Involvement of a holding company in the management of its subsidiaries

The holding company “MVM”, responsible for the management of the group formed with its subsidiaries, has purchased on several occasions various services (legal, management, public relations services) supplied either to itself, in the context of its rental activity subject to VAT, or to the entire group and finally, to some of its subsidiaries. The holding company has recovered VAT on all of these transactions.

The CJEU considers that, insofar as the holding company has not recharged the price of the services used in the interest of the entire group or used by some of its subsidiaries, the involvement of the holding company in the management of its subsidiaries does not constitute an “economic activity” under the VAT Directive.

In these circumstances, the holding company cannot recover input VAT paid for these services, because these services relate to operations outside the scope of VAT. This solution is applicable even though the holding company also performed an “economic activity” (rental activity). The Court applies, in this order, the general VAT principles, whose implementation can nevertheless cause practical difficulties within groups where it is not possible to recharge all supplies of services involving subsidiaries.

Michel Guichard

Michel Guichard, as a Partner, was responsible for the Indirect Tax (VAT Customs) practice and then for the Tax Litigation practice dedicated to assisting clients in national and EU litigation. […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. He regularly assists his clients in the […]

Nicolas Kazandjian

Barrister registered with the Hauts-de-Seine Bar, he started my career in the indirect tax service line of Deloitte Société d’Avocats in 1999. My current position is Director. My area of […]

Vanessa Irigoyen

With more than 16 years of experience, Vanessa has extensive expertise in the implementation of international efficiency business models for customs, export control and indirect tax purposes. Her functions notably […]

Anne Gerometta

Anne Gerometta is Indirect Tax Partner of Deloitte Société d’Avocats. She advises international groups on their indirect tax issues. Anne notably assists operators from the Financial Sector – bank, insurance […]

Delphine Nicault

Delphine Nicault is an Attorney-at-Law at the French Bar. She joined Deloitte in 2002 and assists her clients on day-to-day VAT issues. She developed an expertise in the VAT and […]