IVA Meeting 30 September 2005 Athens

1
IVA Meeting 30 September 2005Athens

2
Agenda

• 09.00 09.15 Introduction and
  Welcome Stephen Dale
• 09.15 10.15 Update on UK policy Peter
  Bright and Ann and implications Jones
• 10.15 10.35 VAT in Greece Mr Kounadis
  Charalampos
• 10.35 Coffee
• 11.00 11.15 Financial and secretarial Pamela
  Beighton
• update Martyn Redman
• 11.15 12.30 The Commission's plans Arthur
  Kerrigan
• - One stop shop Taxud
• - Single Place of Supply
• - Re-cast of the Directive

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Agenda

• 12.30 13.00 Questions Debate All
• 13.00 Lunch
• 14.30 15.30 ECJ Update Stephen Dale
• 15.30 Tea
• 16.00 17.00 Code of Practice Richard
  Yewdall
• 17.00 Closing remarks Stephen Dale
• 18.00 Complimentary sight seeing trip
• arranged by Greek Tourism Board

4
Introduction and WelcomeStephen Dale

5
Update on UK policyand implicationsPeter
Bright and Ann Jones

6
(No Transcript)
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Session Contents

• VAT 8th and 13th Directives UK changes to
  procedures
• UK policy on Partial exemption for cross border
  claims
• IRS form 6166 submissions and delays
• UK policy for VAT on fuel
• UK policy for VAT on personal calls
• UK policy for VAT recovery on motor car (Elm
  Milk)
• Question and answer session

8
UK policy on 8th/13th Directive

• July 2005 announcement about changes to law 1
  January 2006
• New vetting claims procedure will reject at early
  stage incomplete claims
• A complete claim must
• include a valid Certificate of Status
• include a letter of authority (where applicable)
• be completed in English, with amount claimed
  being listed in English
• fall above the minimum claim level of 16
• be submitted complete and signed by the claimant
  and
• be submitted with original invoices

9
UK policy on 8th/13th Directive

• Submission of claims must meet the deadlines for
  Directives
• Invoices which do not show the claimant as
  recipient of the services in question will be
  rejected
• this reflects Commission v UK (Case 33/03)
• who is the recipient of the service in question?
• Invoices must also meet UK regulations (S14 and
  16 SI 1995/2518
• Use of the less detailed invoice (for supplies
  under 250 in value)
• Modified invoices not acceptable (i.e. the
  sticker on a hotel invoice)

10
Eighth Council Directive

• 6th December 1979
• Article 2 - Each Member State should refund to
  any taxable person who is not established in the
  territory of the country, but who is established
  in another Member Stateany value added tax
  charged in respect of services, or movable
  property supplied to him by other taxable persons
  in the territory of the country or charged in
  respect of the importation of goods into the
  country, in so far as such goods and services are
  used for the purposes of the transactions

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Thirteenth Council Directive

• 17 November 1986
• Article 2 - ..each Member State shall refund to
  any taxable person not established in the
  territory of the Community, subject to the
  conditions set out below, any value added tax
  charged in respect of services rendered or
  movable property supplied to him in the
  territory or the country by other taxable persons
  or charged in respect of the importation of goods
  into the country, in so far as such goods and
  services are used for the purposes of the
  transactions referred to in Art 17 (3) (a) and
  (b) or of the provision of services referred to
  in point 1 (b) of Article 1 of this Directive

12
Case study ABC Bank (London Branch)

• ABC Bank submits an EC 8th Directive claim for
  VAT incurred on travel and expenses in Germany.
• VAT costs are incurred by UK staff travelling to
  Germany to work on a project in Germany.
• ABC Bank is refused recovery of the VAT under EC
  8th Directive and the German tax authority
  request that the ABC bank register for German
  VAT. ABC Bank asks for assistance to analyse the
  possible reasons for the refusal and whether this
  is correct.
• What points at issue should we consider in
  looking at this request? Consider the same
  question for a Bank in your own State incurring
  VAT in Germany.

13
Partial Exemption for cross border claims

• Restriction of the claim by the appropriate
  recovery applied in country of the claimant
• What then if an American Bank makes a claim for
  EU VAT?
• What method of VAT recovery is applied by the
  claimant in his own member state
• Does his VAT claim relate to an item of
  expenditure on which the VAT is fully
  recoverable?

