Hilary Stone reviews the concept of 'genuine economic activity' as a means to defend HMRC challenges.
Tax rates and treatments vary considerably between countries even within the EU and therefore tax is one of the many factors which should and does influence what businesses do and where they choose to do it. However as soon as tax is part of the decision-making process a taxpayer must consider and take steps to avoid the pitfall of ‘abuse of rights’.
This lack of harmonisation (for example VAT on hotel services at 8% in Spain but 20% in the UK) is accepted by Member States yet gives rise to a potential for ‘rate shopping’ and distortion of competition. To address...
