The EU VAT System and the Internal Market

Transcription

1 The EU VAT System and the Internal Market Rita Aguiar de Sousa e Melo de la Feria Thesis submitted to the University of Dublin, Trinity College, School of Law in fulfilment of the requirements for the degree of Doctor in Philosophy Degree awarded on 7 July 2006 Volume 16, Doctoral Series IBFD -Academic Council

2 Acknowledgements Abbreviations xiii xv Introduction xvii I v. Chapter 1: The Internal Market Concept ~ Origins of the internal market policy European common market White Paper programme Single European Act Articles 14 and 95 of the EC Treaty Legal definition An area without internal frontiers Free movement of goods, persons, services, and capital Community internal market competence Substantive scope of internal market competence Limits to internal market competence: Conferral of powers Limits to internal market competence: Subsidiarity Temporal scope Legal effect Legal effect: Community Legal effects: Member States Internal market, common market, and single market Internal market vs. common market Internal market vs. single market Exercise of Community internal market competence European economic constitution models Flexibility and differentiation: Different levels of harmonisation VAT policy as part of the internal market policy Scone of Community VAT competence Vll

3 4.2. Decision-making procedure for VAT legislation Exercise of Community VAT competence: Mitigated centralised model 43 Chapter 2: The Role of VAT in the Internal Market Policy: Historical Overview Turnover tax systems in the beginning of the European integration process Turnover taxes and the European Coal and Steel Community - The Tinbergen Report Turnover taxes in the European Economic Community Introduction of a value added tax system Working Group No. I, Sub-Groups A, B, and C and Fiscal and Financial Committee First and Second Directives: The birth of the EU VAT system First Directive Second Directive Sixth Directive: Common basis of assessment The new internal market policy and the role of VAT The White Paper and the removal of fiscal barriers Commission's VAT programme for the internal market Abolition of fiscal frontiers and principle of origin VAT clearing house system Approximation of VAT rates Approval of the "transitional VAT system" Abolition of fiscal frontiers Approximation of VAT rates General rules Temporary measures Ancillary systems and simplification measures Ancillary systems: Intrastat and VIES Simplification measures: First Nettoyage Directive 78

4 5. Towards a definitive VAT system: Developments post Commission's 1996 programme for a definitive VAT system Other proposed options for a definitive VAT system Commission's 2000 VAT strategy 84 Chapter 3: The Current EU VAT System: Practical Problems The current EU VAT system: General overview Basis of assessment: Common VAT System Directive (CVSD) Amendments Derogations Intra-Community and international VAT refund system The statistical system, the administrative cooperation and training measures: Intrastat, VIES, and Fiscalis Intrastat Administrative cooperation Community's own resources The difficulties caused by the current EU VAT system EU VAT system as an obstacle to the establishment of the internal market Inter-jurisdictional issues Place of supply rules Tax administration arrangements Convergence of VAT rates Member States'application of CVSD rules Critical evaluation of lack of rates convergence EU VAT system as an obstacle to the functioning of the internal market EU VAT system as a direct obstacle to the functioning of the internal market: Non-deductible input tax General restrictions to the right to deduct Specific restrictions to the right to deduct Critical evaluation of lack of uniform criteria for non-deductible input tax 153

5 EU VAT system as an indirect obstacle to the functioning of the internal market: VAT treatment of public sector bodies Concept of taxable person Exemptions Critical evaluation of the VAT treatment of public sector bodies New challenges facing the EU VAT system Economic and Monetary Union The Lisbon strategy EU enlargement Chapter 4: The Role of the Court of Justice in the Development of the EU VAT System Origins of Court of Justice intervention in VAT cases Court of Justice jurisprudence on VAT EU VAT system as an obstacle to the establishment of the internal market Inter-jurisdictional issues Place of supply Chain transactions Fixed establishment Reverse-charge mechanism Tax administrative arrangements Eighth Directive refunds Intrastat VIES Convergence of VAT rates Zero VAT rates Reduced VAT rates Assessment of the Court of Justice jurisprudence EU VAT system as an obstacle to the functioning of the internal market EU VAT system as a direct obstacle to the functioning of the internal market: Non-deductible input tax Standstill clause Cyclical economic reasons clause"

6 , Conclusion Annexes References Bibliography Derogations and the principle of proportionality EU VAT system as an indirect obstacle to the functioning of the internal market: VAT treatment of public sector bodies Concept of public sector bodies Exemptions Assessment of the Court of Justice jurisprudence The role of the Court of Justice in the context of the EU VAT system Court of Justice interpretative methods on VAT cases Teleological interpretation and principle-based decisions Decisions based on VAT principles Decisions based on general principles of Community law Assessment of interpretative methods on VAT cases: Limited by legislation Jurisprudential developments vs. legislative measures Is the Court the appropriate forum to resolve the failings of the EU VAT system? Accusations of judicial activism