The European Commission has formally requested that Denmark amend its law pertaining to the application of certain exemptions under the value-added tax (VAT) Directive.
Under Danish law, an exemption from VAT is accorded to charitable and non-profit making associations' supplies, as well as to goods supplied by second-hand shops. The Commission considers that such exemptions go beyond what is allowed under the VAT Directive.
According to the Commission, the VAT Directive establishes a common system of VAT, based, among other things, on a uniform definition of taxable transactions. The Directive also provides for VAT exemptions for certain types of transactions.
The Commission points out that, from the settled case law of the European Court of Justice, it has been clearly established that all exemptions have to be strictly interpreted, given that they are exceptions to the general rules on the taxation of supplies of goods and services. Therefore, any exemption that is not provided for under the VAT Directive, nor granted by Council as a derogation, amounts to an infringement of European Community law.
Such illicit exemptions, the Commission argues, could lead to distortions of competition and would make it impossible to ensure that member states contribute on an equal basis to the Community's own resources. Consequently, the Commission said that it has to ensure that the exemptions are applied correctly in the member states.
The Commission states that: “Under Article 132 of the VAT Directive, certain activities which are in the public interest are VAT exempt. That provision does not, however, provide a VAT exemption for every activity performed in the public interest, but only for those which are listed and described therein.”
It continues: “Denmark exempts all supplies carried out by charitable or other non-profit making associations in connection with [the running of] their businesses. The Commission considers that such a general exemption goes beyond what is allowed under Article 132 of the VAT Directive, which contains a detailed restrictive description of the activities that can be exempted, as well as certain conditions related to the exemption.”
It adds: “Denmark also applies a general exemption for goods supplied by second-hand shops, if the profits are used entirely for charitable or public-interest purposes, and provided that the shop only sells second-hand goods which it has received for free and only employs voluntary unpaid staff. None of the exemptions in Article 132 cover such supplies.”
The request takes the form of a reasoned opinion (the second step of the infringement procedure provided for in article 258 of the Treaty on the Functioning of the EU). If the Danish government has not responded in a satisfactory manner to the reasoned opinion within two months, the Commission may decide to refer the matter to the European Court of Justice.
.
Network Tweets Archive
| Resources | Partners
| Site Map | Links
| Newsletter
Archive | Contact
| RSS Feeds
About | Syndication |
Advertising & Marketing |
Recruitment |
Terms & Conditions |
Privacy
Copyright © 2012 - All Rights Reserved - Tax-News.com
All content provided by BSI Media
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment