Commentary

V1.230G Legal certainty/legitimate expectation

Part V1 General principles and rates of tax

V1.230G Legal certainty/legitimate expectation

V1.230G Legal certainty/legitimate expectation

These principles appear, to a very large extent, to overlap, and are usually referred to together.

The principle of legal certainty “requires that rules imposing charges on the taxpayer must be clear and precise so that he may know without ambiguity what are his rights and obligations and may take steps accordingly”1.

There appear to be limitations to this principle. In ADV Allround2, ADV, a Germany company, was told by its tax office that the place of supply of its services (the provision of lorry drivers) was in Germany, with the result that it was required to charge VAT to its Italian customers. However, the German tax office responsible for the repayment of claims of VAT made by businesses registered in other EU member states took the view that the place of supply was Germany, and consequently refused to entertain a repayment claim from the Italian customers. On appeal the ECJ ruled that member states were not required “to amend their domestic procedural rules in such a way as to ensure that the taxability and liability to value added tax of a service are assessed in a consistent way in relation to the provider and in relation to the recipient of that service, even though they fall within the jurisdiction of different tax authorities. However, those provisions require the Member States to adopt the measures that are necessary to ensure that value added tax is collected accurately and that the principle of fiscal neutrality is observed.”

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