‘EU VAT and Double Taxation: A Fine Line between Interpretation and Application

This article focuses on the division of powers between the Court of Justice of the European Union (ECJ) and national courts, based on a Swedish case concerning the value added taxation of services sold through an intermediary. The role of intermediaries and intermediary services has been frequently discussed from a value added tax (VAT) perspective in Sweden during the past years. The reason for this is twofold. Firstly, Sweden has a large degree of Internet users and is active in the creative industry developing software tools used on mobile platforms. Secondly, the Swedish companies developing these applications have carried the costs for double taxation of these services when sold to consumers resident within the EU. Suggestions for clarifications of the provisions partly causing the diverging application that has led to double taxation, has now been suggested at EU level. This article discusses if the changes are likely to solve the reasons for double taxation by addressing a Swedish case, Resolution Interactive. The case was discussed during the IFA Congress in Boston 2012 during the VAT seminar, and serves as an example for highlighting the fine line between interpretation and application where intermediaries are involved in supply of services.

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