In this article, the author discusses the UK Supreme Court decision in the Airtours case and the two-step test done by Judge Lord Neuberger focusing on identifying a contractual obligation to make a supply to the payor and only departing from this requirement if it would be in accordance with “economic reality”. The author submits that contract law can serve as a starting point, but that the focus on the existence of a contractual obligation in Airtours makes the test excessively restrictive. In the author’s view, “economic reality” in a multiple-party situation should not require the taxable person to prove “artificiality” or “sham”; and contract law and the contractual terms should not serve as a “strait-jacket” for VAT law.