The knowing participation in VAT fraud : reflections on the content and the limits of a reasonable duty of due diligence

Resource Information

The work The knowing participation in VAT fraud : reflections on the content and the limits of a reasonable duty of due diligence represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Continuing Resources.

Label

The knowing participation in VAT fraud : reflections on the content and the limits of a reasonable duty of due diligence

Creator

• Gunacker-Slawitsch, B

Subject

• ECJ case law
• VAT fraud
• due diligence

Language

eng

Summary

According to settled case law, national authorities and courts have to refuse the right of deduction of, or exemption from, VAT if it is ascertained that the taxable person knew or should have known that he or she was participating in a transaction vitiated by VAT fraud. This case law has created a new duty of due diligence which taxpayers have to observe when choosing their contract partners. To specify the content of this due diligence obligation, it is necessary to consider that, even though taypayers and tax authorities must together ensure the smooth functioning of the VAT system, they each have their own sphere of activity and responsibility. The control of taxpayers remains a state task. This task may only be transferred to the taxable person if this transfer is in line with the principle of proportionality. In view of this, it is necessary to specify the principle of proportionality. This can be achieved by implementing the idea of the sphere of responsibility which is useful in order to limit the duty of due diligence to an appropriate and reasonable level. According to the idea of the sphere of responsibility a taxable person can only be held responsible for disregarding information in those cases where indications of tax evasion become part of their sphere of influence. Considering this idea, the criterion of 'should have known' and the content of the duty of due diligence become clearer and the discretion of Member States is almost eliminated

Citation source

In: British tax review. - London. - (2017), no. 5 ; p. 649-666

Geographic coverage

• European Union
• Europe

Language note

English