Definition Economic Reality: a judicial perception of an existing state of affairs that defines the economic relations between two or more parties. As such, economic reality not only relates to the actions of parties involved in a transaction, but to all circumstances surrounding the transaction, such as common commercial practice9, the parties’ intentions and their contractual arrangements.
In this article in EC Tax Review 2020-5, the authors Ad van Doesum and Frank Nellen analyse the notion of ‘economic reality’ in EU VAT and how it is applied by the ECJ in its case law.
Source SSRN
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