The EU VAT Treatment of Vouchers (FM nr. 157) 2019/2.1:2.1 Positive EU law

The EU VAT Treatment of Vouchers (FM nr. 157) 2019/2.1

2.1 Positive EU law

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The main pieces of positive law with regard to EU VAT consists of a number of Directives, a Council Regulation and an Implementing Regulation:

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The EU VAT Directive,1

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The VAT Refund Directive for EU Businesses,2

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The VAT Refund Directive for non-EU Businesses,3

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The Directive on VAT free importations,4

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The Directive on private consignments,5

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The Directive on Travellers’ allowances,6

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The VAT regulation,7 and

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The VAT Implementing Regulation.8

The emphasis of this research will be on determining the VAT treatment of vouchers, for which I will also have to determine whether a supply is made for consideration, whether a multiple-element supply should be ‘bundled’ into one, whether a multiple-element supply is composite supply or not, what the VAT treatment is of supplies made for no consideration and what the VAT treatment is of barter transactions, raffles and other games of chance. All these issues are mainly dealt with in the EU VAT Directive. Therefore, the EU VAT Directive will be my main source of written positive law. In examining the VAT treatment of a transaction based on the current EU VAT Directive, I will in some cases also examine the relevant provisions of its ‘predecessors’: the Sixth VAT Directive,9 the Second Directive10 and the First Directive,11 mainly examining the published explanatory notes to these Directives.

The EU VAT Directive is part of Secondary EU Law. Secondary EU Law consists of legal instruments based on Primary EU Law and produced by supranational bodies that are created through this Primary EU Law. For VAT purposes, the most relevant sources of Primary EU Law are the Treaty on the Functioning of the European Union (TFEU)12 and the Charter of Fundamental Rights of the European Union.13 The most relevant supranational bodies (from a VAT perspective) are the European Council, the European Commission, the European Parliament and the Court of Justice of the European Union (CJEU).14

Other sources of EU VAT law are CJEU case law (jurisprudence), Explanatory notes from the European Commission, VAT Committee Guidelines and European Commission Communications.15

I will test this positive law to norms that are derived from and based on the basic principles of EU VAT and the basic features of VAT (including the legal character of the EU VAT). I will use theoretical sources to substantiate my findings and views, such as international fiscal literature as well as written law and jurisprudence from local jurisdictions (mostly EU Member States, focussing on the Netherlands and the UK).

For this research, or any research regarding VAT, it is relevant to determine the purpose, or guiding principles, of VAT. Establishing this purpose is relevant because every provision of Union law must be interpreted in the light of the provisions of Union law as a whole, regard being had to the objectives thereof.16

Only after establishing the purpose of VAT, it becomes possible to determine whether certain provisions, proposals for adjustments to provisions and new provisions, and case law are in line with that purpose. If current rules, case law or practices are not in line with this purpose, alternatives should be in line with the purpose of VAT. If legislation or case law is not entirely clear, it should be explained and applied so that it is in line with the purpose of VAT. Also, if national VAT legislation is not in line with EU VAT law, national courts should apply the national legislation insofar as compatible with EU law.17 However, Member States are not allowed to introduce VAT provisions that deviate from the EU VAT rules, even if these provisions better reflect the purpose of the EU VAT system.18

How can the purpose of VAT be established? Clues can be found in the EU VAT Directives and the various proposals for EU VAT Directives, including their explanatory notes, in various other documents from the European Commission, in rulings from the CJEU and in literature. This accounts for positive law and literature. Also, the fundamental principles underlying the EU VAT system and the characteristics of EU VAT can be useful for establishing the purpose of the EU VAT. I will first describe the EU VAT system as it is now (positive law) and after that look into the fundamental principles and the characteristics of EU VAT to establish what can be used as a test of this positive law and for establishing desired or appropriate law.

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