NPOS (CHARITIES) AND
Ole Gjems-Onstad and Peter Melz
No clear frame of reference
Income tax v VAT
Income Tax: Tax on profits
No profits – no income tax
Tax on consumption
(Tax on transactions)
Principle of neutrality
Same transactions – different treatment
NPOs v FPO
In breach of the principle of neutrality?
C-498/03 Kingscrest Associates Ltd.
The present situation?
The historical situation?
Two dimensional problem
EU VAT Dir art 132 and 133
Charge to clients/customers
The Real Problem – Input VAT
Denied deduction: NPO – just another consumer
Two questions regarding input VAT
Would most feasible reimbursement arrangements for
input VAT for NPOs be in breach of the EU VAT Dir?
From a theoretical point of view, is there any reason
that the input VAT tax burden for NPOs may be
regarded as unsound, unjustified or illogical?
To what extent should reduced rates be used to
reduce the input VAT of NPOs,
Examples of countries where such a solution has been
Art 132 and 133 – Art 371
Wide variation in national legislations
Need for more detailed overview
Better to forget about it?
Harmonization with income tax
Commission: Sweden’s provisions not compatible
with the EU VAT Dir
Too wide exemption from income tax and VAT for fund
Free supplies to NPOs
Pro Bono Services
Exemptions from output VAT on deemed supplies -
Allowed under current EU VAT Dir?
Should it be allowed?
Cross border acquisitions and supplies
of goods and services
Exemptions under EU VAT Dir?
Should exemptions be allowed?