2.2.4 The current EU VAT Directive

The current EU VAT Directive1 replaced the Sixth Directive from 1 January 2007.2 There were various reasons for this new Directive. The Sixth Directive had been significantly amended on several occasions, and with more amendments being made, it was deemed desirable, for reasons of clarity and rationalisation that the Sixth Directive should be recast.3

Another reason for the new EU VAT Directive was ensuring that the provisions are presented in a clear and rational manner, consistent with the principle of better regulation. The EU legislator deemed it appropriate to recast the structure and the wording of the Sixth Directive. This recasting exercise was said to not, in principle, bring about material changes in the existing legislation. A small number of substantive amendments were however inherent to the recasting exercise.4

Major material changes were made to the EU VAT Directive in 2008, mainly changing the rules for determining the place of supply of services.5 For this research, it is relevant to mention another material change that has taken effect on 1 January 2019: from that date, specific rules with regard to the VAT treatment of transactions involving vouchers are included in the EU VAT Directive.6

I have above described the sources of positive EU VAT Law. I will now describe the fundamental principles underlying the EU VAT system and the characteristics of the EU VAT system as tests to establish whether the application of this positive law on promotional activities is in line with these principles and character, and whether there are differences between positive law and desired or appropriate law.