Unrestricted VAT Deduction For Active Holding Companies

Background

The background was the following. Marle Participations ("Marle") is the holding company of the Marle group. In addition to its shareholding activities, Marle also rents out buildings to group subsidiaries. In the context of a group restructuring, Marle was involved in acquisitions and sales of shares in subsidiaries. In this respect, Marle applied a full input VAT deduction right on expenses relating to this restructuring which was later rejected by the French tax authorities. Marle pought the case before the Conseil d'Etat which referred to the CJEU on the question of the input VAT deduction on restructuring expenses by a holding company performing taxable real property lease activities for its subsidiaries.