ECJ Upholds VAT Credit for “Shell Companies”

The Court of Justice of the European Union has ruled that the national legislation on “shell companies” that precludes the right to deduct VAT is incompatible with EU VAT rules and the principle of VAT neutrality.
The case involved an Italian company that was denied the right to deduct VAT because it was considered non-operational and did not meet the revenue threshold set by the law.
The national legislation on “shell companies” aims to discourage the establishment of companies that lack entrepreneurial activity and are used for the mere holding of assets.
The Court of Justice affirmed that anyone carrying out an economic activity should be considered a taxable person, regardless of the purpose or results of the activity, and that the relevance of the activity cannot be based on quantitative elements such as revenue volume.

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.