VATupdate

Comments on C-98/21: Input VAT deduction for holding companies: “direct and immediate link” conundrum is back

On 8 September 2022, the Court of Justice of the European Union (“CJEU” or “the Court”) released its judgment in Finanzamt R v W GmbH (Case C-98/21), on the right for an active holding company to deduct input VAT on services that it purchased and then contributed to its subsidiaries, for the needs of their own, mostly VAT-exempt activity. The Court denied the holding company the right to deduct input VAT. This judgment comes on the heels of a Luxembourg Supreme Court’s decision that was favourable to the taxpayer also in relation to a holding company’s input VAT recovery position. It is therefore interesting to consider both cases together.

Source: PwC LU

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