Corporate transactions and flotations – Improved VAT Recovery
Many Companies issuing shares will be able to recover more VAT on costs associated with share issues, following the ECJ’s decision in the Kretztechnik AG case. The ECJ followed the opinion of its Advocate General and found that the issue of shares should be ignored for VAT purposes and that VAT incurred on associated costs should be recoverable in the same way as other overhead VAT. Therefore, for a business like Kretztechnik, which charges VAT on all its sales, this VAT should be fully recoverable. Companies that have issued shares in the last three years and have not recovered all the VAT on related costs should consider making a refund claim. It is possible that the judgment may have wider implications and, depending on the outcome of other cases, there could be opportunities for refunds of VAT over longer periods.
