Partial implementation of the open market value provision from the Directive on the common system on value added tax

Vasović Miloš (Institut za uporedno pravo, Beograd), m.vasovic@iup.rs

Value-added tax (VAT) is the most generous form of taxation, both in the European Union (EU) and Serbia. The Directive on the Common System of VAT 2006/112 prescribes the open market value rule as an anti-evasion measure in the case of price manipulation between related parties. Serbia has implemented part of such an anti-evasion provision in its national legislation. The subject research includes an analysis of the implemented measure and its independence in relation to the already existing transfer pricing rules in the domain of corporate income tax, as well as the impact of partial implementation on the national fiscal system. Starting from the assumption that full implementation is necessary to enable tax authorities in order to combat evasion in full capacity and that the independence of this anti-evasion rule is necessary in relation to the same rule prescribed by the regulations governing corporate income tax, the author of the paper, through the application of the dogmatic-legal method and the method of content analysis, presented a review of the case law of the Court of Justice of the EU. Finally, the paper proposes certain recommendations to the national legislator in order to improve the domestic VAT system.

Keywords: VAT, Directive on the common system of value added tax, tax evasion, оpen market value provision