Interpretation methods of the CJEU and the meaning of the principle of fiscal neutrality: a commentary on the Case C-366/12 Klinikum Dortmund

Abstract

The CJEU constitutes the essential institution in interpreting the European VAT Directive. Recently, in the Case C-366/12 Klinikum Dortmund, the Court had to decide on how to interpret the VAT exemptions of hospital and medical care and closely related activities due to Article 132 (1) (b) as well as the provision of medical care in the exercise of the medical and paramedical professions based on Article 132 (1) (c) of the VAT Directive. The present paper focuses on the literal and the purposive interpretation method applied by the Court and, based on a case-law study, finds that the literal method does not necessarily lead to a restriction and, in the same manner, that the purposive approach does not automatically implies an extension of VAT exemptions. As one argument of the plaintiff concerned the principle of fiscal neutrality, which represents the general principle of equal treatment in the VAT Directive, this principle is, again, investigated on a case-law basis, which will disclose the limited impact of the principle of fiscal neutrality and, what is more, will lead to the conclusion that the relation between the EU Treaty and the VAT Directive is not free of discrepancies.