14
IRS certification delays

• If the IRS delays in submission of the 6166 then
  it prevents timely submission of the claim
• IRS certificates in USA perform dual function and
  only get issued once accounts filed
• Certificates issued country by country
• A certificate of status from previous year does
  this help?

15
UK policy on fuel

• In the decision of Commission v UK (Case 33/03)
  the Court declared the UK system for VAT recovery
  by employers of VAT on employees petrol expenses
  to be illegal.
• - UK legislation allowed an employer to recover
  VAT on reimbursed petrol expenses even where the
  employee had incurred the cost on private
  motoring
• - secondly the employer did not have to hold an
  invoice before making the claim
• UK HM RC are to consult industry to change UK
  law.

16
UK policy on personal calls

• Customs are pursuing a policy to inspect
  companies that claim VAT on personal phone calls
  from business mobiles.
• - Phone bill itemisation for numbers
• - Text messages outside business hours
• - Any private calls VAT should be disallowed

17
Elm Milk

• VAT recovery on purchase of a motor car
• - Normally VAT is non recoverable on the
  purchase of a new motor car
• - Elm Milk managed to persuade the Tribunal that
  the board meeting minutes satisfied the criteria
  that the car was not available for private use.
• - Customs Excise (HM RC) have said that they
  will appeal the case to the Court of Appeal

18
Questions and Answers

19
VAT in GreeceMr Kounadis Charalampos

20
COFFEE

21
Financial and Secretarial updatePamela
BeightonMartyn Redman

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Secretary/Treasurers Report
September 2005
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Accounts Financial Position
24
(No Transcript)
25
(No Transcript)
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Membership Subscriptions
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2005 subscriptions

• Subscription invoices to existing members were
  issued on January 2005

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2005 Membership

• We have had one member resign leaving us with 65
  members
• 50 members have paid
• 4 members have arrangements to pay
• We also have 2 potential new members

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IVAWEBSITEPam Beighton Martyn Redman
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NEED
COMMENTS
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INTERNAL OBJECTIVES

• PROVIDE INFORMATION
• GENERAL
• About IVA, Activities etc
• MEMBERSHIP
• Applying, Whos Who, Members
• TECHNICAL
• EU, Tax Authority Rules, Conference Notes
  

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EXTERNAL OBJECTIVES

• PROMOTE
• IVA
• e.g. Aims, Views
• MEMBERS
• e.g. Contact, Web Links

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GENERAL PAGES

• HOME PAGE
• Overview, Page Summaries, Access
• ABOUT IVA
• Aims, History
• ACTIVITIES
• Whats on,

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MEMBERSHIP PAGES

• LIST OF MEMBERS
• Contact Details, Web Links
• MEMBERSHIP
• Code of Practice, Application

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TECHNICAL PAGES

• SPECIALIST INFORMATION
• EU, Tax Authority,
• Conference Notes
• MARKET SIZE

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NEED
COMMENTS CONTRIBUTION
37
The Commissions plansArthur Kerrigan

38

• The European Commission and VAT
• Current and future issues

39

• Current issues
• modernising the provisions for taxing services,
• One Stop Scheme,
• Recast of 6th VAT Directive
• Use of Regulation in VAT legislation
• In the pipeline
• Double Taxation Mechanism,
• VAT treatment of public bodies,
• Vouchers and alternative payment systems,
• Financial services and insurances,

40

• Simplifying Value Added Tax
• obligations towards a one stop
• scheme

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The 6 measures in the proposal

• one stop scheme for EU business
• one stop scheme for 8th Directive refunds
• simplification of limitations on the right to
  deduct
• extension of the reverse charge on services
• review of the SME scheme
• simplification of the distance selling rules

42
One stop shop

• Optional scheme for taxable persons established
  in one or more Member State and having taxable
  activities in other Member States where they are
  not established,
• Electronic single filing with home Member State
  with harmonised administrative rules. Content and
  frequency of return covered by harmonised
  compliance rules.
• Direct payment requirement continues no
  redistribution facility unlike Article 26c scheme.

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One stop shop

• Potential users
• ALL taxable persons liable to pay VAT in a Member
  State where they are not established,
• 26c scheme is separate although reality indicates
  that it will eventually be subsumed.
• NOT limited to specific sectors of activity, to
  SME's
• Potential reduction in registrations -
• Significant cost saving

44
One stop shop

• Optional
• VAT return to be submitted electronically
• VAT due by rate
• VAT deductible
• Payment directly to Member States where VAT is
  due
• Control
• Member State where tax arises maintains control
  capabilities
• coordinated control procedures are always
  possible.
• Refund rules on a country-by-country basis.

