Ruling #503/2021: Tax Authorities Clarify Definition of Ancillary Supplies

The Italian Revenue Agency has published Ruling No. 503 of 23 July 2021 on whether a supply of advisory services in connection with a VAT exempt transfer of shares may qualify as a VAT exempt ancillary supply. The ruling concerns an Italian holding company that decided to sell a minority stake in one of its subsidiaries and, for this purpose, engaged an investment bank as a financial advisor to identify a suitable investor to acquire the minority stake, develop a suitable structure for the transaction, and provide other related services. In the request for the ruling, it was proposed that the advisory services should be considered an exempt ancillary supply considering various factors, including that the services were provided exclusively for the transfer of shares (sale) and the transfer could not have been carried out without the services of the financial advisory. A 2019 court decision regarding the VAT exemption for share transactions was also referenced in support of this position.