Location of Repository

Rethinking the Place of Consumption: New Issues Under the VAT System

By Greggi M.


30 years have passed since the European VI Directive, which shaped VAT as is it today and still constituting a model (to be followed or not) for many States moving towards a so called "Value added taxation system". It's no surprise that after such a considerable time the European bodies (first of all the Commission) felt the necessity to amend very basic aspects of the tax, and more to the point those provisions which didn't stand the test of time. In this respect it was obvious that in a globalised world, with a globalized economy, the first of these would have been those concerning the territoriality rules: namely, the conditions under wich sale of goods or delivery of services are deemed to be relevant for Europe and for VAT (thus taxable in the Old Continent). This conclusion, taken together with the necessity to attract more operations to European taxation urged the EU Commission to prepare the "VAT Package". The so called "VAT Package" consists of a number of European decisions, including a Directive (Directive 2008/8/EC) recently approved by the Council of Europe implementing significant changes to the recasted VAT rules as per Directive 2006/112/EC. The Package shall come into effect on January 1st 2010 and by that date the member States shall have to introduce in their tax systems acts or regulations consistent with the rules laid out by the EU (Italy did that in July, for instance). The main goals pursued by the Union in 2008 is to update most of the criteria applicable to consider the sale of a good or the delivery of a service taxable in one State or in another, in Europe on not. Basically, the VAT Package concerns the rewriting of the territoriality principle. It could seem, at first glance, a pure European issue, involving EU businesses only: this impression is completely wrong. In the case of delivery of services, in particular, such as advertising and many others, the change of territoriality rules could now make some of these operations taxable in Europe even if delivered by a non EU resident company and, most important of all, even if that service is deemed to be delivered elsewhere (in Australia, for instance) and taxed there accordingly (under the GST system). As a matter of fact, the change of territoriality rules in VAT shall create a significant degree of uncertainty in international relations, eventually giving rise to cases of international double taxation that no DTC can effectively deal with

Topics: VAT, consumption tax, territoriality principle, VAT package, taxation, EU law, tax neutrality
Year: 2010
OAI identifier: oai:iris.unife.it:11392/1404205
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://hdl.handle.net/11392/14... (external link)
  • Suggested articles

    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.