Opinion of the Advocate General — ECLI:EU:C:2009:90
Date: 2009-02-12
Language of the case: Swedish
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Sweden

Summary of the Judgment 1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Economic activities within the meaning of Article 4 of the Sixth Directive – Meaning (Council Directives 77/388, Arts 2(1) and 4(1) and (2), and 2006/112, Arts 2(1) and 9(1)) 2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Exemptions provided for in the Sixth Directive – Transactions in securities covered by Article 13B(d)(5) (Council Directives 77/388, Art. 13B(d)(5) and 2006/112, Art. 135(1)(f)) 3. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax (Council Directives 77/388, Art. 17(1) and (2), and 2006/112, Art. 168) 1. Articles 2(1) and 4(1) and (2) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 95/7, and Articles 2(1) and 9(1) of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that where a parent company disposes of all the shares in a wholly-owned subsidiary and of its remaining shareholding in a controlled company which was previously wholly owned by it, and where it has supplied to those companies services that are subject to value added tax, that disposal is an economic activity coming within the scope of those directives. By the disposal of all its shares in a subsidiary and in a controlled company, a parent company brings to an end its holdings in those companies. Where that parent company, as the parent company of an industrial group, was involved in the management of that subsidiary and that controlled company by supplying to them, for consideration, a variety of administrative, accounting and marketing services, in respect of which it was liable to pay VAT, that disposal, carried out in order to enable that parent company to restructure a group of companies, can be regarded as a transaction that consists in obtaining income on a continuing basis from activities which go beyond the compass of the simple sale of shares. That transaction has a direct link with the organisation of the activity carried out by the group and constitutes accordingly the direct, permanent and necessary extension of the taxable activity of the taxable person. Such a transaction consequently comes within the scope of VAT. However, to the extent that the disposal of shares can be regarded as equivalent to a transfer of a totality of the assets of an undertaking or part thereof, within the meaning of Article 5(8) of the Sixth Directive, as amended by Directive 95/7, or of the first paragraph of Article 19 of Directive 2006/112, and provided the Member State concerned has exercised the option provided for in those provisions, that transaction does not constitute an economic activity subject to VAT. Those conclusions are not affected by the fact that the disposal of shares is carried out by way of several successive transactions. (see paras 32-33, 41, operative part 1, 4) 2. Where a parent company disposes of all the shares in a wholly-owned subsidiary and of its remaining shareholding in a controlled company which was previously wholly owned by it, and where it has supplied to those companies services that are subject to VAT, that disposal must be exempted from VAT pursuant to Article 13B(d)(5) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 95/7, and Article 135(1)(f) of Directive 2006/112 on the common system of value added tax. The words ‘transactions … in securities’ within the meaning of those provisions refer to transactions which are liable to create, alter or extinguish parties’ rights and obligations in respect of securities, excluding administrative, material or technical services and activities involving the supply of financial information which do not alter the legal and financial position of the parties. Since a sale of shares changes the legal and financial position of the parties to the transaction, it is therefore, in so far as it comes within the scope of VAT, covered by the exemption laid down those provisions. Those conclusions are not affected by the fact that the disposal of shares is carried out by way of several successive transactions. (see paras 48-50, 53, operative part 2, 4) 3. There is a right, under Article 17(1) and (2) of Sixth Directive 77/338 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 95/7, and under Article 168 of Directive 2006/112, to deduct input value added tax paid on services supplied for the purposes of a disposal of shares by a parent company of all the shares in a wholly-owned subsidiary and of its remaining shareholding in a controlled company which was previously wholly owned by it, if there is a direct and immediate link between the costs associated with the input services and the overall economic activities of the taxable person. It is for the referring court to take account of all the circumstances surrounding the transactions at issue and to determine whether the costs incurred are likely to be incorporated in the price of the shares sold or whether they are among only the cost components of transactions within the scope of the taxable person’s economic activities. Those conclusions are not affected by the fact that the disposal of shares is carried out by way of several successive transactions. (see para. 73, operative part 3-4)