A Critical Perspective of "Subjective Value" According to the CJEU to Determine the VAT Taxable Amount in Barter Transaction - A New Solution

Abstract

The decisions made by the Court of Justice of the European Union (CJEU) in respect of the Value Added Tax (VAT)-taxable value of barter transactions (consideration in kind) (van Doesum et al., 2016) in cases where the consideration has no market price (one-time and unusual service) have been considered to be incompatible with Article 73 of the VAT Directive (see Englisch, 2021b; HMRC, 2021). The CJEU has justified this incompatibility by introducing the term “subjective value”. Before 2018, the Bundensfinanzhof (BFH)— the German Federal Fiscal Court—followed these CJEU judgments by referring to “subjective value” and referring to Section 162 of the Abgabenordnung (AO)—the German General Fiscal Code—thus producing a solution compliant with the law. In 2018, the BFH waived its position and went in an incorrect direction. The view of the U.K.’s H.M. Revenue & Customs (HMRC) department is that the question “has not been considered by the VAT Tribunals or Courts and that any cases of this kind should be submitted to the VAT Supply team” (HMRC, 2021). From a predominantly German perspective, the author demonstrates that the “subjective value” is not a satisfactory solution and suggests, de lege ferenda, the introduction of a new Article 42a into Council Implementing Regulation (EU) No 282/2011 as a new solution by which to ascertain the taxable amount in barter transactions in cases where the consideration has no market price.