- The Supreme Administrative Court has ruled that a company can claim deduction for input tax even if the selling company’s only activity is managing subsidiary companies
- The company provided taxable services to the sold subsidiary, making the share sale a tax-exempt transaction within the economic activity
- The purpose of the restructuring and sale was to streamline the remaining business and provide capital to the group
- The court clarified that costs must have a direct and immediate connection to the overall economic activity to be eligible for deduction
- The tax authority’s position on deduction for VAT on purchases related to the sale of shares in subsidiary companies from 2017 should not be applied, as it does not align with the court’s ruling
- The case has been referred back to the lower court to determine if the deduction should be limited due to non-economic activities and the tax-exempt sale of the subsidiary
- Input tax on general expenses is only deductible for the taxable economic activity of the holding company
- The input tax must be apportioned if the holding company engages in both economic and non-economic activities
- The input tax must also be apportioned for a tax-exempt share sale within the economic activity, but certain transactions may be excluded from the calculation
- The input tax is connected to both taxable and exempt transactions, regardless of how the company prices its transactions
- However, the deduction is not limited for isolated share sales outside the scope of VAT, as long as the costs are directly related to the company’s economic activity.
Source: www4.skatteverket.se
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
