Soft law and EU VAT: From informal to inclusive governance?

Abstract

Soft law has for decades played a role in the largely non-harmonized area of EU direct taxation. It more recently appeared in the harmonised area of EU VAT, with the emergence of the VAT Committee guidelines (published since 2012), the adoption of “explanatory notes” by the Commission (for the first time in 2014), and the opinions of the VAT Expert Group (since 2014). Beyond the EU borders, International VAT/GST guidelines are now also being developed under the auspices of the OECD, substantial parts of which have been endorsed by more than 100 states in 2014 and 2015. The objective of this paper is to analyse and assess these four instruments, and to open a discussion on the negative and positive uses that can be made of soft law in an EU harmonised area. The conclusion that we draw from this assessment is that the VAT Committee guidelines and the Commission explanatory notes open the way to “informal governance” in the area of VAT (considered as rather negative) while the VAT Expert Group opinions open the way to an “inclusive” type of governance in this field (considered as very positive).

Notes

1 Senden defines soft law as “rules of conduct that are laid down in instruments which have not been attributed legally binding force as such, but nevertheless may have certain—indirect—legal effects, and that are aimed and may produce practical effects”. Linda Senden, “Soft Law, Self-regulation and co-regulation in European Law: Where Do They Meet?” (2005) 9(1) Electronic Journal of Comparative Law 23.

2 Pasquale Pistone, “Soft Tax Coordination: A Suitable Path for the OECD and the European Union to Address the Challenges of International Double (Non-) Taxation in VAT/GST Systems” in Michael Lang et al (eds), Value Added Tax and Direct Taxation, Similarities and Differences (IBFD 2008), 1165. The author gives the example of the International Accounting Standards which have been issued by a private body but nevertheless have a significant impact, with accounting and tax laws often making an explicit reference thereto.

3 Jan Klabbers, “The Undesirability of Soft Law” (1998) 67(4) Nordic Journal of International law 381.

4 Eva Eberhartinger and Matthias Petutschnig, “Practicing Experts’ Views of BEPS: A Critical Analysis” (2015) WU International Taxation Research Paper Series 2014–01, with several references.

5 Ibid, with reference to Laszlo Blutman, “In the Trap of a Legal Metaphor: International Soft Law” (2010) 59(3) International & Comparative Law Quarterly 605.

6 A provision that has direct effect can be relied on by private persons before national courts (van Gend and Loos (26/62)). In practice, any EU law provision enacting obligations that are sufficiently clear and unconditional must be considered as having direct effect. As a consequence, individuals may rely upon them, irrespective of the existence or not of internal provisions implementing those rules. See Koen Lenaerts and Piet van Nuffel, “European Union Law” (2001) Sweet & Maxwell 809.

7 Servatius Van Thiel, “The Removal of Indirect Tax Obstacles to Intra-Community Trade and Unfinished Business in the VAT Area”, in Servatius Van Thiel (ed), VAT Harmonization in the EU and Unfinished Business (CFE Brochure on Taxation—3, 2008), 6.

8 In the field of direct taxation, it is more accurate to speak about “coordination” rather than “harmonisation”. The Member States indeed only agreed to abide by specific commitments under the Parent Subsidiary Directive 2011/96/EU (designed to eliminate tax obstacles for profit distributions between parent companies and subsidiaries based in different Member States), the Merger Directive 2005/56/EC (aimed at removing fiscal obstacles to cross-border mergers), the Interest and Royalty Directive 2003/49/EC (designed to eliminate withholding tax obstacles in the area of cross-border interest and royalty payments within a group of companies) and the Administrative Cooperation Directive 2014/107/EU (providing for automatic exchange of financial account information between Member States). There is neither harmonisation nor coordination whatsoever of the Member States” personal income tax legislations (only the Treaty Freedoms can usefully be relied on). Discussions towards a “Common Consolidated Corporate Tax Base” (CCCTB) have been ongoing for years, but currently are in a deadlock. The idea is to come up with a common system for calculating the tax base of businesses operating in the EU, under which groups using the CCCTB would be able to file a single consolidated tax return for the whole of their activity in the EU and to offset losses in one Member State against profits in another. The consolidated taxable profits of the group would then be shared out to the individual companies under a formula. So far, the Member States have not yet been able to agree on a suitable formula. The Commission will make a new proposal in 2016 in order to re-launch the discussions, based on two key changes. First, it will propose a mandatory CCCTB (it was initially proposed as an optional system) because it would greatly help preventing profit shifting by companies that engage in aggressive tax planning to avoid taxes (in the overall BEPS context). Second, it will propose that the CCCTB is introduced through a step-by-step approach, in order to increase chances of agreement by the Member States.

