- Sweden’s Supreme Administrative Court has clarified that holding companies can deduct input VAT on share disposal costs, even if they do not conduct external VAT-able activities.
- The court ruled that a holding company that actively manages its subsidiaries is a taxable person and entitled to deduct input VAT.
- The question arises as to whether the costs incurred should be linked to the VAT-exempt transaction or the taxable person’s economic activities.
- In a previous case, the court ruled that a holding company was entitled to deduct input VAT on disposal costs because it had a direct link to the taxable person’s economic activity.
- However, in this case, the holding company only provided management services to its subsidiaries and did not have any taxable transactions outside of that.
- The Swedish Tax Agency denied the right to deduct input tax, and the court upheld their decision.
- The Supreme Administrative Court granted leave to appeal on the question of whether a parent company can deduct input VAT on professional services in connection with the disposal of a subsidiary’s shares.
- The court concluded that settled case law from the Court of Justice of the European Union does not support a distinction between types of economic activity for VAT deduction.
- The court stated that the holding company’s business activity of providing management services does not preclude its right to deduct VAT on professional services related to share disposal.
- The court found that the costs had a direct and immediate link to the economic activity of the holding company and could be considered part of the price charged to its subsidiaries for services provided.
Source: internationaltaxreview.com
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.