45
One stop shop for refunds

• Current 8th Directive procedure
• Paper based
• Administrative burden for business and
  administrations
• Troublesome, out of date, even for specialised
  8th Directive refund operators.
• 1998 Cross-border deduction proposed
• still preferred option,
• but going nowhere politically, technical aspects
  also a source of problems

46
Dedicated one stop shop for refunds

• Reform now proposed
• no change of the principles, refund requests
  continue to be handled by Member State where
  expenses incurred with local deduction rules.
• modernisation of procedure
• fully electronic, web based portal needed in each
  Member State, open only to local businesses,
• original invoices not required, but home Member
  State will verify claimant's taxable status
• speeded-up procedure, 3 month deadline for
  administrations interest _at_ 1 per month,

47
Limitations to the right to deduct

• addressed in 1998 proposal, problems with
  standstill provisions in Article 17(6),
  resistance mainly attributable to budgetary
  effects.
• this initiative attempts to streamline scope of
  blocking rules thereby reducing complexity,
• defines three broad categories outside which
  normal deduction rules apply,

48
Limits restriction to

• motorised road vehicles, boats and aircraft,
• travel, accommodation, food and drink,
• luxuries, amusement and entertainment,
• Within these categories, businesses should be
  aware of potential for blocking but further
  clarification may require regulation under
  Article 29a
• links to smooth operation of OSS for VAT refunds

49
Extension of the reverse charge

• Obligatory reverse charge when a non established
  supplier carries out
• supplies of goods which are installed or
  assembled by or on behalf of the supplier
• supplies of services connected with immovable
  property
• services covered by Article 9(2)(c).
• (Links with streamlining refunds procedure
  reverse charge inevitably leads to refund
  requests. OSS therefore facilitates greater use
  of reverse charge)

50
Review of the SME scheme

• Threshold of maximum 100 000 for small business
  status,
• Purpose
• gives equal facilitation to all Member States,
• also gives some flexibility domestically to
  Member States

51
Review of the distance selling rules

• 1993 measures arose from insufficiently
  harmonised tax rates leading to distortion of
  competition,
• Issue even more significant today increase in
  distance sales of goods from websites etc., -
  difficult to monitor and enforce VAT compliance.
• Proposal aimed at simplifying with link to one
  stop scheme.
• General EU threshold instead of threshold per
  Member State of destination - 150,000

52
Exchange of information between Member States

• Registration
• Electronic application made to the Member State
  of establishment
• Exact information required to be decided later
  (by Regulation)
• Member State of establishment transmits the
  registration information electronically to all
  other Member States
• Member State of establishment responsible for
  exclusions from the scheme,
• e-services model ensures technical viability.

53
Exchange of information between Member States

• Declaration
• Electronic declaration made to the Member State
  of establishment
• Quarterly
• Exact information required to be decided later
• Member State of establishment transmits the
  declaration information electronically to the
  relevant other Member States
• Taxable person pays liability directly to Member
  State of consumption

54
Exchange of information between Member States

• Refund claim
• Electronic declaration made to the Member State
  of establishment
• Annual
• Member State of establishment transmits the
  declaration information electronically to the
  relevant other Member States
• Member State of establishment confirms status

55
Exchange of information between Member States

• Existing mechanism for the exchange of
  information between Member States will be re-used
  but needs upgrading
• VAT Information Exchange System (VIES)
• Feasibility study currently on-going
• Initial results
• Feasible
• Use newest technology (XML)
• Concerns about timetable

56
Relationship with special scheme for e-services

• Not a duplication of the Special Scheme for
  electronically supplied services 26C(A) which
  is for review in any event,
• Significant differences in scale.
• Non-established taxable persons supplying
  e-services have several options

57
Timetable

• July December 2006
• Council decision tension points?
• Would have to be in place in time for B2C
• Ambitious programme of current UK presidency
  needs to be seen against reality of a Council
  with 25 Member States.

58
Changing Article 9

• Proposal COM (2003) 822 on place of supply of B2B
  services
• Focuses on simplification of rules for B2B
  services, avoiding multiple registrations and
  pre-financing of VAT as well as reducing 8th
  Directive refunds,
• Existing rules cause problems for business
  registration obligations, complex taxing
  decisions.
• Identifies need to modernise VIES system new
  version

59
B2B Services

• Proposal COM (2003) 822 on place of supply of B2B
  services
• New general rule of taxation where customers is
  established, subject to a number of specific
  exemptions,
• Some political obstacles to be overcome.
• Priority for UK presidency may produce a
  legislative decision by end of current year.