9 The Code was set out in the conclusions of the Council of Economics and Finance Ministers (ECOFIN) of 1 December 1997.

10 See Hans Gribnau, “Improving the Legitimacy of Soft Law in EU Tax Law” (2007) International Tax Review 35. The author notes that the conclusions of the Primarolo group are presented as “acquis communautaire” in the negotiations with new Member States. In this case, soft law thus has acquired particularly great force.

11 The OECD Model Tax Convention is for instance regularly cited by the CJEU in its income tax case law. See for example C-336/96 Gilly [1998] ECLI:EU:C:1998:221.

12 “Almost invariably, soft law is used where the lack of political consensus blocks the road to traditional law-making processes”. Claudio Radelli, “The Code of Conduct Against Harmful Tax Competition: Open Method of Coordination in Disguise” (2002) Robert Schuman Center for Advanced Studies EUI Working Paper 2002/43, 3.

13 Article 19 of the Treaty of the European Union provides that the CJEU's role is to: “ensure that in the interpretation and application of the Treaties the law is observed”, and credit is due to the Court for having widely interpreted the directly applicable rights to equal treatment and freedom of movements by sanctioning both direct and indirect forms of discrimination and also non discriminatory restrictions to the basic freedoms also in the field of direct income taxation. See Servatius van Thiel, “The Direct Income Tax Case Law of the European Court of Justice, Past Trends and Future Developments” (2008) 62(1) Tax Law Review 143.

14 For an evolution from the Common market to the Internal Market, see Rita de la Feria, “The EU VAT System and Internal Market” (2009) 16 IBFD Doctoral Series 28.

15 Customs duties were a primary target of the 1957 Rome Treaty (see its Article 12, a provision that had direct effect). Articles 13 to 17 provided for the gradual removal of customs duties (roll back or phase out) by providing an automatic annual reduction in the duty ceilings (applied duties) during a transitional period of ten years. By 1969, customs duties on intra-Community trade (and all measures with equivalent effect) were completely banned, with direct effect.

16 Article 3 of the 1957 Treaty of Rome.

17 Article 95 of the 1957 Treaty of Rome and current Article 110 Treaty on the Functioning of the European Union, “TFEU”.

18 The application of the unanimity rule to tax matters in the EU has been successively based on Article 99 of the 1957 Treaty of Rome, Article 93 of the 1922 Treaty of Maastricht and 113 of the TFEU, which currently reads as follows: “The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonization of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonization is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition”.

19 The current “EU VAT Directive” is Council Directive (EC) 2006/112 of 28 November 2006 on the common system of value added tax [2006] OJ L 347, 1.

20 The unanimity rule applies to all tax matters including harmonisation of taxes and related issues such as administrative cooperation and fight against tax fraud, while the co-decision procedure applies in most other areas of competence.

21 See for example the decisions of the Court concerning the concept of fixed establishment in the cases C-168/84 Berkolz [1985] ECLI:EU:C:1985:299, C-396/02 DFDS [2004] ECLI:EU:C:2004:536 and C-190/95 ARO Lease [1997] ECLI:EU:C:1997:374, which eventually found their way into Implementing Regulation 282/2011.

22 Rita de la Feria, “The Legal Significance of VAT Committee Guidelines” (2014) presentation made at the International VAT Conference KMLZ held in Tegernsee (Munich) on 26 June 2014. See de la Feria (n 14) 260.

