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04 February 2019 / news

Investment Management News Update – End of year 2018

The Investment Management News Updates: an overview in which our Investment Management Team highlights recent developments.

Guideline ruling commission on proportionate use of warrants

Legislative dates for your diary









VAT update

Developments in case law

The European Court of Justice (ECJ) has issued judgments concerning recovery of VAT on costs incurred in connection with acquisitions and disposals of shareholdings. This concerns the cases Ryanair (17 October 2018, see our newsflash) and C&D Foods (8 November 2018, see our newsflash).

The Ryanair case concerned recovery of VAT on costs in connection with an envisaged acquisition (i.e. abort costs) and may be of particular interest for private equity funds that qualify as a VAT taxable person but are not entitled to (fully) recover VAT on general costs (for example due to being engaged in VAT exempt financing activities such as shareholder loans). In practice, acquisition and abort costs were – prior to the Ryanair case – considered general costs from a VAT perspective (provided that after acquisition, VAT taxed services would be rendered to the target company). This meant that if the acquirer was not entitled to (fully) recover VAT on general costs, VAT on acquisition and abort costs was also not (fully) recoverable. In the Ryanair case the ECJ ruled that acquisition (and abort) costs are not general costs and VAT on such costs is fully recoverable if the acquisition has (or would have) resulted in a VAT taxed supply of services. Depending on the situation, this judgment could allow funds that meet certain criteria to take the position that VAT on acquisition and abort costs is fully recoverable, even if such fund is not entitled to (fully) recover VAT on its general costs.

The C&D Foods case concerned recovery of VAT on costs incurred in connection with an envisioned disposal of shares. The ECJ ruled that VAT on disposal costs is in principle not recoverable, which is in line with the current practice. However, according to the ECJ, (partial) recovery of VAT on the disposal costs may be possible if the proceeds from the disposal are used to enhance or expand the VAT taxed activities of the seller or its group.

Other developments

Recent discussions with the Dutch tax authorities have revealed that they are re-evaluating their view on VAT aspects of private equity fund structures. This concerns in particular views on the VAT position of private equity funds as expressed in a report by the Dutch tax authorities in June 2017 (‘Rapport private equity en fiscaliteit’, click here for the full document – Dutch only). We are monitoring this process closely and will provide further updates on its progress.


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Although this publication has been compiled with great care, Loyens & Loeff N.V. and all other entities, partnerships, persons and practices trading under the name  'Loyens & Loeff', cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice.

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