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“Artificiality” - A study of the concepts of Abuse and Economic Reality in the field of EU VAT

Bengtsson, Johan LU (2012) JURM02 20121
Department of Law
Abstract (Swedish)
Ett av de uttalande målen för det gemensamma systemet för mervärdesskatt är att förhindra skatteflykt, skatteundandragande och missbruk. Dessa koncept besläktade i den bemärkelse att de alla hindrar att skattesystemet tillämpas på det sätt som det avsetts att göra. Dock finns det betydande, inneboende skillnader i koncepten och hur de tillämpas.
Genom avgörandet i Halifax-domen slog Domstolen en gång för alla fast att doktrinen om förfarandemissbruk är fullt ut tillämplig inom mervärdesskatteområdet i syfte att försäkra systemets korrekta tillämpning. Vidare slog Domstolen fast att doktrinen om förfarandemissbruk inom mervärdesskattesystemet ska tillämpas som ett tvådelat test, inriktat på att undersöka å ena sidan syftet med... (More)
Ett av de uttalande målen för det gemensamma systemet för mervärdesskatt är att förhindra skatteflykt, skatteundandragande och missbruk. Dessa koncept besläktade i den bemärkelse att de alla hindrar att skattesystemet tillämpas på det sätt som det avsetts att göra. Dock finns det betydande, inneboende skillnader i koncepten och hur de tillämpas.
Genom avgörandet i Halifax-domen slog Domstolen en gång för alla fast att doktrinen om förfarandemissbruk är fullt ut tillämplig inom mervärdesskatteområdet i syfte att försäkra systemets korrekta tillämpning. Vidare slog Domstolen fast att doktrinen om förfarandemissbruk inom mervärdesskattesystemet ska tillämpas som ett tvådelat test, inriktat på att undersöka å ena sidan syftet med lagstiftningen och å andra sidan den skattskyldiges syfte med transaktionerna. Efter Halifax har följt en rad avgöranden som ytterligare definierar doktrinens innebörd och tillämpning på området. I flera av dessa avgöranden har referenser gjorts till ”artificiella transaktioner” eller ”ekonomisk verklighet” och det har uttalats att det är doktrinens syfte att förhindra just artificiella transaktioner som inte motsvarar ekonomisk verklighet.
Innebörden av dessa begrepp är svår att definiera utifrån de avgöranden som avkunnats inom ramen för tillämpningen av doktrinen om förfarandemissbruk. Å ena sidan förespråkar Domstolen en relativt strikt tillämpning av det tvådelade testet, i förhållande till vilket förekomsten av artificiella element kan vara relevant. Å andra sidan andra sidan famstår det emellanåt som om förekomsten av artificiella element eller ”brist på ekonomisk verklighet” agerar som ett tredje, underförstått kriterium för tillämpningen av doktrinen.
Dock har begreppet ”ekonomisk verklighet” refererats till i en annan linje av domar (DFDS-linjen). Här har begreppet betraktats som en generell måttstock för mervärdesskattesystemet. Denna linje överlappar till viss del Halifax-linjen, men ska dock betraktas åtskild från denna. DFSD-linjen relaterar primärt till tolkningen av direktivens bestämmelser, medan Halifax-inriktar sig på att bedöma tillämpningen av dessa. (Less)
Abstract
One of the explicit objectives for the common VAT-system is to prevent tax evasion, -avoidance and -abuse. These concepts are related in the sense that all three concepts aim to prevent that the provisions of the system are applied in a manner that conflicts with the purpose of the system and the provisions. There are however substantial, inherent differences between the concepts and the way that they are applied.
By the decision in the Halifax-judgment the Court once and for all settled that the doctrine of abuse is fully applicable in the field of VAT in order to ensure the correct application of the system. Further the Court, following the rationale set out in Emsland-Stärke, established that the doctrine is to be applied as a two-part... (More)
One of the explicit objectives for the common VAT-system is to prevent tax evasion, -avoidance and -abuse. These concepts are related in the sense that all three concepts aim to prevent that the provisions of the system are applied in a manner that conflicts with the purpose of the system and the provisions. There are however substantial, inherent differences between the concepts and the way that they are applied.
