- Koen Lenaerts, ‘L'égalité de traitement en droit communautaire: un principe unique aux apparences multiples’ [1991] Cahiers de Droit Européen 38.
- Art 2(3) of the Treaty of Lisbon.
- Han Kogels, ‘Making VAT as Neutral as Possible’ (2012) 21 EC Tax Review 230; see also Yolanda Martinez Muñoz, ‘El principio de neutralidad en IVA en la doctrina del TJCE' [2010] Civitas: Revista Española de Derecho Financiero 145.
- Joachim Englisch, ‘The EU Perspective on VAT Exemptions’ in Rita de la Feria (ed), VAT Exemptions, Consequences and Design Alternatives (Wolters Kluwer, 2013) 49. According to Radu Bufan and Aurelian Opre, ‘A tax system that implemented the neutrality principle must ensure that economic decisions are not influenced by tax measures: this is the only possible way to keep decisions of economic operators, investors, etc tax neutral’: see ‘The Principle of Tax Neutrality in the Field of Direct and Indirect Taxation' in Michael Lang, Peter Melz, Eleonor Kristoffersson and Thomas Ecker (eds), Value Added Tax and Direct Taxation (IBFD, 2009) 231; see also Danuše Nerudová and Jan široký, ‘The Principle of VAT Neutrality: VAT/GST v Direct Taxation' in Lang et al, ibid; Georges Egret, La TVA (PUF, 1989) 37.
- Committee on Fiscal Affairs Working Party No 9 on Consumption Taxes, ‘OECD International VAT/GST Guidelines—Guideline on Neutrality’ (approved by the Committee on Fiscal Affairs on 28 June 2011), 4; Stéphane Buydens and Alain Charlet, ‘Les Principes directeurs de l'OCDE sur la neutralité de la taxe sur la valeur ajoutée/taxe sur les produits et services' (2013) 33 Revue de Planification Fiscale et Financière 85.
- Practitioners know that aggressive VAT planning occurs most frequently in the sectors where VAT is the most discriminatory, ie in the public and charities sectors.
- Borbála Kolozs, ‘Neutrality in VAT’ in Lang et al (n 4) 203.
- ME van Hilten, Over Neutraliteit van de omzetbelasting en het hellend vlak van de uitzonderingen (Kluwer Deventer, 2010) 47.
- Rita de la Feria, The EU VAT System and the Internal Market (IBFD, 2009) 177.
- Case C-44/11 Deutsche Bank [2012] ECR I-0000, para 45.
- Case C-174/11 Zimmerman [2012] ECR I-0000, para 49.
- Deutsche Bank (n 10) Conclusions of AG Sharpston, para 60.
- van Hilten (n 8) 47.
- Francis Lefebvre, Union Européenne 2008–2009 (Memento Pratique, 2009); Case C-8/57 Groupement des hauts fourneaux et aciéries belges [1957–8] ECR 245; Case C-265/78 Fewerda [1980] ECR 617.
- Case C-127/07 Société Arcelor Atlantique et Lorraine [2008] ECR I-9895.
- Koen Lenaerts and Piet Van Nuffel, European Union Law (Sweet & Maxwell, 2011) 156.
- Case C-174/08 NCC Construction Danmark A/S v Skatteministeriet [2009] ECR I-10567, para 41.
- The use of the phrase ‘reflect the general principle of equal Treatment’ should not be understood in terms of the reflection in the Myth of the Cave of Plato but rather, as mentioned in the case of Orfey Balgaria, as ‘a particular expression… in the specific area of taxation' of this principle of equal treatment.
- Case C-309/06 Marks & Spencer plc v Commissioners of Customs and Excise [2008] ECR I-2283, para 49 and the case law cited there.
- Case C-106/05 LuP [2006] ECR I-5123, para 48 and the case law cited there.
- Case C-45/01 Christoph-Dornier-Stiftung für Klinische Psychologie v Finanzamt Gießen [2003] ECR I-12911, para 69.
- Art 13(A)(1)(g) of the Sixth Directive provided for exemptions for supplies of services and of goods closely linked to welfare and social security work, including those supplied by old people's homes, by bodies governed by public law or by other organisations recognised as charitable by the Member States concerned. That exemption is comparable to that laid down by Art 132(1)(g) of the current VAT Directive, albeit that the words ‘other organizations recognized as charitable’ have been replaced by ‘other bodies recognized as being devoted to social well-being’.
