The Use of New Technologies in VAT and Taxpayers’ Rights

CJEU: Recent Developments in Value Added Tax 2021 (Linde 2022)

35 Pages Posted: 16 Feb 2022

See all articles by Marta Papis-Almansa

Marta Papis-Almansa

University of Copenhagen - Faculty of Law; Kristianstad University College

Date Written: February 7, 2022

Abstract

Digitalization and emergence of new technologies including Artificial Intelligence has shaped new organizational principles for the functioning of economies and societies globally. Technology has also changed the landscape for taxation and interactions between tax administration and taxpayers. Recently various models of electronic reporting and invoicing, split-payment mechanisms as well electronic tools for data analysis and risk assessment have been adopted by many of the Member States in the EU. Technology will have also a central role to play in the future of EU VAT and administrative cooperation. The discussion and awareness on the legal disruption caused by AI has emerged as aftermath of digital revolution and has already started changing the regulatory framework in the EU. Alongside the undisputed opportunities of improved monitoring of compliance with tax obligations in an effective, cost and time efficient way, possibilities in preventing tax evasion and fraud, transparency and enhanced protection of compliant taxpayers, there are also challenges for protection of taxpayers’ rights, including the right to privacy and protection of personal data, right of defence and to effective legal remedy, prohibition of discrimination freedom to conduct business and protection of property.

Taxpayers’ rights aim at balancing the unequal position of an individual and a state and are meant to protect an individual against arbitrariness of the state. The asymmetry of the public law relationship between the taxpayers and the states represented by tax authorities becomes exacerbated when the latter has access to vast amount of data and tools much more powerful than traditional control measures, including algorithmic systems for data analytics.

The existing case law of the CJEU and ECtHR so far does not specifically address the use of new technologies in VAT. Nevertheless the normative content of taxpayers rights’ and the consequences for the taxpayer derived from them has been clarified to some extent in the existing jurisprudence.
The purpose of this paper is to contribute to the debate on the value and content of taxpayers’ rights and consequently on the requirements or limits which must be respected when designing and using technology in VAT administration. To that end, this paper aims at identifying the implications of the use of new technologies in VAT for the legal framework for the protection of taxpayers’ rights in the EU.

Keywords: VAT, taxpayers' rights, AI, algorithms, real-time VAT reporting. electronic invoicing, EU VAT, machine learning, privacy, data protection, right of defence

JEL Classification: K34

Suggested Citation

Papis-Almansa, Marta, The Use of New Technologies in VAT and Taxpayers’ Rights (February 7, 2022). CJEU: Recent Developments in Value Added Tax 2021 (Linde 2022), Available at SSRN: https://ssrn.com/abstract=4034858

Marta Papis-Almansa (Contact Author)

University of Copenhagen - Faculty of Law ( email )

Studiestraede 6
Studiestrade 6
Copenhagen, DK-1455
Denmark

Kristianstad University College ( email )

S-291 88 Kristianstad
Sweden

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