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Transfer of a Going Concern. VAT Treatment and Some Consequences of the No-supply Rule.

Papis, Marta LU (2011) HARM53 20111
Department of Business Law
Abstract (Swedish)
The no-supply rule provided for in Article 19 and 29 of the Directive constitutes a deviation from the system of VAT. It enables Member States to consider that no supply of goods or services has taken place in the event of a transfer of a totality of assets or part thereof. Although the practice of the Court of Justice sheds light on some issues relating to the transfer of business (what exactly transfer of a totality of assets or part thereof is and what requirements can be set by Member States for the parties to a transaction and the transaction itself in order to be eligible for a no-supply rule; the transferor‘s right to deduct input VAT in respect of the non-taxable transfer), there has not been an extensive case law in that respect... (More)
The no-supply rule provided for in Article 19 and 29 of the Directive constitutes a deviation from the system of VAT. It enables Member States to consider that no supply of goods or services has taken place in the event of a transfer of a totality of assets or part thereof. Although the practice of the Court of Justice sheds light on some issues relating to the transfer of business (what exactly transfer of a totality of assets or part thereof is and what requirements can be set by Member States for the parties to a transaction and the transaction itself in order to be eligible for a no-supply rule; the transferor‘s right to deduct input VAT in respect of the non-taxable transfer), there has not been an extensive case law in that respect and many aspects of the no-supply rule remain vague. This thesis seeks to examine whether in the EU law as it stands the no–supply rule in respect of a transfer of a totality of assets is a satisfactory solution serving its objectives or rather a deviation which leads to legal uncertainty and inequalities. In order to examine and evaluate this issue, potential problems in application of Article 19 and 29 of the Directive and related rules identified by the Court of Justice in its case law, in the context of system of European VAT and its fundamental principles are analyzed. A review of the case law exposes that although the Court of Justice gave rulings providing Member States and taxable person with guidance on how to interpret and apply provisions on a transfer of a going concern, the conclusions reached by the Court in Abbey National, Zita Modes and Faxworld seem to be of casuistic nature, limited to specific circumstances that gave rise to the referred questions. Therefore, the consequences of the findings of the Court are analyzed in the thesis in relation to different circumstances in which a transfer of a going concern can occur. Considerations are devoted to the issue of tax avoidance, evasion and abuse in order to answer a question on whether and how the no-supply rule could be used by taxable persons to set up tax avoidance schemes. Specific problems addressed in this thesis relating to optional nature of Article 19 and 29 include those arising in the context of cross-border transfer. Although most of the Member States have incorporated Article 19 and 29 of the Directive into domestic legislation by providing for a no-supply rule, also the differences in requirements for taxable persons that have to be fulfilled to benefit from the rule can lead to doubts as how to apply it. (Less)
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author
Papis, Marta LU
supervisor
organization
course
HARM53 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
Abbey National, the no-supply rule, Article 19 and 29 of the Directive, transfer of business, transfer of a totality of assets or part thereof, VAT, transfer of a going concern, Zita Modes, Faxworld
language
English
id
1981277
date added to LUP
2011-06-29 14:10:04
date last changed
2011-06-29 14:10:04
@misc{1981277,
  abstract     = {The no-supply rule provided for in Article 19 and 29 of the Directive constitutes a deviation from the system of VAT. It enables Member States to consider that no supply of goods or services has taken place in the event of a transfer of a totality of assets or part thereof.  Although the practice of the Court of Justice sheds light on some issues relating to the transfer of business (what exactly transfer of a totality of assets or part thereof  is and what requirements can be set by Member States for the parties to a transaction and the transaction itself in order to be eligible for a no-supply rule; the transferor‘s right to deduct input VAT in respect of the non-taxable transfer), there has not been an extensive case law in that respect and many aspects of the no-supply rule remain vague. This thesis seeks to examine whether in the EU law as it stands the no–supply rule in respect of a transfer of a totality of assets is a satisfactory solution serving its objectives or rather a deviation which leads to legal uncertainty and inequalities. In order to examine and evaluate this issue, potential problems in application of Article 19 and 29 of the Directive and related rules identified by the Court of Justice in its case law, in the context of system of European VAT and its fundamental principles are analyzed. A review of the case law exposes that although the Court of Justice gave rulings providing Member States and taxable person with guidance on how to interpret and apply provisions on a transfer of a going concern, the conclusions reached by the Court in Abbey National, Zita Modes and Faxworld seem to be of casuistic nature, limited to specific circumstances that gave rise to the referred questions. Therefore, the consequences of the findings of the Court are analyzed in the thesis in relation to different circumstances in which a transfer of a going concern can occur. Considerations are devoted to the issue of tax avoidance, evasion and abuse in order to answer a question on whether and how the no-supply rule could be used by taxable persons to set up tax avoidance schemes. Specific problems addressed in this thesis relating to optional nature of Article 19 and 29 include those arising in the context of cross-border transfer. Although most of the Member States have incorporated Article 19 and 29 of the Directive into domestic legislation by providing for a no-supply rule, also the differences in requirements for taxable persons that have to be fulfilled to benefit from the rule can lead to doubts as how to apply it.},
  author       = {Papis, Marta},
  keyword      = {Abbey National,the no-supply rule,Article 19 and 29 of the Directive,transfer of business,transfer of a totality of assets or part thereof,VAT,transfer of a going concern,Zita Modes,Faxworld},
  language     = {eng},
  note         = {Student Paper},
  title        = {Transfer of a Going Concern. VAT Treatment and Some Consequences of the No-supply Rule.},
  year         = {2011},
}