Keywords
Summary

Keywords

1. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Economic activity within the meaning of Article 4 of the Sixth Directive - Involvement of a holding company in the management of its subsidiaries - Included, provided transactions are carried out which are subject to VAT by virtue of Article 2 of the directive

(Council Directive 77/388, Arts 2 and 4(2))

2. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Holding company carrying out both taxable and exempt transactions - Expenditure arising from the purchase of services in the context of the acquisition of a shareholding in a subsidiary - Right to deduct - Conditions

(Council Directive 77/388, Art. 17(2), (3) and (5))

3. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Sixth Directive - Scope - Receipt of dividends - Excluded

(Council Directive 77/388, Art. 2)

Summary

1. The involvement of a holding company in the management of companies in which it has acquired a shareholding constitutes an economic activity within the meaning of Article 4(2) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes where it entails carrying out transactions which are subject to value added tax by virtue of Article 2 of that directive, such as the supply by a holding company to its subsidiaries of administrative, financial, commercial and technical services.

( see para. 22, and operative part 1 )

2. Expenditure incurred by a holding company in respect of the various services which it purchases in connection with the acquisition of a shareholding in a subsidiary forms part of its general costs and therefore has, in principle, a direct and immediate link with its business as a whole. Thus, if the holding company carries out both transactions in respect of which value added tax is deductible and transactions in respect of which it is not, it follows from the first subparagraph of Article 17(5) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes that it may deduct only that proportion of the value added tax which is attributable to the former.

( see para. 35, and operative part 2 )

3. Since the receipt of dividends is not the consideration for any economic activity, within the meaning of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, it does not fall within the scope of VAT.

( see para. 41, 45, and operative part 3 )