On September 8, 2022, the Court of Justice of the European Union (hereinafter: ECJ) ruled in the case W GmbH (C-98/21). Central to this is the right to deduct VAT of a holding company that provides VAT-taxed services and also purchases services, which it then contributes to its two subsidiaries. The ECJ has ruled that in this specific situation there is no right to deduct costs directly attributable to the contribution. The ECJ seems to take into account the VAT position of the subsidiaries that have virtually no right to deduct VAT. Although the ruling was in line with expectations, we still have some reservations about the way in which the ECJ arrives at its verdict.
Source: KPMG NL
- ECJ C-98/21 (Finanzamt R) – Judgment – No Input VAT recovery by holding for free services to subsidiaries that perform mostly VAT exempt activities
- ECJ Cases on Right to deduct VAT by Holding companies related to their subsidiaries (Art. 167, 168, 173)
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