23 It may even be argued that the Court could play a more pro-active role as Constitutional Court in the area of VAT by accepting to assess the conformity of the VAT Directive with the Treaty in the same way as it does it with national legislations, while it has decided in several cases that the application of the Treaty freedoms is subject to limitations in harmonised areas. See for example C-470/03 AGS-COS.MET [2007] ECLI:EU:C:2007:213 and C-123/00 Bellamy [2001] ECLI:EU:C:2001:214. The Court did not refuse to assess the VAT Directive in the light of the Treaty in the case C 97/09 Schmelz [2010] ECLI:EU:C:2010:632, but the result is a rather lenient constitutional control of the VAT Directive. To be noted, however, that some authors however have questioned the legitimacy of the Court's role in filling the gaps left by the legislator. See de la Feria (n 14) from 281. Member States themselves have challenged the Court's jurisdiction in early cases. See Cases 15/81 Gaston Schul [1982] ECLI:EU:C:1982:135, para 25, 415/85 Commission v Ireland [1988] ECLI:EU:C:1988:320, para 8 and 416/85 Commission v United Kingdom [1988] ECLI:EU:C:1988:321, para 8.

24 Frans Vanistendael, “A Window of Opportunity of Europe: Member States Cannot have their National Cake and Eat the European One” (2003) EC Tax Review 2.

25 Cross-border ruling may also be available, but it does not offer the same level of legal certainty, in the first place because these rulings are not offered by all the Member States and do not have erga omnes effects, but also because the cross-border ruling procedure does not guarantee that the Member States concerned “will agree on the VAT treatment of the transactions envisaged”. See <http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/cross_border_rulings/cbr_info-notice-to-the-public_en.pdf>.

26 de la Feria (n 14) 279.

27 de la Feria (n 22). See also Joep Swinkels, “Combating VAT Avoidance” (2005) 4 International VAT Monitor 246: “the case law of the CJEU, on one hand, provides clarifications on the existing provisions of the Sixth Directive but, on the other hand, also makes application of those provisions more difficult. Every CJEU judgment appears to give rise to new questions”.

28 Article 398 of the VAT Directive reads as follows: “1. An advisory committee on value added tax, called “the VAT Committee“, is set up. 2. The VAT Committee shall consist of representatives of the Member States and of the Commission. The chairman of the Committee shall be a representative of the Commission. Secretarial services for the Committee shall be provided by the Commission. 3. The VAT Committee shall adopt its own rules of procedure. 4. In addition to the points forming the subject of consultation pursuant to this Directive, the VAT Committee shall examine questions raised by its chairman, on his own initiative or at the request of the representative of a Member State, which concern the application of Community provisions on VAT”.

29 Article 4 of the VAT Committee rules of procedures (taxud.c.1(2013)1103950—EN).

30 “Guidelines resulting from meetings of the VAT Committee up until 17 July 2015”, 2, available at: <http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/vat_committee/guidelines-vat-committee-meetings_en.pdf >.

31 Nils Eriksen and Karl-Heinz Haydl, “Avoidance of VAT/GST Double (Non-) Taxation: Recommendations and Other Types of Soft Law v. Legally Binding Instruments to Allocate Taxing Rights Between States” in Michael Lang et al (eds), Value Added Tax and Direct Taxation, Similarities and Differences (IBFD 2009) 1155. The authors refer to Ian Sinclair, The Vienna Convention on the Law of the Treaties (Manchester University Press 1984) 117.

32 See AG Opinion in the case C-41/04 Levob Verzekeringen and OV Bank [2005] ECLI:EU:C:2005:649, point 25.

33 See Björn Ahrens and Marc Bothe, “The Supply of Blood Plasma in the Light of VAT” (2015) 26 (6) International VAT Monitor. The authors argue that in the pending case 412/15, the CJEU should ignore the guideline adopted almost unanimously by the VAT Committee at its 99th meeting (3 July 2013), according to which the supply of blood shall also encompass the supply of single blood components such as blood plasma, in order to decide that while the supply of blood is exempt under the VAT Directive, the supply of blood plasma for industrial production purposes does not fall under the scope of the exemption.

34 Compare Article 267 TFEU.

35 On Preliminary rulings, see Koen Lenaerts, Ignace Maselis, and Kathleen Gutman, “EU Procedural Law” (2014) Oxford European Union Law Library, Part II, Ch 6.

36 Article 263 TFEU.

37 Annulment is also not possible in the case of recommendations and opinions. The question is whether a VAT Committee guideline falls into that category. On the Action for Annulment, see Lenaerts, Maselis, Gutman (n 35) Part III, Ch 7.

