The Court of Justice of the European Union (the “Court”) recently issued the Advocate General’s opinion in case C-502/17 C&D Foods Acquisition ApS. The opinion states that VAT on costs directly and immediately linked to the intention to sell shares is non-deductible.
Danish company C&D Foods Acquisition ApS (hereinafter “the Company”) intended to sell the shares it held indirectly in its sub-subsidiary, to which it provided taxable management services. To assist the sale of those shares, the Company acquired various services, for which it deducted input VAT. In the absence of potential buyers, the Company eventually cancelled efforts to sell those shares and the Danish tax authorities rejected the Company’s right to deduct VAT on the acquired services.
The Advocate General concluded the following:
This opinion points out that taxable persons are not entitled to deduct VAT on purchases of services necessary for the sale of shares, if there is a direct and immediate link between those costs and the intention to sell the shares.
If the Court follows the Advocate General's opinion, it could be extended to cover all cases involving an intention to sell shares, as far as the deduction of input VAT on associated costs is concerned.
©  [ PricewaterhouseCoopers Tax Advisors & Accountants S.R.L ]. All rights reserved. PwC and PricewaterhouseCoopers refer to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. At PwC, our purpose is to build trust in society and solve important problems. PwC is a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.ro.