Study finds Denmark loses less to border shopping than thought

Denmark loses far less tax revenue to cross-border shopping than previously estimated, according to research by the University of Copenhagen reported by DR. Researchers estimate the state missed out on 415 million kroner in 2019 on goods such as chocolate, crisps, beer and soft drinks, excluding tobacco.

The Tax Ministry had estimated that the lost revenue could have been 1.16 billion kroner. The researchers say the difference reflects an assumption that every krone spent by Danes on these goods in Germany would otherwise have been spent in Denmark.

The study’s authors say spending does not transfer directly from German shops to Danish ones. They suggest that people who drive to Germany may buy extra goods to justify the trip, unlike when they shop at a local store. As a result, some money spent across the border would not have gone to Danish shops even if cross-border shopping had not been possible.

During the coronavirus lockdowns in 2020 and 2021, when it was not possible to shop at the German border, people living within 30 kilometres of the border increased their spending on these goods in Denmark by 109 per cent. The effect declined with distance and disappeared for people living 120 kilometres or more from the border. The researchers found no change in Danish spending linked to cross-border shopping in Sweden.

The study draws on grocery purchase records from Danish households in the YouGov Shopper panel, and its results were checked against an independent dataset from the Spenderlog app, which collects digital supermarket receipts. Researchers compared households near the border with those living far enough away that cross-border shopping was not an economic benefit. The study was published in The Scandinavian Journal of Economics.

The researchers say the findings could help policymakers assess taxes on these goods. They argue that higher duties would not prompt most Danish households to shop across the border, and that such taxes could therefore still raise revenue and support public health goals.