38 In accordance with Article 340(2) TFEU which provides that: “In the case of non-contractual liability, the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties”.

39 On the Action for Damages, see Lenaerts, Maselis, Gutman (n 35) Part III, Ch 11.

40 Guidelines adopted at its 93rd meeting.

41 To be noted that these guidelines are those that have been referred to by Advocate General Kokott in the above mentioned case C-155/12 RR Donnelley [2013] ECLI:EU:C:2013:434. In this case, the Advocate General did however not refer to the definition of immovable property that has now become part of the legislation, but to another guidance offered by the VAT Committee suggesting that the leasing or letting of immovable property other than that covered by para 9, including the storage of goods for which a specific part of the property is assigned for the exclusive use of the customer, should be covered by Article 47 of the VAT Directive.

42 The term “steering instrument” is used in relation to soft law by Gribnau (n 10) 35.

43 Other examples include the guidelines adopted by the VAT Committee in its 86th meeting of 18 and 19 March 2009, 88th meeting of 13 and 14 July 2009, and 89th meeting of 30 September 2009, which all found their way into Council Regulation 282/2011.

44 In accordance with Article 326 to 334 of the TFEU.

45 At present, enhanced cooperation procedure in the field of taxation has only been used for the adoption of a tax on financial transactions. On this topic, see for example Marie Lamensch, “Introducing a Harmonized Financial Transaction Tax in the EU: A Failure in 2012, Two Steps Ahead in 2013, and One Step Backward in 2014”, in Servatius van Thiel (ed) Policies for a Sustainable Tax Future—Tackling Base Erosion and Profit Shifting—Recent Developments in VAT and the Financial Transactions Tax (CFE Forum Reports on European Taxation—6 December 2014).

46 Rita de la Feria referred to the use of enhanced cooperation procedure in this context as “the devil we don’t know” as compared to soft law being “the devil we know”. de la Feria (n 22).

47 As noted above, no damages could be sought before the CJEU, but the principle of legitimate expectation should probably play a role in the determination of the sanction/fines imposed on the taxable person.

48 See n 25 regarding cross-border rulings.

49 More generally, this has become a problem for the adoption of any new legislation in the field of VAT. The average timeline for the adoption of a legislation in that area indeed now usually exceeds more than five years, and the final text is often much different, much more vague and incomplete as compared to the initial proposal. The Commission decided to not submit any legislative proposal in 2015 because of this situation.

50 European Commission, “Explanatory notes on the EU VAT changes to the place of supply of telecommunications, broadcasting and electronic services that enter into force in 2015” (2014) available at: <http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf>. Hereafter referred to as “the explanatory notes”.

51 Explanatory notes, 3.

52 Explanatory notes, 3.

53 See <http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/explanatory-notes-fiscalis.pdf>.

54 Marie Lamensch, European Value-added Tax in the Digital Era: A Critical Analysis and Proposals for Reform (IBFD Amsterdam, Doctoral series, expected vol 36).

55 Communication from the Commission to the European parliament, the Council and the European Economic and Social Committee on the future of VAT, “Towards a simpler, more robust and efficient VAT system tailored to the single market” COM (2011) 851 final, 8.

56 It is worth recalling that under Article 4(3) of the TUE, the principle of “sincere cooperation” inter alia requires that the Member States take “any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. The Member States shall facilitate the achievement of the Union's tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives”. On this topic, see Lenaerts and van Nuffel (n 6) 147.

57 Case C-311/94 IJssel-Vliet Combinatie v Minister van Economische Zaken [1996] ECLI:EU:C:1996:383.

58 Case C-443/97 Spain v Commission, [2000] ECLI:EU:C:2000:190, Case C-75/97 Belgium v Commission, [1999] ECLI:EU:C:1999:311, para 56 and Case C-382/99 the Netherlands v Commission, [2002] ECLI:EU:C:2002:363, para 4; Case C-189/02P Dansk Rørindustri v Commission [2005] ECLI:EU:C:2005:408, in particular paras 207–214 and 238–252. Note however that a number of the Commission's internal acts were replaced by both Council and Commission regulations, on the basis of considerations such as “effectiveness, the correct and uniform application of Community law, legal certainty, transparency and equal treatment”. Linda Senden, “Soft Law and its Implications for Institutional Balance in the EC” (2005) 1(2) Utrecht Law Review 79–99.

