Keywords
Summary

Keywords

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1. Tax provisions ° Harmonization of laws ° Turnover tax ° Common system of value added tax ° Sixth Directive ° Scope ° Export of goods which cannot be exported to certain destinations because of their possible use for strategic purposes ° Inclusion

(Council Directive 77/388)

2. Tax provisions ° Harmonization of laws ° Turnover tax ° Common system of value added tax ° Exemptions laid down by the Sixth Directive ° Supply of goods dispatched or transported by the vendor outside the national territory ° Distinction between lawful and unlawful exports ° None

(Council Directive 77/388, Art. 15(1))

Summary

1. The principle of fiscal neutrality on which the Sixth Directive (77/388) is based precludes differentiation between lawful and unlawful transactions in the application of value added tax, except where, because of the special characteristics of certain products, all competition between a lawful economic sector and an unlawful sector is precluded.

That is not the case where there is no absolute prohibition based on the nature of the goods or their special characteristics, but where only their export to certain destinations is prohibited, because of their possible use for strategic purposes. Such a prohibition cannot, therefore, be sufficient to remove exports of those products from the scope of the directive.

2. Article 15(1) of the Sixth Directive (77/388), which concerns the exemption from value added tax of supplies of goods dispatched or transported by the vendor outside the national territory, entails no distinction, as far as exemptions are concerned, between lawful and unlawful exports, with the result that unlawful exports of goods which fall within the scope of the directive must be treated in the same manner as lawful exports of the same goods. It follows that the provision is to be interpreted as meaning that the exemption for exports provided for therein may not be refused on the ground that they are effected in breach of national provisions requiring prior authorization for exports to States for which, as a result of national provisions imposing an embargo, no authorization could have been issued in any of the Member States of the Community.

That finding is entirely without prejudice to the powers of Member States to impose appropriate penalties, including those with financial consequences, for contraventions of their legislation requiring export permits for certain non-member countries.