Abortive transactions: actual use takes precedence over initial intention
In Sonaecom SGPS SA v Autoridade Tributária e Aduaneira(Case C-42/19) (12 November 2020) the CJEU held that VAT incurred by a holding company on market research services relating to an unfulfilled share purchase was recoverable. However VAT on investment banking fees for raising capital which ended up being loaned to a parent company was irrecoverable.
Sonaecom (S) was a Portuguese holding company. It incurred VAT on both a market study and investment banking fees for putting together a bond loan. The market study was conducted with a view to acquiring shares in a telecoms operator to which it would provide management services. The capital raised by the bond issue was initially intended to be used to acquire shares in the target telecom operator in order to ultimately supply it with taxable services.
S’s intention to acquire the shares...
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Abortive transactions: actual use takes precedence over initial intention
In Sonaecom SGPS SA v Autoridade Tributária e Aduaneira(Case C-42/19) (12 November 2020) the CJEU held that VAT incurred by a holding company on market research services relating to an unfulfilled share purchase was recoverable. However VAT on investment banking fees for raising capital which ended up being loaned to a parent company was irrecoverable.
Sonaecom (S) was a Portuguese holding company. It incurred VAT on both a market study and investment banking fees for putting together a bond loan. The market study was conducted with a view to acquiring shares in a telecoms operator to which it would provide management services. The capital raised by the bond issue was initially intended to be used to acquire shares in the target telecom operator in order to ultimately supply it with taxable services.
S’s intention to acquire the shares...
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