 |
This paper analyses the price effects and tax pass-through of a VAT increase from 7% to 19% on restaurant services in Germany as of January 1, 2024. The Synthetic Control Method (SCM) is used to identify the causal effects of this reform using prices of goods and services unaffected by the tax change as a counterfactual for restaurant prices. Immediately in January, 31% of the tax increase was passed on to consumer prices. Pass-through increased to 70% in the following months, which corresponds to a causal consumer price increase of nearly 8%. This indicates a low price elasticity of demand for gastronomy in post-pandemic Germany. The presumed increase in demand for gastronomy services due to hosting the UEFA Euro 2024 tournament did not alter the path of price adjustments
Advertising · Business · Economics · Event study · Mega · Political science · Tourism · Consumer Market Behavior and Pricing · Economics of Agriculture and Food Markets · History · Psychology · Taxation and Compliance Studies · Marketing
| Citation velocity | historical |
|---|---|
| Highly cited | No |