CJEU – Recent Developments in Value Added Tax 2020

S. 341. Introduction

Both the principle of good faith and the principle of legitimate expectations are in essence about trust: the trust that the taxable person derives from information given by trade partners and, respectively, the trust he derives from actions or statements by the executive (tax authorities). Both principles deal with the applicability of legal provisions – in this context, those of the VAT directive(s) – and the conditions under which the taxpayer’s trust may be honoured. As will be shown in this chapter, the requirements for protection under each of these principles are not dissimilar. One could say that, in a sense, the principle of good faith and the principle of legitimate expectations are two sides of the same coin; this is a reason to deal with both.

2. Principle of good faith

As such, the principle of good faith is not laid down as a specific principle in Union legislation, nor is it defined in the case law of the CJEU. Nevertheless, from the case law of the CJEU it appears that taxable persons who act in what is commonly named “good faith” are protected. Section 2. is dedicated to elements that constitute “good faith” in the CJEU’s case law on VAT.

2.1. Unpaid tax ...