The sale of shares is exempt from VAT and therefore the VAT authorities generally reject the VAT deduction on the costs linked to such sale. This position was moderated by the CJEU (Skatteverket c/ AB SKF Case, C-29/08), who confirmed that there is a right to deduct input VAT on the costs related to a disposal of shares if there is a direct and immediate link between these costs and the overall VAT taxable activities of the company. The Belgian Ministry of Finance confirmed that VAT deduction could be granted in some circumstances on the basis of the SKF case.
In this recent judgment, the Court of Appeal confirmed that input VAT on costs related to the sale of shares is deductible to the extent that the proceeds of the sale are used to perform taxable activities. This is a practical application of the SKF case.
As a reminder, in case of acquisition of shares, VAT deduction is allowed if there is an involvement in the management of the company owned (management fees invoiced). VAT deduction of costs linked to sale/acquisition of shares remains a complex issue. European and Belgian Court cases can be used to defend the VAT deduction.
In case you have any questions on this topic, please don’t hesitate to contact your regular PwC VAT advisor.