- Case C-141/00 Ambulanter Pflegedienst Kügler GmbH v Finanzamt für Körperschaften I in Berlin [2002] ECR I-6833, para 56.
- Case C-384/01 Commission of the European Communities v French Republic [2003] ECR I-4395, paras 21 and 22; Case C-155/94 Wellcome Trust Ltd v Commissioners of Customs and Excise [1996] ECR I-3013, para 38; Case C-349/96 Card Protection Plan Ltd v Commissioners of Customs and Excise [1999] ECR I-973, para 33; Case C-481/98 Commission of the European Communities v French Republic [2001] ECR I-3369, para 21; Case C-108/99 Cantor Fitzgerald International v Commissioners of Customs and Excise [2001] ECR I-7257, para 33.
- Case C-549/11 Orfey Balgaria [2012] ECR I-0000, para 34.
- ibid, para 33, referring to Case C-309/06 Marks & Spencer [2008] ECR I-2283, paras 49 and 51, and Case C-174/08 NCC Construction Danmark [2009] ECR I-10567, para 44.
- Case C-2/92 Bostock [1994] ECR I-955, para 23.
- The Court referred to Joined Cases C-201/85 and C-202/85 Klensch v Secrétaire d'Etat [1986] ECR 3477, para 9, referring to Joined Cases C-117/76 and C-16/77 Ruckdeschel & co and Hanse Lagerhaus Stroh & Co v Hauptzollamt Hamburg-St Annen [1977] ECR 1753, and Joined Cases C-124/76 and C-20/77 SA Moulins et Huileries de Pont-à-Mousson v Onic [1977] ECR 1795.
- Englisch (n 4) 55.
- Kolozs (n 7) 203.
- Margot Horspool and Matthew Humphreys, European Union Law (Oxford University Press, 6th edn 2010) 136.
- Case C-6/71 Rheinmühlen Düsseldorf [1971] ECR 719.
- Horspool and Humphreys (n 31) 138.
- Case C-588/10 Kraft Food Polska [2012] ECR I-0000, para 28.
- Case C-330/95 Goldsmiths [1997] ECR I-3801, para 21.
- Case C-566/07 Stadeco [2009] ECR I-5295, para 28.
- Case C-489/09 Vandoorne [2011] ECR I-225, para 27.
- Case C-268/83 Rompelman [1985] ECR 655, para 19.
- Case C-153/11 Klub [2012] ECR I-0000.
- Case C-275/11 GfBk Gesellschaft für Börsenkommunikation mbH [2013] ECR I-0000, para 30.
- See Case C-408/98 Abbey National [2001] ECR I-1361, para 62, and Case C-363/05 JP Morgan Fleming Claver-house Investment Trust and The Association of Investment Trust Companies [2007] ECR I-5517, para 45.
- Case C-250/11 Lietuvos geležinkeliai AB [2012], para 45; see, inter alia, Joined Cases C-259/10 and C-260/10 Rank Group [2011], para 32 and the case law cited.
- As is the case for the concept of ‘management of special investment funds as defined by Member States'.
- See DG Taxud Website, ‘How VAT Works', http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/index_en.htm.
- Bufan and Opre (n 4) 231; see also Nerudová and Široký (n 4) 231.
- Egret (n 4) 37.
- Ben Terra and Julie Kajus, A Guide to the European VAT Directives, vol 1 (IBFD, 2011) 283.
- Case C-45/95 Commission v Italy [1997] ECR I-3605, para 15.
- Case C-400/98 Breitshol [2000] ECR I-4321, para 37.
- Compare with the view of de la Feria (n 9) 263: ‘The Principle of fiscal Neutrality which could be regarded as neutrality stricto sensu is probably the most important principle of the VAT system… It is essentially a fall-back principle, conveying the idea of neutrality where other principles such as VAT as tax on consumption or the principle of the right to deduct do not apply.’
- Case C-284/11 EMS Bulgaria [2012] ECR I-0000, para 43; see, inter alia, Klub (n 39) para 35.
