Keywords
Summary

Keywords

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Tax provisions - Harmonization of legislation - Turnover taxes - Common system of value-added tax - Taxable base - National derogating measures - Policy of combating tax evasion or avoidance - Measure applicable to a taxable person acting without any intention of obtaining a tax advantage - Measure designed to combat tax avoidance - Measure applicable only to certain taxable persons whose sales methods lead to the avoidance of tax - Whether permissible - Conditions

( Council Directive 77/388/EEC, Arts 11A.1 ( a ) and 27 ( 1 ) )

Summary

Article 27 ( 1 ) of the Sixth Directive on the harmonization of the laws of the Member States relating to turnover taxes empowers the Council to authorize the Member States to introduce special measures derogating from the directive in order to prevent certain types of tax evasion or avoidance . That provision permits the adoption of a measure derogating from the rule set out in Article 11.A.1 ( a ), concerning the taxable base for value-added tax purposes, even where the taxable person carries on business of a kind capable of leading to a reduction of that base, not with any intention of obtaining a tax advantage but for commercial reasons . Such conduct comes within the concept of avoidance which, unlike that of evasion which involves an element of intent, represents a purely objective phenomenon .

The adoption of a derogating measure which applies only to certain taxable persons amongst those whose sales methods lead to the avoidance of tax is permissible on condition that the resultant difference in treatment is justified by objective circumstances .