Einde inhoudsopgave
The EU VAT Treatment of Vouchers (FM nr. 157) 2019/6.2
6.2 Introduction to the VAT treatment of ‘free’ supplies
Dr. J.B.O. Bijl, datum 01-05-2019
- Datum
01-05-2019
- Auteur
Dr. J.B.O. Bijl
- JCDI
JCDI:ADS594781:1
- Vakgebied(en)
Omzetbelasting / Levering van goederen en diensten
Omzetbelasting / Bijzondere OB-regelingen
Omzetbelasting / Vergoeding
Voetnoten
Voetnoten
See Section 2.4.4.
Artt. 176, 177 and 184-186 of the EU VAT Directive.
Artt. 16 and 26 of the EU VAT Directive.
Proposal for a second Directive for the harmonization among Member States of turnover tax legislation, concerning the form and methods of application of the common system of taxation on value added, COM (65) 144 final, 13 April 1965, Supplement to the Bulletin of the European Economic Community No. 5, 1965, p. 32: “As regards the withdrawal of a good purchased by a taxpayer, Member States are free not to apply the tax but instead to disallow the deduction or to rectify the assessment in case the deduction has already been allowed.”
Proposal for a Sixth Council Directive on the harmonization of Member States concerning turnover taxes – Common system of value added tax: Uniform basis of assessment, COM(73) 950 of 20 June 1973, Bulletin of the European Communities 1973, Supplement 11/73, OJ C 80, 5 October 1973, p. 10: “(…) to avoid the enjoyment of unjustified advantages by taxable persons who are entitled to deduct input tax, application of goods to own use, and transfers of goods from a taxable to an exempt business are treated as taxable supplies. The same aim could have been attained by means of adjustments to deduction already made, but the technique of treating these transactions as taxable supplies was chosen for reasons of impartiality and simplicity”.
Unless Member States had a system of disallowing deduction of VAT on specific costs in place before the coming into force of the Sixth EU VAT Directive. See Art. 17(6) of the Sixth EU VAT Directive, now Art. 176 of the EU VAT Directive.
VAT is due on the supply of goods and services for consideration by a taxable person acting as such. This means that, as a rule, a consideration is required for a transaction to be subject to VAT. Because VAT aims to tax consumption (or rather, expenditure on local consumption)1 and because consumption can also be the result of a transaction that is not made for consideration, the EU VAT Directive contains provisions that ensure that transactions that result in consumption are also taxed where there is no consideration.
Taxation of supplies that are not made for consideration can be achieved by either (retroactively) disallowing deduction of VAT on the costs of the goods and services insofar as these are not used for taxable business activities,2 or by taxing these activities by treating them as if they were supplies made for consideration.3 Originally, the EU VAT legislator allowed the taxpayers to choose which of these two adjustment systems they wanted to apply.4 Under the later and current VAT rules, the ‘main’ system requires businesses to apply the latter system (taxing the application of the goods or services by deeming them to be supplied for consideration).5,6Different rules exist for situations where, for example, the consumption takes place outside the scope of VAT (as a non-economic activity) or where an immovable property is partially used for non-business purposes (consumption), as I will now describe.
6.2.1 Free transactions and non-economic activities6.2.2 VAT consequences of non-economic activities6.2.3 Free supplies as promotional activities6.2.4 Gifts and VAT6.2.5 When is a supply made ‘free of charge’ or not made ‘for consideration’?