59 For a complete analysis of the explanatory notes, see Lamensch (n 54).

60 Article 288 TFEU provides that “To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions”.

61 Another example is the “mobile network presumption” of Article 24b(b), which locates the private customer of electronically supplied services purchased via a mobile network (for the purpose of determining the place of taxation) in the country identified by the mobile country code of his SIM card. The explanatory notes give a narrow interpretation of this presumption and hold that it only applies when the customer uses his SIM card to receive an electronically supplied service, in which case he will normally be charged for the telecom service and for the electronically supplied service. This presumption would therefore not apply to supplies delivered to a customer on a smartphone via a mobile connection to the Internet, and charged to a credit card. In our view, however, this narrow scope of application of the “mobile network presumption” does not clearly follow from the wording of the Article (which broadly refers to services supplied “through mobile networks” and therefore could also cover “mobile Internet networks’). Some Member States could therefore interpret that provision in a much broader way, ie as providing that whenever a customer uses a “mobile Internet” connection to purchase online, the supplier should be able to identify his SIM country code. This interpretation could actually be appealing for national tax administrations because it would allow them to claim VAT on all purchases made by “their” residents, even when they are travelling abroad. As the place of residence is actually the proxy that the implementing regulation should seek to implement (Article 58 of the VAT Directive), the CJEU could also conclude that this broader interpretation should prevail. Such a broader interpretation would raise serious implementing difficulties for suppliers, and the interpretation offered by the Commission is probably the only one that would be practicable. But the question remains whether it can be safely relied on or not. For another example of possible diverging interpretations, see Pernillar Rendhal, “Methodological Notes on a Changing Legislative Landscape” in Marie Lamensch et al (eds) Value Added Tax and the Digital Economy, The 2015 EU Rules and Broader Issues (Kluwer, EUCOTAX Series on European Taxation Vol 46) 174.

62 Case C-322/88 Grimaldi [1989] ECLI:EU:C:1989:646, para 18.

63 See n 35.

64 See n 37.

65 Case C-57/95 France v Commission [1997] ECLI:EU:C:1997:164.

66 The Communication provided for the application measures which constituted the subject-matter of the proposal for a directive which the Commission withdrew “because of a deadlock in the negotiations with Member States in the Council” (para 1.4. of the Communication).

67 Court decision paras 23 and 26.

68 See n 39.

69 Commission Recommendation (EC) 94/79 on the taxation of certain items of income received by non-residents in a Member State other than that in which they are resident [1994] OJ L 39, 22.

70 See C-7/13 Skandia America [2014] ECLI:EU:C:2014:2225.

71 Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the future of VAT: Towards a simpler, more robust and efficient VAT system tailored to the single market, COM (2011) 851 final.

72 Commission decision dated 26 June 2012 “setting up a group of experts on value added tax”, 2012/C 188/02.

73 Article 4 (6) of Commission decision of 26 June 2012 setting up a group of experts on value added tax, 2012/C 188/02.

74 Article 2 of Commission decision of 26 June 2012 setting up a group of experts on value added tax, 2012/C 188/02.

75 Article 4 (8) of Commission decision of 26 June 2012 setting up a group of experts on value added tax, 2012/C 188/02.

76 Article 5 (3) of Commission decision of 26 June 2012 setting up a group of experts on value added tax, 2012/C 188/02.

77 Only two so far, ie opinions of 12 June 2014 on the definitive VAT regime for the taxation of intra-EU B2B supplies of goods, of 31 March 2015 on the Cross-Border Rulings. They are available at <http://ec.europa.eu/taxation_customs/taxation/vat/key_documents/expert_group/index_en.htm>. A third one, concerning VAT grouping, will probably be released soon.

78 European Commission, “European Governance, A White Paper” COM (2001) 428 final. The Commission defines “governance” as “rules, processes and behaviour that affect the way in which powers are exercised at European level, particularly as regards openness, participation, accountability, effectiveness and coherence”. European Commission, “European Governance, A White Paper” COM (2001) 428 final, 8.

