The company Ginger held shares in its subsidiaries. The company took a management role with respect of all of its subsidiaries, providing them, to this effect, with services subject to VAT. Ginger also received dividends. The right to deduct VAT on costs incurred by the company had been, in part, challenged by the French tax authorities.
With the case before them for a second time in the course of the litigation, the Conseil d’Etat held that the Administrative Court of Appeal had made an error of law in holding that Ginger could not deduct the full amount of input VAT incurred solely on the basis that it received from its subsidiaries dividends which were outside the scope of VAT.
The Conseil d’Etat is adopting the position set out by the CJEU (Larentia + Minerva, Marenave Schiffahrts, joined cases C-108/14, C-109/14), thus completely overturning its previous case law. Thus, the receipt of dividends by a holding company which takes a management role in all of its subsidiaries is not liable to suffer a reduction of its right to VAT deduction.