- Case C-271/12 Petroma [2013] ECR I-0000, para 23.
- The Court referred to Case C-137/02 Faxworld [2004] ECR I-5547, para 37.
- Case C-438/09 Dankowski [2010] ECR I-14009, para 24, referring to Case C-137/02 Faxworld [2004] ECR I-5547, para 37, and Case C-29/08 SKF [2009] ECR I-10413, para 56.
- Robert Lecourt, L'Europe des juges (Bruylant, 1976) 241.
- Terra and Kajus (n 47) 284.
- Jean Van Houtte, ‘Les Dispositions fiscales’ in Les Novelles: droit des Communautés Européennes (Larcier, 1969) 874.
- Terra and Kajus (n 47) 284.
- Compare with Case C-112/91 Werner [1993] ECR I-429.
- Horspool and Humphreys (n 31) 306.
- Le Régime fiscal du Chiffre d'Affaires et son incidence sur la productivité, Project No 315, published by the Agence Européenne de productivité de l'Organisation Européenne de Coopération Economique (November 1957). This agency, which was the economic counterpart of NATO, later became the OECD. Charles Campet, the author of this report, later co-authored the First and Second VAT Directives.
- Arts 96–98 of the Treaty of Rome.
- And actually, it never functioned properly, and this led to permanent conflicts between the Member States and the Commission which ended only at the close of the 1960s.
- In short, the system consisted in introducing into the German Umsatzsteuergesetz 1951 the right of deduction that is the essential characteristic of the change of the French tax on production into the ‘Taxe sur la Valeur Ajoutée’ provided for in the law of 10 April 1954. The French VAT of 1954 was probably aimed at eliminating any discussion about the possibility of refunding the tax on exports which had arisen in relation to the previous French tax on production (this conclusion is not based on official statements, but on the analysis of the economic and legal constraints existing at that time). It confirms that the very nature of the concept of VAT neutrality is neutrality on intra-community trade.
- Commission, General Report of Sub-groups A, B and C, set up to examine the different possibilities for harmonization value added taxes, 3310/IV/62-F, January 1962, pp 96 and 97.
- Commission, ‘Proposal for a Second Council Directive for the harmonization among Member States of turnover tax legislation, concerning the form and the methods of application of the common system of taxation on value added' COM(65) 144 final, Supplement to Bulletin of the European Economic Community No 5, 1965, p 17.
- Insurance services should also have been subject to VAT, but they were never listed as such because they were a topic for a discussion that never ended in agreement.
- Edouard Bours, Rapport sur l'application de la TVA aux opérations immobilières au sein de la Communauté (Collection Etudes, Série Concurrence—Rapprochement des législations no 21, Brussels, 1971) 18.
- Gérard Hutchings, Les Opérations financières et bancaires et la taxe sur la valeur ajoutée (Commission Européenne, Collection Etudes, Série Concurrence—Rapprochement des législations no 22, Brussels, 1973).
- Debates of the European Parliament, Report of the sessions from 18 to 22 April 1977, OJ 216, Enclosures, p 180. An example is the option to tax financial services, which was previously only possible in a few Member States on grounds of maintaining some pre-existing structures but which is now available for outsourcing (with full right of deduction of input VAT) of financial services throughout the European Union (while such services generally do not allow the right of deduction of input VAT).
- Commission, ‘Proposal for a seventh Council Directive on the harmonization of the laws of the Member States relating to turnover taxes—common system of value added tax to be applied to works of art, collectors' items, antiques and used goods' COM(77) 735 final, OJ C26/2, but its scope was restricted to the treatment of second hand goods. This proposal was withdrawn on 11 November 1987.
- Commission, ‘Completing the internal market—The introduction of a VAT clearing system mechanism for intra-Community sales' COM(87) 323 final; Commission, ‘Proposal of 21 August 1987 for a Council Directive completing and amending Directive 77/388/EEC—Removal of fiscal frontiers' COM(87) 322 final.