By the decision in the Halifax-judgment the Court once and for all settled that the doctrine of abuse is fully applicable in the field of VAT in order to ensure the correct application of the system. Further the Court, following the rationale set out in Emsland-Stärke, established that the doctrine is to be applied as a two-part test. This two-part test is constructed by a comparison between the purpose of the procedure set out by the taxpayer and on the other hand the purpose and objectives of the VAT-system. The Halifax-decision has been followed by a series of decisions further defining the implications and applicability of the concept. I several of these decisions reference has been made to the significance of “artificial transactions” or “lack of economic reality” and the Court has held that the objective of the application of the concept of abuse is to prevent these types of transactions
When examining the decisions delivered on the assessment of abusive procedures the significance and meaning of the these terms and their relation two-part test is difficult to establish. On one hand the Court advocate a strict application of the two-part test, in relation to which the existence of “artificial elements” can be relevant. On the other the existence of such elements seem to act as a third, implied criterion when assessing possibly abusive procedures.
The concept of “economic reality” has further been actualized in a different line of cases, the “DFDS-line. Here the concept is addressed as a fundamental benchmark for the interpretation of the provisions of the directive. This line of cases to some extent over-laps the Halifax-line but should be regarded as separate. This is since the DFDS-line primarily relate to the interpretation of the provisions of the directive, whilst the Halifax-line aims to assess the correct application or invocation of the provisions. (Less)
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author
Bengtsson, Johan LU
supervisor
organization
course
JURM02 20121
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Tax law, EU law, abuse of rights, abuse of law, economic reality, Halifax, artificiality
language
English
id
3122994
date added to LUP
2012-11-01 11:36:52
date last changed
2012-11-01 11:36:52
@misc{3122994,
  abstract     = {One of the explicit objectives for the common VAT-system is to prevent tax evasion, -avoidance and -abuse. These concepts are related in the sense that all three concepts aim to prevent that the provisions of the system are applied in a manner that conflicts with the purpose of the system and the provisions. There are however substantial, inherent differences between the concepts and the way that they are applied.
By the decision in the Halifax-judgment the Court once and for all settled that the doctrine of abuse is fully applicable in the field of VAT in order to ensure the correct application of the system. Further the Court, following the rationale set out in Emsland-Stärke, established that the doctrine is to be applied as a two-part test. This two-part test is constructed by a comparison between the purpose of the procedure set out by the taxpayer and on the other hand the purpose and objectives of the VAT-system. The Halifax-decision has been followed by a series of decisions further defining the implications and applicability of the concept. I several of these decisions reference has been made to the significance of “artificial transactions” or “lack of economic reality” and the Court has held that the objective of the application of the concept of abuse is to prevent these types of transactions
When examining the decisions delivered on the assessment of abusive procedures the significance and meaning of the these terms and their relation two-part test is difficult to establish. On one hand the Court advocate a strict application of the two-part test, in relation to which the existence of “artificial elements” can be relevant. On the other the existence of such elements seem to act as a third, implied criterion when assessing possibly abusive procedures.
The concept of “economic reality” has further been actualized in a different line of cases, the “DFDS-line. Here the concept is addressed as a fundamental benchmark for the interpretation of the provisions of the directive. This line of cases to some extent over-laps the Halifax-line but should be regarded as separate. This is since the DFDS-line primarily relate to the interpretation of the provisions of the directive, whilst the Halifax-line aims to assess the correct application or invocation of the provisions.},
  author       = {Bengtsson, Johan},
  keyword      = {Tax law,EU law,abuse of rights,abuse of law,economic reality,Halifax,artificiality},
  language     = {eng},
  note         = {Student Paper},
  title        = {“Artificiality” - A study of the concepts of Abuse and Economic Reality in the field of EU VAT},
  year         = {2012},
}