NPOs (Charities) and VAT

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					NPOS (CHARITIES) AND
VAT
Ole Gjems-Onstad and Peter Melz
No consensus
   No clear frame of reference

Income tax v VAT
   Income Tax: Tax on profits
     NPOs
       No   profits – no income tax
   VAT
     Tax   on consumption
       (Tax   on transactions)
     NPOs?
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
   Output VAT
     EU   VAT Dir art 132 and 133
       Charge     to clients/customers
              Incidence
   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?
Reduced Rates
   To what extent should reduced rates be used to
    reduce the input VAT of NPOs,
   Examples of countries where such a solution has been
    found satisfactory.
Art 132 and 133 – Art 371
   Wide variation in national legislations
   Need for more detailed overview
   Possible infringements
     Better   to forget about it?
Harmonization with income tax
provisions
   Taxable person
   Commission: Sweden’s provisions not compatible
    with the EU VAT Dir
     Too  wide exemption from income tax and VAT for fund
      raising activities
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?

				
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posted:10/3/2012
language:English
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