79 European Commission, “European Governance, A White Paper” COM (2001) 428 final, 7.

80 Senden (n 1), 3.

81 European Commission, “European Governance, A White Paper” COM (2001) 428 final, 4 and 20. To be noted that the other key element of the proposed governance reform was to increase quality and reduce quantity of legislation (“less and better legislation”).

82 Interinstitutional agreement on better law-making [2003] OJ C 321, 1–5, point 22.

83 European Commission, “European Governance, A White Paper” COM (2001) 428 final, 17 and 18.

84 European Commission, “European Governance, A White Paper” COM (2001) 428 final, 18.

85 Radelli (n 12) with reference to the Mandelkern Group 2001 on principles and practices of better regulation. On the potentials of the open method of coordination as a new model of governance, see inter alia Caroline de la Porte and Philippe Pochet, Building Social Europe through the Open Method of Coordination (2002), Peter Lang Brussels; David Trubeck and James Mosher, “Alternative Approaches to Governance in the EU: EU Social Policy and the European Employment Strategy” (2003) 42 (1) JCMS 63–88; For a more critical analysis, see Claudio M Radelli Who Learns What? Policy Learning and the Open Method of Coordination (2004), Paper prepared for the ESRC Seminar Series: Implementing the Lisbon Strategy “Policy Learning Inside and Outside the Open Method”, European Research Institute—University of Birmingham, available at: <http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=F87EB816F3CD7F5C6610E3E8E594F44D?doi=10.1.1.320.5125&rep=rep1&type=pdf>; Sandra Kröger, “The Open Method of Coordination: Underconceptualisation, Overdetermination, Depolitisation and Beyond” in Sandra Kröger (ed), What We have Learnt: Advances, Pitfalls and Remaining Questions in OMC Research (European Integration online papers, Special Issue 1, Vol 13, Art 5); Timo Idema and Daniel R Kelemen, “New Modes of Governance, the Open Method of Co-ordination and other Fashionable Red Herrings” (2006) 7 (1) Perspectives on European Politics and Society 108–123.

86 Jonathan Zeitlin, “Conclusions” in Jonathan Zeitlin and Philippe Pochet (eds) The Open Method of Coordination in Action: The European Employment and Social Inclusion Strategies (Pieter Lang,) 483.

87 High Level Group, Facing the Challenge: The Lisbon Strategy for Growth and Employment (2004) 42. Even in areas where the method has been applied quite extensively (eg employment), the conclusion was usually that there has been little if any influence on domestic policies. Timo Idema and Daniel R Kelemen, “New Modes of Governance, the Open Method of Co-ordination and other Fashionable Red Herrings” (2006) 7 (1) Perspectives on European Politics and Society 110. In the introduction we mentioned that in the non-harmonised area of EU direct taxation, the Member States have adopted a Code of Conduct against harmful tax competition. Radelli qualified this code (adopted before the development of the concept of “open method of coordination”, and not to improve EU law and offer more flexible regulation, but in the context of absence of legislation) as an example of open method of coordination “in disguise”, because although EU tax policy makers have not made the connection, it contains most of the characteristics of this method (ie voluntary agreement, peer review and timetables). The author, however, also notes that because private sector actors have not been included in the discussions of the Primarolo group, the Code does not score well in terms of transparency, inclusion of social actors and even legitimacy, which are the characteristics of the most sophisticated forms of open method of coordination (as can be found in the area of employment policy). Radelli (n 12) 18.

88 European Commission, “European Governance, A White Paper” COM (2001) 428 final, 18.

89 Interinstitutional agreement on better law-making [2003] OJ C 321, 1–5, point 18.

90 Gribnau (n 10) 31.

91 Hans Gribnau, “Soft Law and Taxation: EU and International Aspects” (2008) 2(2) Legisprudence 86.

92 Communication from the Commission to the European parliament, the Council and the European Economic and Social Committee on the future of VAT, “Towards a simpler, more robust and efficient VAT system tailored to the single market” COM (2011) 851 final, 8.

93 Communication from the Commission to the European parliament, the Council and the European Economic and Social Committee on the future of VAT, “Towards a simpler, more robust and efficient VAT system tailored to the single market” COM (2011) 851 final, 8.

94 As VEG Opinions are thus adopted within a clearly defined framework, they still in a way form part of a “top-down model” of governance.