60
B2C Services

• Proposal COM (2005) 334 on place of supply of B2B
  services
• distortion of competition a key factor,
• VAT is consumption tax!
• fallback rule is where supplier is established,
• specific exceptions governed by issues of
  practicality and economic significance,

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B2C Services

• Proposal COM (2005) 334 specific provisions
• passenger transport,
• restaurants and catering services,
• telecoms, e-services, gaming and gambling,
• Administrative issues link to OSS.

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New - use of regulation

• Proposal COM (2004) 641 to clarify interpretation
  and application of common rules
• Regulation under Article 29a of 6th VAT Directive
  has direct legal force without need for
  transposition into national law.
• Delivers consistent and binding interpretation of
  VAT law (replaces VAT Committee guidelines
  which have uncertain legal standing)
• Addresses problems caused by differences in the
  practical application of common VAT rules which
  are a recurrent problem for firms who wish to
  take advantage of internal market.
• Initial scope is limited but represents a
  significant new instrument.

63
Regulation

• Proposal COM (2004) 641 to clarify interpretation
  and application of common rules
• Regulation is a form of secondary legislation
  which achieves consistency across the Community
  because of direct application.
• First instrument under new Article 29a will give
  binding effect to a number of guidelines adopted
  by the VAT Committee,
• If successful, this model is likely to be a
  recurring feature of tax legislation in the
  future,

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"New" Directive

• Recast of 6th VAT Directive
• Directive has been amended more than 30 times,
• Complicated by structure of double provisions
  (linked to transitional measures) which makes for
  a difficult text and can easily lead to mistakes,
• Will bring together all rules (including those
  found in Acts of Accession) in one instrument,
• Will give clear and consistent structure, using
  shorter provisions with more logical grouping in
  chapters.

65
In the pipeline .

• Dispute resolution mechanism
• To resolve double taxation in individual cases,
• VAT Committee can deal with questions of
  diverging general interpretation of existing 6th
  Directive provisions,
• ECJ role is slow and onerous,
• But when different application by two
  administrations leads to a mismatch, even whilst
  both conform to 6th Directive
• Possible solution in 1990 arbitration convention
  or perhaps use of OECD model treaty article 25?

66
In the pipeline .

• Vouchers, telephone cards, promotional schemes,
  alternative payment methods
• Emerging market which grows in complexity and
  sophistication,
• VAT provisions do not cope with this and member
  states developing different solutions,
• Compete with traditional payment systems (credit
  cards, stored value cards),
• links to e-money regulations
• competitive issues arise.

67
In the pipeline .

• Treatment of public authorities
• need for a consistent and neutral approach,
• increased breaking down of boundaries between
  public, semi-state and private sector,
• cross border implications,

68
In the pipeline .

• Financial services
• current measures out of date,
• not consistent with other established policy
  objectives e.g., FSAP
• fundamental inefficiencies have a ive effect on
  the sector,
• need for frequent recourse to ECJ

69
Political question

• Rates issues
• Labour intensive services measures need a
  decision by end of 2005
• Other reduced rate issues particularly those
  consequential to 2004 enlargement
• delicate political balance in any solution
  this task likely to fall to UK.

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Questions - Debate

71
Lunch

72
ECJ UpdateStephen Dale

73
PLAN

• Case C-210/04 FCE Bank Plc opinion 29
  September 2005
• Case C-58/04 Köhler, 15 September 2005
• 3. Case C-169/04 Abbey National, opinion, 8
  September 2005
• 4. Case C-43/04 Stadt Sundern, 26 May 2005
• 5. Case C-465/03 Kretztechnik, 26 May 2005
• 6. Case C-498/03 Kingscrest Associatas and
  Montecello, 26 May 2005
• 7. Case C-291/03 MyTravel, opinion, 15 May
  2005
• 8. Case C-452/03 RAL (Channel Islands) e. a.,
  12 May 2005
• 9. Case C-376/02 Goed Wonen, 26 April 2005
• 10. Case C223/03 University of Huddersfield
  Higher Education Corporation, opinion, 7 April
  2005

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1 - Case C-210/04 29 September 2005Services
supplied within the same legal entity OECD tax
treaties fixed establishment -

• Background
• - Training and other services charged by a UK
  bank to its Italian branch charges booked in
  the branchs books.
• Opinion
• The AG has stated that in his view even where
  the branch and the head-office are in different
  territories and even where the recharge is booked
  in the branchs books there is no supply for
  VAT purposes.

