Reverse Charge Mechanism for Holding Companies: Avoiding Pitfalls

• Holding companies should consider VAT registration, even if they don’t meet the turnover threshold.
• Receiving services from foreign subsidiaries or third parties can lead to a final VAT burden if the holding company is not VAT registered.
• The Swiss Federal Supreme Court ruled that consulting services received from abroad before VAT registration are not eligible for input tax deduction.
• The court upheld the FTA’s position that consulting services are presumed to be consumed at the time they are received.
• The FTA allocated the expenses pro rata temporis for the period from the conclusion of the contract to the sale of the investment.
• The court rejected the company’s request for subsequent input tax deduction.

Source: altenburger.ch

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.

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