95 31 August 2015 report prepared for the 11th meeting of the VEG by the sub-group on VAT grouping and the Skandia case, taxud.c.1(2015)3986774—EN—will probably be out soon as an Opinion.

96 No annulment proceedings nor action for damages are conceivable here.

97 Article 3 of Commission decision of 26 June 2012 setting up a group of experts on value added tax, 2012/C 188/02.

98 Not only because tax revenue allow for the financing of a variety of policies and public services, but also because distortions of competition arise to the detriment of bona fide businesses, if mala fide businesses are able to fraud VAT.

99 “Neutrality” in the area of EU VAT covers different concepts including, first, the idea that supplies should be subject to a similar tax burden irrespective of their origin and that business decisions should not be driven by tax considerations, which objective is achieved by the application of the destination principle in cross-border supplies under which the location of the supplier will not impact consumption decisions, and which therefore also avoids distorting suppliers” establishment decisions (see OECD neutrality guidelines 3 and 4 available at: <http://www.oecd.org/ctp/consumption/guidelinesneutrality2011.pdf>); second, the idea that within a domestic legal system, similar supplies should be subject to similar tax treatment (concept of “fiscal neutrality” as developed by the CJEU, reflecting the principle of equal treatment in the area of VAT. See for example C-174/08 NCC Construction Danmark [2009] ECLI:EU:C:2009:669 para 41. In the same sense: C-549/11 Orfey Balgaria [2012] ECLI:EU:C:2012:832 para 34; C-309/06 Marks & Spencer [2008] ECLI:EU:C:2008:211 para 49; C-106/05 LuP [2006] ECLI:EU:C:2006:380 para 48; C-45/01 Dornier [2003] ECLI:EU:C:2003:595 para 69). Third, it is also used to express the idea—to which we relate in this case—that VAT should strictly remain a tax on consumption and for that reason should in principle not be borne by businesses, which objective is achieved under the EU VAT system by allowing the taxable persons to deduct their input VAT. The right to deduct VAT is a fundamental principle underlying the common system of VAT, and for that reasons may in principle not be limited (see Joined Cases C-110/98 to C-147/98 Gabalfrisa and Others [2000] ECLI:EU:C:2000:145, para 43; Case C-409/99 Metropoland Stadler [2002] ECLI:EU:C:2002:2, para 42; and Case C-465/03 Kretztechnik [2005] ECLI:EU:C:2005:320, para 33). See also OECD neutrality guidelines 1 and 5.

100 The idea that tax related compliance burden and costs for businesses should be minimised is a widely recognised principle. See OECD neutrality guidelines listing efficiency as “a basic principle” (4): “Compliance costs for businesses and administrative costs for the tax authorities should be minimized as far as possible”.

101 <https://ec.europa.eu/eusurvey/runner/ModernisingVATcrossborderecommerce>.

102 We mentioned the OECD Model Tax Convention on Income and on Capital and the Transfer Pricing Guidelines.

103 OECD, Electronic Commerce: Taxation Framework Conditions, A Report by the OECD Committee on Fiscal Affairs, as presented to Ministers at the OECD Ministerial Conference “A Borderless World: Realising the Potential of Electronic Commerce” on 8 October 1998.

104 Pistone (n 2) 1161.

105 These guidelines now form part of the Base Erosion and Profit Shifting project (“BEPS”)for what concerns the VAT aspects.

106 In accordance with Article 220(1) of the TFEU: “The Union shall establish all appropriate forms of cooperation with . . . the Organisation for Economic Cooperation and Development”.

107 Businesses were also involved in the drafting of the Ottawa Framework and its subsequent implementing guidelines.

108 More exactly, do participate to these meetings: business representatives having made a specific request and the OECD Member States having expressed an interest in participating to the preparation of the guidelines and in reflecting on specific/problematic issues within the Technical Advisory Group.

109 Gilly (n 12), C-234/01 Gerritse [2003] ECLI:EU:C:2003:340, C-324/00 Lankhorst [2002] ECLI:EU:C:2002:749.

110 Senden (n 1). To be noted that under Article 288 of the TFEU, only “recommendations and opinions” emanating from “the institutions” are listed among the “legal acts of the Union” without binding force.

111 Or be reduced to mere “window dressing”. . .