Keywords
Summary

Keywords

Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Sixth Directive - Scope - Supply of counterfeit perfume products - Covered

(Council Directive 77/388, Art. 2)

Summary

Although unlawful imports or supplies of goods, such as narcotics or counterfeit currency, which, because of their intrinsic nature or special characteristics, cannot be placed on the market or incorporated into economic channels are wholly alien to the provisions of the Sixth Directive on the harmonisation of the laws of the Member States relating to turnover taxes, that is not the position in the case of counterfeit perfumes.

Transactions involving counterfeit products infringe intellectual property rights. However, any consequential prohibition is not linked to the nature or essential characteristics of such products, but to their detrimental impact on the rights of third parties, and is conditional, not absolute.

Furthermore, counterfeit perfumes cannot be regarded as extra commercium, since there can be competition between counterfeit products and goods which are lawfully traded.

Accordingly, on a proper construction of Article 2 of the Sixth Directive, VAT is payable on the supply of counterfeit perfumes.