CJEU - Recent Developments in Value Added Tax 2017

1. S. 106Introduction

Value-added taxes are broad based consumption taxes. This means that they are levied on a wide range of supplies, in contrast to narrow-based consumption taxes such as excise taxes, customs duties and certain special taxes, which are levied on the supply of a selection of goods.

In general, a broad based tax is more equitable because it affects all consumers and products in the same way. In principle, it also allows for a lower tax rate in order to generate a satisfactory level of revenue, which is positive because it is widely acknowledged that the higher the tax rate, the higher the incentive to avoid or escape the tax (which actually proves easier in the case of a narrowly defined tax base because it is possible to turn to untaxed products, which is less the case when the tax base is defined in broader terms). Broad-based value added taxes therefore have the advantage of generating significant amounts of revenue while interfering as little as possible with economic behaviour and avoiding inequitable consequences for consumers depending on their consumption needs.

With its large scope of application (covering, in principle, all persons carrying out an economic activi...