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?