To What Extent is the Prohibition of Abuse of Law Consistent with the Legal Certainty In VAT?
Abstract: For more than 40 years the case-law of the European Court of Justice has been developing the principle of prohibition of abuse of law in the European Union. However, in the sphere of value-added tax, the principle was invoked by the Court for the first time in 2006 in the landmark case Halifax, creating a tension between this emerging principle and the principle of legal certainty observed and protected by the Union and all its Member States. Despite the tension between these principles, the abuse of law is justified by the necessity to procure a rational and congruent outcome where the law is applied to the transactions carried out by the economic operators. Nevertheless, the European Court of Justice has been inconsistent developing the principle of abuse of law. As a result, the difficulty in the already challenging application of the principle by the national courts has been increased and the outcome is even less predictable. Therefore, economic operators are uncertain whether their tax schemes will be considered abusive by the national courts, restricting thus, the necessary advance planning of their economic activities in order to reduce costs and increase the efficiency of their businesses. National courts are struggling to assess the abuse following the current guideline provided by the Court of Justice of the European Union, making almost unreachable the uniform application of the principle in the courts across the Member States.
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