Aspects of Cross-Border VAT: The EU Approach and Evolving Trends

This chapter discusses the European Union approach to cross-border value-added tax (VAT) and the evolving trends. The essential backbone of European VAT, whose history dates back to the inception and initial steps of the European Communities, was established in the ten-year period between 1967 and 1977 and later amended in several parts. Such additions and amendments were recast in the currently binding Council Directive 2006/112 on the common system of value added tax (the VAT Directive) for the purpose of achieving ‘clarity and rationalisation’. This evolution of the VAT rules has also affected the underlying principles of the directive and the so-called ‘place-of-supply’ (POS) rules. The chapter analyses the current VAT approach—and foreseeable developments—towards crossborder supplies and, more precisely, towards the ‘fixed establishment’ (FE) proxy in the light of the VAT: (1) grounding principles; (2) origin and historical evolution; and (3) case law of the Court of Justice of the EU (CJEU).