With effect from January 1 2011, Denmark forfeited the previously used derogation clause, and implemented article 12 from the Council Directive 2006/112/EC on the common system of value added tax, in an attempt to accommodate the desire for harmonization within the European Union concerning VAT. The article in question exempts transactions concerning commercial transfer of buildings, before first occupation (hereafter referred to as new buildings), and building land from the general VAT exemptions on real estate. The specific provisions in article 12 of the Directive states that the Member countries has the individual authority to determine the interpretation of these terms in regards to national legislation. However, despite this individual right set forth in the Directive, existing case law concerning The EU Court’s interpretation of these terms has to be considered as well. The individual right set forth in the Directive is therefore somewhat curtailed as the member countries has a duty of loyalty concerning EU consistent interpretation in relation to all EU institutions, including the EU Court. The member states are therefore obligated to consider the case law in regards to the national interpretations. The rulings in scope of this thesis, states, inter alia, that the role of a taxable person, selling a building land or a new building, is of great significance when ruling if a transaction is to be considered a supply of building land or an old building, and subsequently taxable or nontaxable. With the above-mentioned rulings, the European Court of Justice has provided the European member states with an overall framework concerning the definition of the terms in question. This thesis will be based on the legal dogmatic method and seek to account for this overall framework, and analyze, if the Danish administrative practice in this area is consistent with the framework in question. The analysis is based on binding administrative decisions from the Danish tax authorities, mainly the Danish Tax Council, concerning doubts of the VAT consequences related to transactions with building land and buildings before first occupation. It is important to note that the Danish administrative practice upon the subject does not constitute a precedent, however due to the lack of case law in this area; the analysis of the administrative practice seeks to create a presumption of future case law. Furthermore, this thesis clarifies the mechanisms behind the VAT system, in order to put the implementation of these rules in a broader perspective in relation to the harmonization within the EU, including the political considerations and the economic factors. The discussion has a particular focus 2 at the principle of neutrality in the VAT System. A principle set forth to ensure taxation remains neutral in relation to business structures and consumer choice. The section will furthermore highlight which economic operators, who will be most affected by this implementation in national legislation, and discuss the possible consequences in this particular market. Based on the analysis, it is not possible to extract a clear and unambiguous interpretation in relation to the national administrative practice. The Danish tax Authority does not always reach similar results even though circumstances of some cases seem similar. However, it is possible to derive an indicator from the analysis and derive a predominantly administrative practice upon the subject. This thesis concludes that the Danish administrative practice in general is in accordance with the overall EU framework in relation to the interpretation of new buildings. However, as the EU caselaw upon the subject is somewhat sparse, the national interpretation merely need to be in accordance with the provisions set forth in the Directive, without extensive consideration to any limitations defined by EU case-law. The administrative practice concerning the definition of building land however is not entirely in accordance with the overall EU framework. In certain aspects, the Danish tax authority seems to interpret the provisions of the Directive somewhat more strictly, than it is intended within the EU court given the general purpose defined in EU case-law.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||85|