75
1bis - Case C-58/04 Köhler, 15 September
2005Place of taxable transactions Supplies of
goods effected onboard cruise ships Transport
effected within the Community Exclusion of tax
where a stop is made in a third territory

• Background
• - Are stops made by a ship in ports of
  non-member countries, at which passengers may
  disembark the vessel only for a short period, for
  example for sightseeing purposes, but at which
  they may not begin or end their journey, 'stops
  in a third territory' within the meaning of
  Article 8 (1) (c) of Directive 77/388/EEC?
• - Madame Köhler had a shop onboard a cruise
  ship.

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1bis - Case C-58/04 Köhler, 15 September 2005

• Decision
• - Stops made by a ship in the ports of a third
  country during which passengers may leave the
  ship, even for a short period, are stops in a
  third territory within the meaning of Article 8
  (1) (c) of Sixth Council Directive.

77
2 - C-169/04 Abbey National, opinion, 8
September 2005Exemption of the management of
special investment funds Concept of management

• Background
• The main question is What is covered by the
  concept of management of an investment fund ?
• Does the exemption for "management of special
  investment funds as defined by Member States",
  contained in Article 13B (d) (6) of the Sixth VAT
  Directive mean that the Member States have the
  power to define the activities comprising the
  "management" of the special investment funds, as
  well as the power to define special investment
  funds which may benefit from the exemption?

78
2 - C-169/04 Abbey National, opinion, 8
September 2005

• Opinion
• The concept of management within the meaning of
  Art. 13B (d) (6) of the Sixth Directive is an
  autonomous concept of Community law from with
  Member States may not diverge.
• Services provided by a depositary within the
  meaning of Art. 7 and 14 are exempt from VAT
  under Art. 13B (d) (6).

79
3 - Case C-43/04 Stadt Sundern, 26 May 2005
Common flat-rate scheme for farmers Grant of
hunting licences within the framework of a
municipal forestry undertaking Concept of
agricultural service

• Background
• - From 1994 to 1999, the Stadt Sundern obtained
  income from the sale of wood and the use of
  forest land as well as from the licensing of
  private hunting areas. As it initially treated
  those licensing operations as transactions within
  the meaning of the flat-rate scheme under
  Paragraph 24 of the UStG, it declared no turnover
  tax in that connection.

80
3 - Case C-43/04 Stadt Sundern, 26 May 2005

• Art 25 of Sixth Directive Where the application
  to farmers of the normal value added tax scheme,
  or the simplified scheme provided for in Article
  24, would give rise to difficulties, Member
  States may apply to farmers a flat-rate scheme
  tending to offset the value added tax charged on
  purchases of goods and services made by the
  flat-rate farmers pursuant to this Article.
• Decision
• Art. 25 is to be interpreted as meaning that the
  common flat-rate scheme for farmers applies only
  to the supply of agricultural products and
  agricultural services, as defined in Art. 25 (2),
  and that other operations carried out by
  flat-rate farmers are subject to the general
  scheme under that directive

81
4 - Case C-465/03 Kretztechnik, 26 May
2005Supplies for consideration Share issue
Admission of a company to a stock exchange
Deductibility of VAT
Background In the present reference for a
preliminary ruling, the Linz section of the
Austrian Unabhängiger Finanzsenat (Independent
Tax Tribunal) asks whether a company which issues
new shares, and becomes listed on a stock market
for that purpose, is to be regarded as making a
supply for consideration for VAT purposes and
whether, depending on the answer to that
question, VAT paid on services acquired in
connection with the listing and share issue may
be deductible
82
4 - Case C-465/03 Kretztechnik, 26 May
2005Supplies for consideration Share issue
Admission of a company to a stock exchange
Deductibility of VAT

• Decision
• - A new share issue does not constitute a
  transaction falling within the scope of Art. 2
  (1).
• - Art. 17(1) confers the right to deduct in its
  entirety the VAT on the expenses incurred on all
  the transactions undertaken by the taxable person
  in the context of his economic activity provided
  such economic activity constitutes taxed
  transactions.

