CJEU – Recent Developments in Value Added Tax 2019

S. 601. Abuse vs Fraud in VAT: legal basis and legal consequences

Starting with the excellent paper by Judge Wäger, in particular his plea for a better balance between the principle of fiscal legality and the principle of prohibition of fraud or abuse, I would like to make three comments on his contribution. These concern firstly, the evolution of the case law of the CJEU, secondly, the interaction between VAT and direct taxation, and finally some limitations applicable in the fight against fraud or abuse.

1.1. Evolution

The case law of the Court of Justice is now crystal clear: fighting against abuse or fraud is clearly an obligation for the Member States. The Court has repeatedly said that EU Law cannot be relied on for abusive or fraudulent ends. In the famous judgement Halifax the Court has said that the principle of prohibiting abusive practices also applies to the sphere of VAT adding that “preventing possible tax evasion, avoidance and abuse is an objective recognized and encouraged by the 6th Directive”.

After having established a prohibition, the case law has progressively created an obligation to enforce it. In its judgment in Åkerberg Fransson, the Court decided clearly that “eve...