Entitlement to deduction of VAT on acquisition costs and costs of sales of participations
As an entrepreneur, you only perform activities that are subject to VAT and are therefore entitled to deduct the input tax. You are planning to buy or sell a participation and are incurring costs to do so. Then you are also entitled to a VAT deduction, right? Or perhaps not?
This may seem a simple question, but nothing could be further from the truth.
VAT entrepreneur when holding shares?
To be entitled to a deduction of input tax, you must first qualify as a VAT entrepreneur. By buying or selling shares you become or used to be a shareholder. In principle, the purchase or holding of shares does not result in the qualification as VAT entrepreneur. However, if a shareholder – besides the holding of shares – is also involved in the management of its participation(s) and receives a remuneration for this management activity, the shareholder performs an economic activity and qualifies as a VAT entrepreneur.
There is quite some discussion about the interpretation of the term “involvement”. This is the case, for example, when a shareholder performs management activities for the participation against a remuneration, but also if the shareholder rents out real estate or performs supporting administrative services to its participation.
Whitepaper: Entitlement to deduction of VAT on acquisition costs and costs of sales of participations
In this whitepaper, we discuss the points of attention for the right to deduct VAT on acquisition costs and the costs of sales of a participation. If you are about to embark on a buying or selling process or are in the middle of one, please contact your VAT consultant for custom-made advice.
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