Group-Linked Companies’ Margin VAT Increase via Subsidiary in Travel Sector Deemed Tax Abuse

• A company created a subsidiary to buy airline tickets and resell them at a markup to the parent company, aiming to reduce the parent’s margin VAT.
• The resale of tickets was VAT-exempt, and the markup generated significant profit in the subsidiary, which was later distributed to the parent.
• The Danish Tax Appeals Agency (Landsskatteretten) ruled the subsidiary was not an independent taxable entity, as its activities were carried out for the parent’s account and risk.
• The artificial structure was disregarded for VAT purposes, and the transactions were treated as if the parent company had bought the tickets directly from airlines.
• The decision upheld the tax authority’s original ruling.

Source: info.skat.dk

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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