A strict test for economic reality: The concept of VAT supply in Airtours

Publication Type

Journal Article

Publication Date

1-2024

Abstract

In this article, the author discusses the UK Supreme Court decision in the Airtours case and the two-step test done by Judge Lord Neuberger focusing on identifying a contractual obligation to make a supply to the payor and only departing from this requirement if it would be in accordance with “economic reality”. The author submits that contract law can serve as a starting point, but that the focus on the existence of a contractual obligation in Airtours makes the test excessively restrictive. In the author’s view, “economic reality” in a multiple-party situation should not require the taxable person to prove “artificiality” or “sham”; and contract law and the contractual terms should not serve as a “strait-jacket” for VAT law.

Discipline

Business Organizations Law | Taxation-Transnational

Research Areas

Corporate, Finance and Securities Law

Publication

International VAT Monitor

Volume

35

Issue

1

First Page

27

Last Page

31

ISSN

0925-0832

Identifier

10.59403/2k61ygh

Publisher

IBFD

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.59403/2k61ygh

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