- VAT Treatment of Share Transactions: Generally, the acquisition, holding, and sale of shares are not considered taxable business activities under VAT; however, if a parent company actively manages its subsidiaries and provides taxable services, the sale of shares may be treated as a taxable business activity.
- VAT Exemption and Deduction Dilemma: While share disposal transactions are typically exempt from VAT, the right to deduct VAT on related advisory or legal services depends on the nature of the costs. If these costs are directly linked to exempt transactions, no deduction is allowed; if they are part of general overhead costs related to the entire business, VAT on these services may be deductible.
- Principle of VAT Neutrality: According to the principle of neutrality, taxpayers can deduct VAT on purchases related to taxable activities. The CJEU ruling (C-249/17) clarified that if a company intends to provide taxable management services post-acquisition, it can deduct input VAT on advisory expenses incurred during the share purchase process, even if those services are not ultimately provided.
Source Daniel Więckowski
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