Deduction Of Input VAT On Abort Costs

On 3 May 2018, Advocate General ("AG") Kokott delivered her opinion in the Ryanair case (C-249/17) concerning the deduction of input VAT on costs incurred in relation to an unsuccessful acquisition of a company's entire share capital.

Background

Ryanair, an airline company established in Ireland, intended to take over a competitor, the Irish airline Aer Lingus. The takeover failed due to competition law issues. However, Ryanair requested the deduction of the input VAT on costs related to this failed acquisition, based on the intended economic activity, i.e. the supply of management services to Aer Lingus. Such deduction was rejected by the Irish tax authorities (the Revenue Commissioners) and after initial court proceedings, the case was brought before the High Court which referred the question of the input VAT deduction right for abort costs in a share deal to the European Court of Justice ("ECJ") for a preliminary ruling.