V1.230C Equal treatment

The principle of equal treatment is similar to, and often referred to in conjunction with, the principle of fiscal neutrality. The difference appears to be that whilst the (parity) principle of fiscal neutrality requires that businesses who are in direct competition with one another be treated equally, the principle of equal treatment requires that businesses who are in similar situations1 be treated equally. Thus both principles applied in the well-known “tea-cakes” case of Marks and Spencer2 (“M&S”). Fiscal neutrality applied because M&S was in competition with other tea-cake sellers; equal treatment applied because both M&S and its competitors were in the position of seeking a refund of overpaid VAT. The principle of equal treatment meant that the authorities were not justified in discriminating between M&S and its competitors on the grounds that the former was a “payment trader”, whilst the latter were “repayment traders”. The distinction is not, however always clear cut, and in Jetair3, the ECJ considered that the principal of fiscal neutrality was simply the reflection of the principle of

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