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Self-supply of goods in the light of the principle of fiscal neutrality

Skinderyte, Kamile LU (2015) JAEM03 20151
Department of Law
Abstract (Swedish)
Article 16 of the VAT Directive, which regulates the self-supply of goods, is a good example of how it is complicated to achieve fraud resistance and full compliance with the principle of fiscal neutrality in the current system of VAT. This provision concerns taxation on business goods used for private purposes, which has shown to be a complex area of VAT. Although the application of this rule has been made conditional upon strict requirements, leeway for fraudulent behavior of a taxable person still remains.

The Court supplemented the current complex VAT system with the doctrine of ‘Asset labelling’ which aimed at simplifying the procedure for a taxable person to deduct input and account for output VAT on his capital goods when they... (More)
Article 16 of the VAT Directive, which regulates the self-supply of goods, is a good example of how it is complicated to achieve fraud resistance and full compliance with the principle of fiscal neutrality in the current system of VAT. This provision concerns taxation on business goods used for private purposes, which has shown to be a complex area of VAT. Although the application of this rule has been made conditional upon strict requirements, leeway for fraudulent behavior of a taxable person still remains.

The Court supplemented the current complex VAT system with the doctrine of ‘Asset labelling’ which aimed at simplifying the procedure for a taxable person to deduct input and account for output VAT on his capital goods when they are used for mixed purposes. This doctrine intended to bring the self-supply rules in VAT to perfection in the light of the principle of fiscal neutrality.

However, the Commission was of a different opinion. Granting a full right of deduction to a taxable person who acquired capital goods for mixed use was too difficult for it to digest. This led to adoption of the new Article 168a of the VAT Directive, which limits the initial deduction of input VAT to the actual use, and is applicable just to immovable property. Although the Commission tends to believe that the new provision solved problems caused by allocation of assets, the article is considered to not be in compliance with the principle of fiscal neutrality. (Less)
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author
Skinderyte, Kamile LU
supervisor
organization
course
JAEM03 20151
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Self-supply, Article 16 of the VAT Directive, VAT, Tax Law, Asset labelling doctrine, allocation of assets, the principle of fiscal neutrality, Article 168a of the VAT Directive.
language
English
id
7374173
date added to LUP
2015-06-25 18:49:29
date last changed
2015-06-25 18:49:29
@misc{7374173,
  abstract     = {Article 16 of the VAT Directive, which regulates the self-supply of goods, is a good example of how it is complicated to achieve fraud resistance and full compliance with the principle of fiscal neutrality in the current system of VAT. This provision concerns taxation on business goods used for private purposes, which has shown to be a complex area of VAT. Although the application of this rule has been made conditional upon strict requirements, leeway for fraudulent behavior of a taxable person still remains. 

The Court supplemented the current complex VAT system with the doctrine of ‘Asset labelling’ which aimed at simplifying the procedure for a taxable person to deduct input and account for output VAT on his capital goods when they are used for mixed purposes. This doctrine intended to bring the self-supply rules in VAT to perfection in the light of the principle of fiscal neutrality. 

However, the Commission was of a different opinion. Granting a full right of deduction to a taxable person who acquired capital goods for mixed use was too difficult for it to digest. This led to adoption of the new Article 168a of the VAT Directive, which limits the initial deduction of input VAT to the actual use, and is applicable just to immovable property. Although the Commission tends to believe that the new provision solved problems caused by allocation of assets, the article is considered to not be in compliance with the principle of fiscal neutrality.},
  author       = {Skinderyte, Kamile},
  keyword      = {Self-supply,Article 16 of the VAT Directive,VAT,Tax Law,Asset labelling doctrine,allocation of assets,the principle of fiscal neutrality,Article 168a of the VAT Directive.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Self-supply of goods in the light of the principle of fiscal neutrality},
  year         = {2015},
}