83
5 - Case C-498/03 Kingscrest Associatas and
Montecello, 26 May 2005Exempt transactions
Supplies closely linked to welfare and social
security work Supplies made by bodies other
than those governed by public law and recognised
as charitable by the Member State concerned
Private, profit- making entity Meaning of
charitable

• Background
• - Appellants in the main proceedings formed the
  partnership Kingscrest for the purpose of
  operating residential care homes in the United
  Kingdom. Kingscrest is run for profit and is
  therefore not a charity within the meaning of
  the national legislation. It operates four homes,
  all of which were formerly registered by the
  relevant local authorities under the Registered
  Homes Act 1984 or the Children Act 1989 and are
  now registered under the Care Standards Act 2000.
  

84
5 - Case C-498/03 Kingscrest Associatas and
Montecello, 26 May 2005

• - According to the order for reference, it is
  common ground that Kingscrests supplies are of
  welfare services within the meaning of item 9
  of Group 7 in Schedule 9 to the amended VAT Act
  and that the partnership is a state-regulated
  private welfare institution within the meaning
  of that provision.
• Decision
• - The word  charitable in the English version
  of Article 13A (1) (g) and (h) of Sixth Directive
  is a concept with its own independent meaning in
  Community law which must be interpreted taking
  account of the language versions of that
  Directive
• -

85
5 - Case C-498/03 Kingscrest Associatas and
Montecello, 26 May 2005

• The meaning of  organisation recognised as
  charitable by the member state concerned  in the
  same Article does not exclude private
  profit-making entities
• It is for national court to determine whether
  the recognition of private profit-making entity,
  which as such does not have charitable status
  under domestic law, as charitable for the purpose
  of the exemptions under Art. 13A (1) (g-h)
  exceeds the discretion granted by those
  provisions to the Member States for the purposes
  of such recognition

86
6 - Case C-291/03 MyTravel, opinion, 15 May
2005 Article 26 of the Sixth VAT Directive
Scheme applicable to travel agents and tour
operators In-house services and services
purchased from third parties Method of
calculation of the taxable amount Apportionment
of package price between bought-in services and
in-house services Application of the market
value method

• Background
• In what, if any, circumstances is it open to a
  tour operator, which has completed its value
  added tax return for a financial year using the
  actual cost method which was the only method laid
  down in national legislation implementing the
  Directive, subsequently to recalculate its VAT
  liability partly in accordance with the market
  value method.

87
6 - Case C-291/03 MyTravel, opinion, 15 May
2005

• Opinion
•  A travel agent or tour operator who has filled
  in his VAT return for a tax year using the method
  laid down by the national legislation transposing
  the Sixth Directive is entitled to recalculate
  his VAT liability according to the method held by
  the Court to be consistent with Community law,
  under the conditions laid down by the applicable
  national law which must observe the principles of
  equivalence and effectiveness.

88
6 - Case C-291/03 MyTravel, opinion, 15 May
2005

• Opinion
• Article 26 of the Sixth Directive must be
  interpreted as meaning that a travel agent or
  tour operator who, for a package price, supplies
  travellers with bought-in services and in-house
  services must, generally, identify the part of
  the package price corresponding to the in-house
  services on the basis of their market value,
  where that value can be established. In such a
  case, a taxable person may only use the actual
  cost method if he proves that that method
  accurately reflects the actual structure of the
  package price.

89
7 - Case C-452/03 RAL (Channel Islands) e. a.,
12 May 2005 Slot gaming machines -
Entertainment or similar activities - Supplier of
services established outside the territory of the
Community - Determination of the place where
services are supplied

• Background
• - Questions basically concern determination of
  the place of supply where a company supplies slot
  gaming machine services to consumers in a Member
  State but has located its place of business
  outside the Community for the sole or main
  purpose of avoiding liability to VAT.

90
7 - Case C-452/03 RAL (Channel Islands) e. a.,
12 May 2005

• Decision
• The supply of services consisting of enabling
  the public to use, for consideration, slot gaming
  machines installed in amusement arcades
  established in the territory of a Member State
  must be regarded as constituting entertainment or
  similar activities within the meaning of the
  first indent of Article 9 (2) (c) of Sixth
  Directive, so that the place where those services
  are supplied is the place where they are
  physically carried out.

