Keywords
Summary

Keywords

Tax provisions - Harmonization of laws - Turnover taxes - Common system of value added tax - Basis of assessment - Reduced in the case of total or partial non-payment - Member States permitted to derogate therefrom - Extent to which so permitted - Refund of the tax excluded in case of non-payment where consideration paid in kind - Not permissible

(Council Directive 77/388, Art. 11C(1), second subpara.)

Summary

The derogation provided for in the second subparagraph of Article 11C(1) of the Sixth Directive 77/388 does not authorize a Member State which enacts provisions for the refund of VAT in the case of total or partial non-payment of the consideration to refuse that refund where the unpaid consideration is in kind, when it permits a refund where the consideration is expressed in money.

On the one hand, since such provisions alter the taxable amount in a manner which goes beyond what is strictly necessary in order to avoid the risk of tax evasion, they cannot be justified by the aim of preventing such a risk. On the other hand, those provisions lead to discrimination against transactions in which consideration is paid in kind as compared with those in which the consideration is expressed in money, by discouraging traders from entering into barter contracts, when the two situations, which are economically and commercially speaking identical, are treated in the same way by the Sixth Directive.