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.
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