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16th November 2020
Banking & Finance External Relations & Trade Tax

Analysis: “Do mixed holding companies have the right to deduct the input VAT paid when changing the initial intended use of the acquired services?” by Jordi Sol

On 12 November 2020, the Court of Justice of the European Union (CJEU) ruled that the actual use of acquired services prevails over the initial intention for the purposes of the right to deduct for a mixed holding company. Under this approach, the input VAT paid on services by a mixed holding company to carry out exempt transactions although the initial intention was to provide VAT taxable transactions (management services to its subsidiaries) is not deductible.

The facts in Sonaecom (C-42/19) can be found here.

In the first question, the CJEU confirms the nature of preparatory activities as being economic activities in and of themselves, hence conferring on Sonaecom the status of taxable person. Moreover, the CJEU pointed

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