PhD project on “The Interaction between VAT Law and Income Tax Law”

The subject of this project is the legal study of the interaction between VAT (value added tax) law and income tax law. More precisely, the project examines the different forms of interaction between VAT law and income tax law that can be distilled through the interpretation and application of similar (in the sense of almost identical wording) VAT and income tax concepts to regulations and case law. The word “interaction” is defined as the mutual influence that exists between the two tax systems in the form of either 1) VAT law influences on income tax law or 2) income tax law influences on VAT law.

The interaction between VAT and income tax law is analyzed in a legal dogmatic perspective and an intertaxational perspective (focus on the interaction crossing VAT and income tax law) on the basis of three selected VAT and income tax concepts or special VAT/income tax themes:

  1. Independence connected to economic activity for VAT purposes and independence connected to business activity for income tax purposes
  2. Economic activity for VAT purposes contra business activity for income tax purposes
  3. Economic activity with sale of real estate for VAT purposes influenced by business activity with trade in real estate for income tax purposes

The project documents that conflicts with EU law are likely to arise in cases of interaction between VAT and income tax law as VAT law is primarily based on EU law, whereas income tax law is primarily based on national tax law. Thus, the influence of nationally based income tax law on EU-based VAT law will, as a general rule, be in conflict with VAT law and EU law. The main purpose of the project is to establish whether the actual interactions between VAT and income tax law that can be observed in regulation and case law are in conflict with current valid law and/or in conflict with EU law, especially EU VAT law, and in that case to present solutions to the problems.  

The PhD project is finalized at the beginning of 2016 but research within the cross field between VAT and tax law continues.

Assistant Professor Karina Kim Egholm Elgaard, University of Copenhagen.