Court of Justice 6 September 2018, C-502/17 (C&D Foods Acquisition ApS v Skatteministeriet.)

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In this Opinion (Case C-502/17, C&D Foods Acquisition ApS v Skatteministeriet), Advocate General Kokott opines that the disposal of shares in a sub-subsidiary, by which a holding company terminates its taxable management services activity, constitutes an economic activity within the meaning of Article 9(1) of Directive 2006/112/EC (the VAT Directive), consistent with the principle of equal treatment between the commencement and termination of economic activity. However, the AG further opines that a holding company cannot claim a deduction of input VAT under Article 168 of the VAT Directive for consultancy services incurred in connection with a proposed (but uncompleted) share sale if those services are directly and immediately linked to the intended transaction, which is exempt from VAT under Article 135(1)(f) of the VAT Directive as a transaction in shares; the determination of that direct and immediate link is a matter for the national court. Only where no such link to the specific exempt transaction can be established should the national court examine whether the expenditure qualifies as a general cost component of the taxable person's overall economic activity, with the possibility of apportionment where the costs also relate to purely non-economic holding activities.AI