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The EU VAT Treatment of Vouchers (FM nr. 157) 2019/2.4.4
2.4.4 VAT: a tax on expenditure for local private consumption
Dr. J.B.O. Bijl, datum 01-05-2019
- Datum
01-05-2019
- Auteur
Dr. J.B.O. Bijl
- JCDI
JCDI:ADS594771:1
- Vakgebied(en)
Omzetbelasting / Levering van goederen en diensten
Omzetbelasting / Bijzondere OB-regelingen
Omzetbelasting / Vergoeding
Voetnoten
Voetnoten
Cf. Ben Terra and Julie Kajus, A Guide to the European VAT Directives 2018, IBFD, 2018, Volume 1, section 7.3.
See Section 2.3.1 of this Chapter.
This principle is embedded in Art. 96 of the Treaty establishing the European Economic Community, Traites 1957 CEE 1(EN) 0001, which was the basis for the VAT Directives, now Art. 91 of the Consolidated version of the Treaty of the European Union, OJ of 24 December 2002, C 325/68, which also states that any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.
European Commission, Green Paper, On the future of VAT - Towards a simpler, more robust and efficient VAT system, Brussels, 1 December 2010, COM(2010) 695 final, page 7.
Commission Staff Working Document, Accompanying document to the Green Paper on the future of VAT - Towards a simpler, more robust and efficient VAT system, Brussels, 1 December 2010, SEC(2010) 1455 final, pages 4 and 11.
Article 402(1) of the EU VAT Directive states: The arrangements provided for in this Directive for the taxation of trade between Member States are transitional and shall be replaced by definitive arrangements based in principle on the taxation in the Member State of origin of the supply of goods or services.
OECD (2017), International VAT/GST Guidelines, OECD publishing, Paris, p. 15-17.
See, for example, Completing the Internal Market: White Paper from the European Commission to the European Council, Brussels, 14 June 1985, COM(85) 310 FINAL, paragraph 172 et seq.
See, for example, CJEU joined cases C-283/06 and C-312/06, KÖGÁZ rt and Others v Zala Megyei Közigazgatási Hivatal Vezetője (C-283/06) and OTP Garancia Biztosító rt v Vas Megyei Közigazgatási Hivatal (C-312/06), ECLI:EU:C:2007:598, paragraph 37.
External neutrality1 ensures that goods and services produced and supplied locally have the same tax treatment as imported goods and services provided by businesses that are established in other countries.2 It also means that, because VAT is meant to tax the expenditure of individual consumers, if goods are not consumed in the country of origin while at the same time tax is levied on these goods, a refund should be made when the goods are exported.3 Under that same rationale, services should be taxed in the country of consumption.
The European Commission, in the ‘Green Paper’ on the future of VAT4 and the accompanying Working document5 indicate that the VAT system is moving away from taxation based on the ‘origin principle’ towards taxation based on the ‘destination principle’, even though the opposite is stated in Art. 402 of the EU VAT Directive.6 The OECD also adheres to the destination principle as one of the guiding principles for a VAT system.7 Even under the ‘origin principle’, the VAT would have been paid to the treasury of the country of destination through a ‘clearing-house system’.8 Taxation under the destination principle to me implies that the purpose is to tax expenditure for local consumption, because that takes place at the place of destination.
This means that the purpose of a neutral VAT is to tax expenditure for local private consumption. This is consistent with the four essential characteristics of EU VAT that the CJEU has established in its jurisprudence on the prohibition of introducing or maintaining taxes that qualify as a VAT:9
VAT applies generally to transactions relating to goods or services,
it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied,
that tax is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place, and
the amounts paid during the preceding stages of the production and distribution process are deducted from the VAT payable by a taxable person, with the result that that tax applies, at any given stage, only to the value added at that stage and the final burden of that tax rests ultimately on the consumer.