VAT Deduction Rights for Renewable Energy Plants Used by Subsidiary Companies

• The right to deduct VAT on purchases of goods and services is a fundamental principle that ensures tax neutrality for businesses and professionals
• VAT deduction can only be exercised when goods and services are used for operations subject to the tax, requiring a direct and immediate connection between upstream and downstream operations
• A recent court case involved company Alfa which was denied VAT deduction on a renewable energy plant purchase because it was used by its subsidiary rather than directly for its own oil and fat production activities
• Alfa had created a wholly owned subsidiary and granted it free use of the land where the plant was located, with the plant being powered by renewable sources produced by the parent company
• The company argued the cost was business related since the subsidiary used Alfa’s oils and fats to power the plant, making the investment functional to the business activity

Source: eutekne.info

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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