2.3 The fundamental principles underlying the EU VAT system

Union law, and the VAT Directives as part thereof, is founded on a number of principles. Some of these principles, such as the principle of an open market economy, are included in the EC Treaty.1 Others, such as the neutrality principle, are mentioned in the European VAT Directives. These principles of Union law are in fact its foundation. When applying or interpreting Union law and legal concepts, which do not necessarily have the same meaning as in the national legislation of the Member States, every provision must be places in its context and interpreted in the light of the provisions of Union law as a whole, regard being held to the objectives thereof and to its state of evolution at the date on which the provision in question is to be applied.2 The objectives of Union law are defined by their underlying principles. Therefore, these principles of Union law must be closely adhered to.

In this research, I will determine whether the methods of determining the VAT treatment of promotional activities in general, and transactions involving vouchers in particular, whether in the VAT Directives or case law, are in line with the relevant principles. Where they are not, I will suggest other methods, which are more in line with the relevant principles of Union law. For this purpose, I will have to determine which principles of Union law are relevant for this research.