|
Vertex CyberTax News
Could Per Item Rounding Down Become an EU Staple?
In a case involving a supermarket chain in the Netherlands the European Court of Justice (ECJ) has ruled that under Community law Member States are not obliged to allow VAT to be calculated based on a method of rounding down per item.
The supermarket chain concluded that it would be advantageous to round down the VAT amounts due on its supermarket sales per individual item sold to a customer rather than round up or down on the total order. They based their position on the opinion that both Dutch law and Community law restricts a taxpayer from paying a higher amount than the exact amount legally due. Rounding up would result in a higher amount of VAT than the exact amount legally due.
The Dutch Supreme Court referred two questions to the ECJ. First, is the rounding of VAT amounts governed solely by national law or by Community law? Second, if it is governed by Community law are Member States required to permit rounding down per article even if different supplies are included in one invoice and/or one tax return?
The ECJ ruled that there are no specific provisions in Community law that obliged Member States to allow VAT to be calculated based on a method of rounding down per item. In the absence of Community legislation it is up to the Member States to determine the appropriate rounding method to be used as long as they observe the principles governing the common system of VAT, in particular the principles of fiscal neutrality and proportionality.
Sign up here for the CyberTax News and receive
monthly news updates from Vertex - featuring the latest news and research to
hit the Tax Cybrary.
|