- The first Commission proposal in 1987 had not taken into account the absence of harmonisation consequent on the Sixth Directive nor the way the tax was monitored by local tax inspectors. The system adopted by the Council in 1991 was actually an improvement on the mechanisms that existed between Belgium, the Netherlands and Luxembourg and that had proven to be more open to fraud. See Christian Amand and Kris Boucquez, ‘A New Defence for Victims of EU Missing-Trader Fraud?’ [2011] International VAT Monitor 234. In any other area than VAT, this could have led to legal proceedings against Member States that had introduced such rules.
- The impact of such fraud is much more important than putting the Member States' financial resources at risk: it creates major commercial distortions and distorts the price mechanism. See Conseil des Impôts, La Taxe sur la valeur ajoutée (19ième rapport au Président de la République, 2001) 219.
- See the preamble to Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers.
- Case C-112/91 Werner [1993] ECR I-429.
- Such discrimination may be prohibited on the basis of Art 27 of the OECD model Conventions, which are applicable even in the field of VAT. But this is not EU law.
- This is a source of reinvoincing flows. See eg Case C-01/08 Athesia Druck [2009] ECR I-1255.
- Case C-212/06 Government of the French Community and Walloon Government v Flemish Government [2008] ECR I-1683.
- This is a very sensitive topic that is outside the scope of the present study. According to the legislative chamber of the Belgian Conseil d'Etat, a Member State should refuse to adopt EU provisions which lead to disproportionate violations of the principle of non-discrimination. See opinion of the Belgian Conseil d'Etat 28.936/2 of 21 April 1999, Doc Parl Sénat, sess 1999–2000, no 2–329/1, no 21 p 7.
- Case C-36/99 Idéal Tourisme [2000] ECR I-6049.
- See also Case C-165/88 ORO Amsterdam Beheer [1989] ECR 4081.
- See, to that effect, Case C-305/97 Royscot [1999] ECR I-6671. The international transport of passengers by road and train is probably the sector where the most absurd situations are observed. According to a study for the European Commission in the early 1990s, the airlines were not able to know on which transactions VAT would have been due (but some commentators wryly observed that airlines never face difficulties getting paid!). The topic has not been discussed since.
- Case C-165/88 ORO Amsterdam Beheer [1989] ECR I-4081.
- Case C-153/11 Klub [2012] ECR I-0000, para 50, referring to Case C-385/09 Nidera Handelscompagnie [2010] ECR I-10385, para 49.
- Case C-489/09 Vandoorne [2011] ECR I-225, para 27, referring to Joined Cases C-177/99 and C-181/99 Ampa- france and Sanofi [2000] ECR I-7013, para 60, and Case C-17/01 Sudholz [2004] ECR I-4243, para 46. It is questionable whether the general principle of reverse charging that is applicable to local operations performed by foreign businesses not established in these countries meets this objective.
- The Court of Justice uses four methods of interpretation (text, context, purpose and ‘effet utile’): see Christian Amand, ‘The Limits of the EU VAT Exemption for Financial Service' [2009] International VAT Monitor 263.
- European Parliament, Report of the Committee for the Internal Market on the Proposal of the Commission to the Council (Doc 121, 1962–1963) concerning a Directive on the harmonization of the legislations of the Member States on turnover taxes (Deringer Report), European Parliament, Documents of Session 1963–4, 20 August 1963, Document 56, p 45.
- Commission, ‘Proposal for a Council Directive for the harmonization amongst Member States of turnover tax legislation' IV/COM (62) 217 final, Bulletin of the European Economic Community No 12, 1962. The existing exemptions in French VAT of 1954 (EDF, Gaz de France, etc) were not introduced into the European system.
- Finally, a list of taxable operations, including banking services, has been drafted: see ‘Proposal of 14 April 1965 for a Second Council Directive for the harmonization among Member States of turnover tax legislation, concerning the form and the methods of application of the common system of taxation on value added' COM(65) 144 final, p 17.
- Jean-Claude Bouchard, Anne Grousset and Christophe Aldebert, ‘Rapport français au congrès de l'IFA à Sidney’ (2003) LXXXVIIIb Cahiers de droit Fiscal International 320. The French Taxe sur les Activités Financières has been incorporated into the Sixth VAT Directive in order to tax some banking operations and to escape the French Tax on the salaries applicable in case of VAT exemptions.
- From a political point of view, VAT is a costly issue: electors will never give their votes to politicians who promise changes in the VAT system.
