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Principle of Proportionality and the Prevention of Evasion, Avoidance or Abuse

Moossdorff, Bastiaan Arnold LU (2011) HARM53 20111
Department of Business Law
Abstract
VAT fraud exists in different forms, ranging from the black economy to internal fraud and carousel fraud if intra-Union transactions are involved. It effects the financial interest of both the Member State in question and the European Union within the meaning of Article 325 TFEU. Both Member States and the Commission take measures to prevent the potential tax evasion or avoidance and abuse of law. Recently, the Court of Justice decided in R about a measure taken by Germany in a case considering VAT fraud. Moreover, on 31 May 2006 the Commission presented a Communication concerning the need to develop a coordinated strategy to improve the fight against fiscal fraud. However, the legislative resolution of the European Parliament calling the... (More)
VAT fraud exists in different forms, ranging from the black economy to internal fraud and carousel fraud if intra-Union transactions are involved. It effects the financial interest of both the Member State in question and the European Union within the meaning of Article 325 TFEU. Both Member States and the Commission take measures to prevent the potential tax evasion or avoidance and abuse of law. Recently, the Court of Justice decided in R about a measure taken by Germany in a case considering VAT fraud. Moreover, on 31 May 2006 the Commission presented a Communication concerning the need to develop a coordinated strategy to improve the fight against fiscal fraud. However, the legislative resolution of the European Parliament calling the Commission to alter the proposal on joint and several liability questions the proportionality of the proposed and adopted measures.

The purpose of my research is to analyse what powers Member States have to prevent evasion, avoidance or abuse, based on jurisprudence of the Court of Justice and the proposed measures by the Commission to fight tax fraud and whether these powers are in conformity with the principle of proportionality. Therefore, the hypothesis for the thesis is:

The powers of Member States in connection with the prevention of potential evasion, avoidance or abuse are disproportional.

Based on my research on the jurisprudence of the Court of Justice and the proposed measures by the Commission (and subsequently adopted by the Council) it is difficult to give a clear answer to this hypothesis.

On the one hand, the powers that Member States deriving from the amendments to the Directive are proportional. So are the powers following from the judgements in Ampliscientifica and Amplifin, Stadeco, Direct Cosmetics and Federation of Technological Industries and Others. On the other hand, the knowledge test, developed in Kittel and Recolta Recycling is disproportional. The same is in my opinion true for the Court's judgements in Sudholz, Transport Service NV and R. It seems therefore that the hypothesis is true in regard to the powers that Member States have in relation to the right of deduction and the exemption for intra-Union supplies. (Less)
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author
Moossdorff, Bastiaan Arnold LU
supervisor
organization
course
HARM53 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
Principle of proportionality, abuse of law, taxation, anti-abuse, Commission's coordinated strategy to fight tax fraud
language
English
id
2006304
date added to LUP
2011-07-08 15:55:58
date last changed
2011-07-08 15:55:58
@misc{2006304,
  abstract     = {VAT fraud exists in different forms, ranging from the black economy to internal fraud and carousel fraud if intra-Union transactions are involved. It effects the financial interest of both the Member State in question and the European Union within the meaning of Article 325 TFEU. Both Member States and the Commission take measures to prevent the potential tax evasion or avoidance and abuse of law. Recently, the Court of Justice decided in R about a measure taken by Germany in a case considering VAT fraud. Moreover, on 31 May 2006 the Commission presented a Communication concerning the need to develop a coordinated strategy to improve the fight against fiscal fraud. However, the legislative resolution of the European Parliament calling the Commission to alter the proposal on joint and several liability questions the proportionality of the proposed and adopted measures.

The purpose of my research is to analyse what powers Member States have to prevent evasion, avoidance or abuse, based on jurisprudence of the Court of Justice and the proposed measures by the Commission to fight tax fraud and whether these powers are in conformity with the principle of proportionality. Therefore, the hypothesis for the thesis is:

The powers of Member States in connection with the prevention of potential evasion, avoidance or abuse are disproportional.

Based on my research on the jurisprudence of the Court of Justice and the proposed measures by the Commission (and subsequently adopted by the Council) it is difficult to give a clear answer to this hypothesis.

On the one hand, the powers that Member States deriving from the amendments to the Directive are proportional. So are the powers following from the judgements in Ampliscientifica and Amplifin, Stadeco, Direct Cosmetics and Federation of Technological Industries and Others. On the other hand, the knowledge test, developed in Kittel and Recolta Recycling is disproportional. The same is in my opinion true for the Court's judgements in Sudholz, Transport Service NV and R. It seems therefore that the hypothesis is true in regard to the powers that Member States have in relation to the right of deduction and the exemption for intra-Union supplies.},
  author       = {Moossdorff, Bastiaan Arnold},
  keyword      = {Principle of proportionality,abuse of law,taxation,anti-abuse,Commission's coordinated strategy to fight tax fraud},
  language     = {eng},
  note         = {Student Paper},
  title        = {Principle of Proportionality and the Prevention of Evasion, Avoidance or Abuse},
  year         = {2011},
}