Advanced

Good Faith: A comprehensive evaluation of the VAT requirement

McCarthy, Caroline LU (2017) JAEM03 20171
Department of Law
Abstract
The requirement that taxable persons act in good faith first appeared in the Court of Justice’s case law in 1989. Given that there is an indisputable link between it and the rights to deduct input VAT, exempt intra-Community transactions and adjust improperly invoiced VAT, the requirement has potentially serious financial repercussions for taxable persons across the EU. However, exemplified by the high number of preliminary references relating to the requirement, national courts have been slow to engage fully with the concept. As indicated by this research, this is largely due to the vague, and at times unhelpful, replies given by the Court of Justice to requests for preliminary rulings.

This thesis is a comprehensive evaluation of the... (More)
The requirement that taxable persons act in good faith first appeared in the Court of Justice’s case law in 1989. Given that there is an indisputable link between it and the rights to deduct input VAT, exempt intra-Community transactions and adjust improperly invoiced VAT, the requirement has potentially serious financial repercussions for taxable persons across the EU. However, exemplified by the high number of preliminary references relating to the requirement, national courts have been slow to engage fully with the concept. As indicated by this research, this is largely due to the vague, and at times unhelpful, replies given by the Court of Justice to requests for preliminary rulings.

This thesis is a comprehensive evaluation of the VAT requirement. It determines the content and application of good faith, and seeks to categorise the legal standard within the VAT system of rules. It highlights the competing interests of the neutrality of the VAT system and third party liability for VAT losses, and the role good faith has in this issue. Furthermore, potential conflicts of the requirement with other aspects of EU law are examined. Finally, the thesis suggests that, as a means of ensuring legal certainty and upholding the principle of proportionality, the requirement of good faith should be formalised at an EU level as a long-term goal. In the short-term, it is proposed that Member States take a proactive approach in codifying the requirement under national law. (Less)
Please use this url to cite or link to this publication:
author
McCarthy, Caroline LU
supervisor
organization
course
JAEM03 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
VAT, indirect taxation, good faith, good faith requirement, fraud, carousel fraud, knowledge test, abuse, fiscal neutrality
language
English
id
8910100
date added to LUP
2017-06-13 13:10:54
date last changed
2017-06-13 13:10:54
@misc{8910100,
  abstract     = {The requirement that taxable persons act in good faith first appeared in the Court of Justice’s case law in 1989. Given that there is an indisputable link between it and the rights to deduct input VAT, exempt intra-Community transactions and adjust improperly invoiced VAT, the requirement has potentially serious financial repercussions for taxable persons across the EU. However, exemplified by the high number of preliminary references relating to the requirement, national courts have been slow to engage fully with the concept. As indicated by this research, this is largely due to the vague, and at times unhelpful, replies given by the Court of Justice to requests for preliminary rulings. 

This thesis is a comprehensive evaluation of the VAT requirement. It determines the content and application of good faith, and seeks to categorise the legal standard within the VAT system of rules. It highlights the competing interests of the neutrality of the VAT system and third party liability for VAT losses, and the role good faith has in this issue. Furthermore, potential conflicts of the requirement with other aspects of EU law are examined. Finally, the thesis suggests that, as a means of ensuring legal certainty and upholding the principle of proportionality, the requirement of good faith should be formalised at an EU level as a long-term goal. In the short-term, it is proposed that Member States take a proactive approach in codifying the requirement under national law.},
  author       = {McCarthy, Caroline},
  keyword      = {VAT,indirect taxation,good faith,good faith requirement,fraud,carousel fraud,knowledge test,abuse,fiscal neutrality},
  language     = {eng},
  note         = {Student Paper},
  title        = {Good Faith: A comprehensive evaluation of the VAT requirement},
  year         = {2017},
}