2.6.6 A concept developed by the CJEU as test for positive law?

Can a concept that is created or developed by the CJEU and that the CJEU deems to be a fundamental criterion for the application of the common system of VAT, be used for testing whether the application of positive law to promotional activities is in line with the fundamental principles that underlie EU VAT? In other words, can positive EU law be tested against a concept that is developed or created by an institution that was established to ensure that "the law is observed" "in the interpretation and application" of the Treaties, meaning – insofar as relevant for this research – that it interprets European Union law at the request of the national courts and tribunals?1 If CJEU case law is part of positive law, can a concept created in positive law be used for testing it?

In my view, it can. It is the CJEU’s mission to ensure that the law is observed, also by interpreting concepts of EU VAT law. This means that the CJEU also has to apply tests for ensuring that the law is applied. Where the law is insufficiently clear or where things (transactions, events) are not clearly covered by written law, the CJEU has to ensure that the correct VAT rules are applied anyway. The CJEU does this by providing interpretation of EU concepts. Courts or judges use interpretation to come to a fair decision. Their rulings link in and are often based on previous rulings and at the same time add to this jurisprudence. With each ruling, a court or a judge has to be aware of the fact that that he will have to take positive law into account, assess it and that his ruling will be a part of this positive law that will be used as the basis for future rulings.2 This applies even more to common law, where the legal form is based on court rulings previously made in similar cases (decisions) and this jurisprudence is leading, as opposed to ‘continental law’ or ‘civil law’, which is based on legislation imposed by the national government.3 The whole concept of common law is based on courts interpreting, applying and commenting on their own and their colleagues’ earlier rulings, adding to positive law.

In summary, the concept of economic and commercial reality is a useful test for establishing whether the application of positive law to determine the EU VAT consequences of certain transactions are in line with the fundamental underlying principles of EU VAT and therefore constitute desirable or appropriate law.