Taxable Supplies and Their Consideration in European VAT by Kollmann Jasmin;

Author:Kollmann, Jasmin;
Language: eng
Format: epub
Publisher: IBFD Publications USA, Incorporated
Published: 2019-08-15T00:00:00+00:00

Chapter 5

Selected Issues of the Digital Economy

This chapter contains an analysis of selected transactions taking place in the digital economy. In order to conduct the analysis, the criteria of taxable supplies as filtered out in the previous chapters will be applied to selected examples, namely the sale of e-vouchers, transactions with virtual currencies, and the use of online portals. These three examples will be analysed in the above-mentioned order deliberately. The sale of e-vouchers refers to scenarios that relate to both the digital and the real economy. Since the reader should be familiar with the real economy transactions, this makes it easier to grasp the facts and circumstances. There also exists European Court of Justice (ECJ) case law on this issue, 725 therefore the reader may already be familiar with some arguments and the analysis should be comparably easy to follow. Similarly, also some types of virtual currencies relate to the real economy. Since there exist different types of virtual currencies, the connectedness to the brick-and-mortar economy varies. Furthermore, for one type of virtual currency, the ECJ already was confronted with the question of how to apply the value added tax (VAT) Directive. 726 Whether the ECJ’s analysis applies to all types of virtual currencies will be shown below. Last but not least, the use of online portals also relates to a certain extent to the brick-and-mortar economy. However, there exists no case law on this issue yet, thus only parallels can be drawn to comparable scenarios.

For each transaction, it will be determined whether the transaction constitutes a supply that falls within the scope of the VAT Directive, 727 by means of determining whether a consumable benefit is supplied to an identifiable customer. Additionally, for most of the transactions, the question about what constitutes the consideration is relevant and will thus be subject to analysis. Furthermore, whether the supply and the consideration are sufficiently connected is one of the key problems of most of the transactions that are studied below.

On the one hand, the author will test whether the current rules on taxable supplies are flexible enough to cover new types of supplies and business models. On the other hand, the chapter will discuss the question of whether there is legal certainty regarding which of the digital transactions should fall within the scope of the VAT Directive.

Solutions will be proposed according to the outcome of the interpretative analysis, but especially the implementation of the proposed solutions might encounter practical obstacles. Therefore, if the interpretative analysis does not lead to one clear solution, or the solution achieved by interpretation cannot be implemented because of practical problems, a different approach will be suggested. Hence, the outcome of the interpretative analysis will not only be guided by the aim and purpose of the European VAT legislation but also by its administrability. This means that effectiveness and an equally applicable law may also need to be considered when proposing a solution. 728

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