The Sixth Council Directive 77/388/EEC was adopted by the European Union (EU) as a means toward harmonization of the value-added tax (VAT) system. The Framers of Directive 77/388/EEC believed that a disjointed VAT tax system that existed previously was harmful to the common market’s guarantee of free movement of goods and services that are subject to the VAT tax. The jurisprudence of the European Court of Justice (ECJ) on the subject of the Sixth Council Directive 77/388/EEC reflects four dominant patterns, including the limitation of member-states to dictate the parameters of the VAT tax, that additional administrative measures cannot be adopted by member-states, that variations among member-states will only be tolerated if no threat to harmonization exists, and that the ECJ will draft opinions that promote efficiency in trade and combat tax avoidance. Problematically, the ECJ’s allowing for too much discretion for member-state legislatures and national courts in conjunction with the use of a Directive to legislatively push for harmonization have left the EU with serious threats to a VAT tax system that can be best described as fragile. If left in this fragile state, the level of harmonization that has been achieved could be in jeopardy.
Making Sense of the European Union's VAT Tax System: Does the European Court of Justice's Jurisprudence Support Harmonization?,
7 Global Bus. L. Rev.
available at https://engagedscholarship.csuohio.edu/gblr/vol7/iss1/6