VAT position of a holding company in the EU

The European Court of Justice (CJEU) once ruled that holding shares is not an entrepreneurial activity for VAT purposes. Following more case law, it became clear that a legal entity merely holding shares in other companies cannot reclaim the VAT on its expenses (passive holding). In light of recent developments, we want to take a fresh look at the VAT position of a holding entity.

On March 3 2022, the Advocate General of the CJEU argued in line with the holding doctrine. The Advocate General ruled that a holding company providing services to two of its subsidiaries against a profit share is not entitled to a VAT refund on the costs associated with the provided services.

Source International Tax Review

See also

• ECJ C-98/21 (Finanzamt R) – AG Opinion – No Input VAT recovery by holding for free services to subsidiaries that perform mostly VAT exempt activities
• Right to deduct VAT by Holding companies related to their subsidiaries (Art. 167, 168, 173)

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