- BGBI I of 2 June 1967, p 545.
- For example, for postal services, immovable property, financial operations, distribution of water etc… Reichssteuerblatt, 11 December 1934, no 86.
- Case C-472/03 Arthur Andersen [2005] ECR I-1719.
- Case C-237/09 De Fruytier [2010] ECR I-4985.
- Case C-394/04 Ygea [2005] ECR I-10373.
- Case C-424/11 Wheels Common Investment Fund Trustees [2013] ECR I-0000.
- Case C-453/93 Bulthuis-Griffioen [1995] ECR I-2341.
- See van Hilten (n 8).
- Case C-222/84 Johnston [1986] ECR 1651, para 38.
- The concept of ‘management of credit’ (Art 135(1)(c) VAT Directive) is clear in French jurisprudence and economic literature, where it means the evaluation of the risk of credit prior to the granting of a credit. A purely literal interpretation without taking into account the background of this concept tends to conclude that it consists of the purely administrative operations after the granting of a credit. Of course, this leads to major conceptual and legal difficulties.
- Frans Vanistendael, ‘The Role of the European Court of Justice as the Supreme Judge in Tax Cases' [1996] EC Tax Review 114.
- See in this sense non-tax literature: Marc Fallon and Denis Martin, ‘Dessine-moi une discrimination’ [2010] Journal de droit Européen 165.
- Rita de la Feria, ‘VAT and the EC Internal Market: The Shortcomings of Harmonisation’, Oxford University Centre For Business Taxation, WP 09/29 (2009), p 15; Rita de la Feria, ‘VAT and the EU Internal Market: The Paradoxes of Harmonisation' in Dennis Weber (ed), Traditional and Alternative Routes to European Tax Integration (IBFD, 2010) 267–308; Kamiel Mortelmans, ‘The Relationship between the Treaty Rules and Community Measures for the Establishment and Functioning of the Internal Market' (2002) 39 Common Market Law Review 1303, 1312–16.
- Case C-390/96 Lease Plan Luxembourg [1998] ECR I-2553; Case C-361/96 Société Générale des Grandes Sources d'Eaux Minérales Françaises [1998] ECR I-3495; Case C-114/96 Kieffer and Thill [1997] ECR I-3629 para 34; Case C-409/04 Teleos [2007] ECR I-7797, para 63.
- This is not only observed with local judges. How should we understand the question about turnover raised by the Court during the public hearing of Case C-388/11 Crédit Lyonnais [2013] ECR I-0000? Why did the Court in Case C-284/03 Temco Europe [2004] ECR I-11237 not even reply to the question raised by the national judges or to the facts as summarised by the Court? In Case C-285/11 Bonik [2012] ECR I-0000, the taxpayer was surprised by the fact that the Commission considered as established what had previously been refuted before the national jurisdiction. In Case C-439/04 Kittel [2006] ECR I-6161, the business (ANG Computime) had no possibility of knowing in advance information obtained by the Court from criminal investigations against other taxable persons involved in the case. During public hearings before the CJEU, lawyers are sometimes surprised by questions of the Court or observations of the legal service of the Commission raised pursuant to factual investigations of the Court, facts that have not been previously subject to a contradictory debate or even disclosed to the concerned parties.
- Lenaerts and Van Nuffel (n 16) 175.
- Case C-269/95 DFDS [1998] ECR I-1605.
- Case C-81/87 Daily Mail [1988] ECR 5483, confirmed in Case C-210/06 Cartesio [2008] ECR I-9641.
- Such as the concepts of leasing and letting that are to be found in Art 135(1)(l) of Directive 2006/112/EC, and as also found in § 4(12)(a) of the Umsatzsteuergesetz of 28 May 1967.
- Case C-651/11 Staatsecretaris v XBV [2013] ECR I-0000, para 31.
- Referring to Case C-497/01 Zita Modes [2003] ECR I-14393, paras 32 and 35, and Case C-444/10 Schriever [2011] para 22.
- Copenhagen Economics, VAT in the Public Sector and Exemptions in the Public Interest (Final Report for Taxud/2011/De/334, 10 January 2013).
World Journal of VAT/GST Law
Volume 2, 2013 - Issue 3