CJEU - Recent Developments in Value Added Tax 2017

1. S. 299Introduction

Every exemption from the general rule of taxation bears certain inherent risks. Generally speaking, exemptions lead, per se, to a certain level of distortion of competition in terms of supplies of somewhat similar services that are not covered by an exemption. With the Charter of Fundamental Rights coming more into the focus of jurisprudence, the question of equal treatment, especially regarding exemptions, will also likely come more into focus. Another risk is that exemptions are misused and therefore leave the door open to evasion, avoidance or abuse. From the outset, this potential problem was foreseen by the European lawmakers, whose job it was to harmonize the VAT rules. As a result, all of the VAT Directive’s Title IX exemptions are subject to the reservation that Member States may lay down conditions in order to prevent these risks. This, together with the general rule that exemptions are, on the one hand, to be interpreted strictly and, on the other hand, are not to be construed in such a way as to basically limit their effect, provides an environment, which is prone to dispute. As such, it cannot come as much of a surprise that, in the last year, fourteen C...