Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

Transfer Pricing in European Union VAT Law

Aðalsteinsson, Brimar LU (2013) HARN60 20131
Department of Business Law
Abstract
The aim of the thesis is to analyse the transfer pricing rules in the VAT system, namely Articles 72 and 80 of the Recast VAT directive. The thesis specifically aims to investigate the application of the open market value to improperly valued transactions between related parties, what the open market value in the VAT system is and how it is determined.
The second chapter of the thesis presents an analysis of transfer pricing in European Union law and international tax law. In line with the aim of the thesis, the chapters main focus is on the transfer pricing provision of Article 80. It presents an analysis of the provision and puts it into the context of the common system of VAT, specifically by looking at how it relates to the general... (More)
The aim of the thesis is to analyse the transfer pricing rules in the VAT system, namely Articles 72 and 80 of the Recast VAT directive. The thesis specifically aims to investigate the application of the open market value to improperly valued transactions between related parties, what the open market value in the VAT system is and how it is determined.
The second chapter of the thesis presents an analysis of transfer pricing in European Union law and international tax law. In line with the aim of the thesis, the chapters main focus is on the transfer pricing provision of Article 80. It presents an analysis of the provision and puts it into the context of the common system of VAT, specifically by looking at how it relates to the general principles of the taxable amount being based on a subjective valuation based on the actual consideration paid for a transaction, and especially how it relates to the general principle of fiscal neutrality inherent in the VAT system. The chapter then briefly looks at transfer pricing rules in, on the one hand European Union customs law, and on the other hand international corporate income tax law.
The third chapter presents an analysis of the concept of open market value as it is provided in Article 72 of the Recast VAT Directive. The concept is compared to the rules on re-valuation of the customs value in transactions between related parties in customs law. The concept of open market value is then compared to that of the arm‘s length principle used in international corporate income tax law. Lastly, the chapter asks the question whether customs valuation methods would be accepted as a basis for calculating the open market value in VAT before the European Court of Justice, and attempts to answer it.
Finally, in the fourth chapter, the main conclusions of the thesis are summed up. The main findings of the thesis are that the transfer pricing provisions may be too far reaching, and possibly go against the principle of proportionality, harming the neutrality of the VAT system unnecessarily when a re-valuation to the cost or purchase price would similarly prevent tax evasion and avoidance. The provisions the thesis set out to examine are both lacking in clarity due to definitions of key concepts being to general. The corresponding concepts in the Community Customs Code don‘t suffer from this lack of clarity and it could be worthwhile looking in that direction for clarification of the VAT transfer pricing rules. (Less)
Please use this url to cite or link to this publication:
author
Aðalsteinsson, Brimar LU
supervisor
organization
alternative title
What is the open market value in EU VAT and how is it determined?
course
HARN60 20131
year
type
H1 - Master's Degree (One Year)
subject
keywords
Value added tax, transfer pricing, open market value
language
English
id
4064518
date added to LUP
2014-01-24 16:17:32
date last changed
2014-01-24 16:17:32
@misc{4064518,
  abstract     = {The aim of the thesis is to analyse the transfer pricing rules in the VAT system, namely Articles 72 and 80 of the Recast VAT directive. The thesis specifically aims to investigate the application of the open market value to improperly valued transactions between related parties, what the open market value in the VAT system is and how it is determined. 
The second chapter of the thesis presents an analysis of transfer pricing in European Union law and international tax law. In line with the aim of the thesis, the chapters main focus is on the transfer pricing provision of Article 80. It presents an analysis of the provision and puts it into the context of the common system of VAT, specifically by looking at how it relates to the general principles of the taxable amount being based on a subjective valuation based on the actual consideration paid for a transaction, and especially how it relates to the general principle of fiscal neutrality inherent in the VAT system. The chapter then briefly looks at transfer pricing rules in, on the one hand European Union customs law, and on the other hand international corporate income tax law.
The third chapter presents an analysis of the concept of open market value as it is provided in Article 72 of the Recast VAT Directive. The concept is compared to the rules on re-valuation of the customs value in transactions between related parties in customs law. The concept of open market value is then compared to that of the arm‘s length principle used in international corporate income tax law. Lastly, the chapter asks the question whether customs valuation methods would be accepted as a basis for calculating the open market value in VAT before the European Court of Justice, and attempts to answer it.
Finally, in the fourth chapter, the main conclusions of the thesis are summed up. The main findings of the thesis are that the transfer pricing provisions may be too far reaching, and possibly go against the principle of proportionality, harming the neutrality of the VAT system unnecessarily when a re-valuation to the cost or purchase price would similarly prevent tax evasion and avoidance. The provisions the thesis set out to examine are both lacking in clarity due to definitions of key concepts being to general. The corresponding concepts in the Community Customs Code don‘t suffer from this lack of clarity and it could be worthwhile looking in that direction for clarification of the VAT transfer pricing rules.},
  author       = {Aðalsteinsson, Brimar},
  keyword      = {Value added tax,transfer pricing,open market value},
  language     = {eng},
  note         = {Student Paper},
  title        = {Transfer Pricing in European Union VAT Law},
  year         = {2013},
}