Commentary

V2.203A The meaning of business—the European perspective and the evolution of case law

Part V2 Registration – deregistration

V2.203A The meaning of business—the European perspective and the evolution of case law

V2.203A The meaning of business—the European perspective and the evolution of case law

This paragraph examines the European perspective on what is an economic activity and the influence that this has had on the understanding of 'business' for UK VAT purposes.

For an overview of VAT and business more broadly, see V2.201B.

For the purposes of Directive 2006/112/EC, VAT is concerned with any person who 'independently carries out … any economic activity … whatever the purpose or results of that activity'1. Such a person is known as a 'taxable person'. It should be noted that this phrase is also used in UK legislation to mean a person who is, or should be, registered for VAT. In this section, the sense in which the phrase is used will be made clear where there might otherwise be doubt.

The economic activities referred to 'comprise all activities of producers, traders and persons supplying services … and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity'2.

The use of the word 'independently' excludes employees and other persons bound to an employer by a contract of employment or other legal ties3.

Economic activity—CJEU case law

Objective character

The CJEU has stressed that the concept of economic activity must be given a wide scope, and is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results

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