91
8 - Case C-376/02 Goed Wonen, 26 April
2005Turnover tax - Common system of value added
tax - Article 17 of Sixth Directive 77/388/EEC -
Deduction of input tax - Amendment of national
legislation - Retroactive effect - Principles of
the protection of legitimate expectations and
legal certainty

• Background
• - During the second quarter of 1995, three
  housing complexes intended for letting were
  transferred to the Woningbouwvereniging Goed
  Wonen. During the construction of those
  dwellings, the Association, taking advantage of
  an option available under national law, did not
  deduct the VAT paid on goods and services
  received for the purpose.

92
8- Case C-376/02 Goed Wonen, 26 April 2005

• Decision
• The principles of the protection of legitimate
  expectations and legal certainty do not preclude
  a Member State, on an exceptional basis from
  giving that law retroactive effect when, in
  circumstances such as those in the main
  proceedings, economic operators carrying out
  economic transactions such as those referred to
  by the law were warned of the impending adoption
  of that law and of the retroactive effect
  envisaged in a way that enabled them to
  understand the consequences of the legislative
  amendment planned for the transactions they carry
  out.
• 
  

93
9- Case C-223/03 University of Huddersfield
Higher Education Corporation, opinion, 7 April
2005Case C-255/02 Halifax e. a., opinion, 7
April 2005Case C-419/02 BUPA Hospitals and
Goldsborough Developments, opinion, 7 April
2005Supply of goods and services Economic
activity Abuse of rights Transactions having
the sole aim of obtaining a tax advantage

• Background
• - The three cases involve transactions entered
  into for the purpose of gaining a tax advantage
  in terms of a right to deduct input VAT.
• - The Court is asked
• -To determine whether transactions carried out
  with the sole purpose of enabling input tax to be
  recovered may constitute an economic activity
  within the meaning of Article 4 (2) of the Sixth
  Directive.
• -To consider the possible applicability of the
  doctrine of abuse of rights in the field of
  value added tax as a result of which claims to
  deduct VAT incurred by a person in circumstances
  such as those of the present cases might be
  disallowed.

94
9 - Case C-223/03 University of Huddersfield
Higher Education Corporation, opinion, 7 April
2005Case C-255/02 Halifax e. a., opinion, 7
April 2005Case C-419/02 BUPA Hospitals and
Goldsborough Developments, opinion, 7 April 2005

• Opinion
• The terms economic activity and supply made
  by a taxable person acting as such for the
  purposes of Article 2 and Article 4 of Sixth
  Directive should be interpreted as meaning that
  each of the transactions at issue must be
  considered objectively and per se.
• The fact that a supply is made with the sole
  intention of obtaining a tax advantage is
  immaterial.
• There is no reason why the VAT rules should not
  be interpreted in accordance with the general
  principle of the prohibition of abuse of
  Community law.

95
VAT cases April 2005 September
2005 C-184/04 Opinion 2005-09-15,
Uudenkaupungin kaupunki C-394/04 Opinion
2005-09-15,Ygeia C-395/04 C-394/04 Opinion
2005-09-15, Ygeia C-415/04 Opinion 2005-09-15,
Stichting Kinderopvang Enschede C-349/03 Judgment
2005-07-21, Commission v United Kingdom C-197/04
Opinion 2005-07-14, Commission v
Germany C-434/03 Judgment 2005-07-14, Charles
and Charles-Tijmens C-435/03 Judgment
2005-07-14, British American Tobacco
International and Newman Shipping Agency
Company C-494/03 Opinion 2005-07-14, Senior
Engineering Investments
96
VAT cases April 2005 September
2005 C-138/04 Judgment 2005-06-16, Commission
v Denmark C-200/04 Opinion 2005-06-16,
iSt C-466/03 Opinion 2005-06-16, Albert Reiss
Beteiligungsgesellschaft C-378/02 Judgment
2005-06-02, Waterschap Zeeuws Vlaanderen C-533/03
Opinion 2005-06-02, Commission v
Council C-46/04 Opinion 2005-05-26, Aro Tubi
Trafilerie C-536/03 Judgment 2005-05-26, António
Jorge C-435/03 Opinion 2005-05-25, British
American Tobacco International and Newman
Shipping Agency Company
97
VAT cases April 2005 September 2005 C-41/04
Opinion 2005-05-12, Levob Verzekeringen and OV
Bank C-25/03 Judgment 2005-04-21, HE C-446/03
Opinion 2005-04-07, Marks Spencer
98
Tea

99
Code of practiceRichard Yewdall

100
Closing remarksStephen Dale

101
Complimentary Sight-seeing TourGreek Tourist
Board

102
IVA Meeting 30 September 2005Athens