The EU VAT Treatment of Vouchers (FM nr. 157) 2019/3.5.3:3.5.3 Economic activities

The EU VAT Treatment of Vouchers (FM nr. 157) 2019/3.5.3

3.5.3 Economic activities

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

Economic activities are all activities performed by a taxable person acting as such.1 However, not all economic activities are transactions that are subject to VAT, and not all transactions that are subject to VAT are economic activities.

Examples of economic activities that are not considered transactions that are subject to VAT, which can be found in the EU VAT Directive as well as in CJEU case law, are:

•

the supply of goods and services outside the EU for consideration by a taxable person acting as such;

•

holding shares in a subsidiary where that subsidiary is managed (but not for consideration) and where these activities entail other taxable activities,2

•

the purchase of goods or services for the purpose of providing taxable transactions,3

•

the transfer of a going concern in specific cases,4

•

transaction within one single taxable person (e.g. within a VAT group or between a head office and its branches),5

•

the issuing of shares6 and

•

certain transactions for no consideration.7

As I described in Section 3.4, examples of transactions that qualify as ‘subject to VAT’ but that are not economic activities are the supply of goods or services under conditions that are different from ‘normal’ market conditions.8 Other examples of non-economic activities that can be performed by a taxable person (but not acting as such with regard to these activities) are the ‘passive’ holding of shares in subsidiaries (i.e. not entailing any other activities)9 and the issuing new shares.10

Other examples of non-economic activities are transactions performed by non-taxable persons or by bodies governed by public law under the special legal regime applicable to them,11 and transactions that are subject to a total legal prohibition on importation and marketing in the entire EU (as performed by any person), such as the supply of narcotics.12

In this section I have established what constitutes an economic activity. Economic activities can be either subject to VAT or not. I have summarised the above in the two diagrams below, where the left diagram shows the types of activities as performed by businesses, and the diagram on the right show how these activities are categorised for EU VAT purposes. The red section in the diagram on the right side represents activities for consideration that are, nonetheless, not considered economic activities from an EU VAT perspective:

Afbeelding 1

and

Afbeelding 3

The red box in the second schedule denotes the supplies that are made for consideration (i.e. supplies that are subject to VAT) but that are not economic activities, as described above.

Transactions that are (deemed to be) performed outside the EU are never subject to VAT. They can, however, qualify as economic activities). In Section 3.6 I will briefly touch upon the requirement for transactions to be made ‘within the territory of an EU Member State’ to be subject to VAT.

Deze functie is alleen te gebruiken als je bent ingelogd.