Are VAT Exemptions Compatible with Primary EU Law?

The VAT exemptions are probably the most complex aspect of the European VAT system. The official documents and reports that were published at the time VAT was introduced in the European Union and the lack of information on the purposes of the EU legislature in adopting specific VAT exemptions do not make it easy for the Court of Justice of the European Union (ECJ) to delimit the scope of the exemptions. Consequently, the ECJ’s attempts to establish the purposes of specific exemptions are occasionally controversial and arbitrary. In this article, the author presents the history of the VAT exemptions.