Opinion of the Advocate General — ECLI:EU:C:2025:149
Date: 2025-03-06
Language of the case: Swedish
Procedure: Reference for a preliminary ruling
Origin: Sweden

Translation C-808/23 – 1 
Case C-808/23 
Request for a preliminary ruling 
Date lodged: 
27 December 2023 
Referring court: 
Högsta förvaltningsdomstolen (Sweden) 
Date of the decision to refer: 
21 December 2023 
Appellant: 
Högkullen AB 
Respondent: 
Skatteverket 
  
[…] 
APPELLANT 
Aktiebolaget Högkullen […] 
[…] Göteborg 
RESPONDENT 
Skatteverket 
[…] 
JUDGMENT UNDER APPEAL 
Judgment of the Kammarrätten i Göteborg (Administrative Court of Appeal, 
Gothenburg, Sweden) of 3 March 2021 […] 
SUBJECT MATTER 
EN 
REQUEST FOR A PRELIMINARY RULING OF 21. 12. 2023 – CASE C-808/23 
 
2  
Value added tax (‘VAT’) and tax surcharge; request for a preliminary ruling from 
the Court of Justice of the European Union 
The case is presented. 
The Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden) 
makes the following 
ORDER 
A request for a preliminary ruling in accordance with Article 267 TFEU is to be 
made to the Court of Justice of the European Union as set out in the annexed 
request for such preliminary ruling (annex to the minutes). 
[…] 
ANNEX 
Request for a preliminary ruling in accordance with Article 267 TFEU 
concerning the interpretation of Articles 72 and 80 of Council Directive 
2006/112/EC of 28 November 2006 on the common system of value added tax 
(‘the VAT Directive’) 
Introduction 
1 The Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden) 
seeks a preliminary ruling in order to clarify how Articles 72 and 80 of the VAT 
Directive are to be interpreted as regards the determination of the open market 
value of services supplied by a parent company to its subsidiary. The questions 
referred for a preliminary ruling have arisen in a case concerning the calculation 
of the taxable amount in which the Skatteverket (Swedish Tax Agency) applied 
national rules on revaluation introduced on the basis of Article 80 of the VAT 
Directive. 
Relevant provisions of European Union law 
2 It follows from Article 73 of the VAT Directive that, as a general rule, the taxable 
amount is the consideration for goods or services. 
3 Under Article 80, Member States may, in order to prevent tax evasion or 
avoidance, take measures to ensure that, in certain defined cases, the taxable 
amount corresponds to the open market value. In accordance with point (a) of 
paragraph 1, this applies, inter alia, where there are management or ownership ties 
HÖGKULLEN 
 
3 
as defined by the Member State, the consideration is lower than the open market 
value and the recipient of the supply does not have a full right of deduction. 
4 For the purposes of applying the VAT Directive, the concept of ‘open market 
value’ is defined in Article 72. With regard to services, the first paragraph 
provides that ‘open market value’ means the full amount that, in order to obtain 
the services in question at that time, a customer at the same marketing stage at 
which the supply of services takes place, would have to pay, under conditions of 
fair competition, to a supplier at arm’s length within the territory of the Member 
State in which the supply is subject to tax. Where no comparable supply of 
services can be ascertained, ‘open market value’ means, according to the second 
paragraph of Article 72, an amount that is not less than the full cost to the taxable 
person of providing the service. 
Relevant provisions of national law 
5 During the accounting periods at issue in the case, the mervärdesskattelagen 
(1994:200) (Law on value added tax) was in force. That law was replaced by a 
new mervärdesskattelag (2023:200) (Law on value added tax), but the previous 
law still applies, in so far as is relevant here, to situations prior to the entry into 
force of the new law. The applicable provisions of the 1994 Law are set out 
below. In essence, the new law contains equivalent provisions. 
6 It follows from Paragraphs 2 and 3 of Chapter 7 that, as a general rule, the taxable 
amount is the consideration for goods or services. 
7 In accordance with Paragraph 3a of Chapter 7, the taxable amount is the open 
market value where the consideration is lower than the open market value, the 
customer does not have a full right of deduction, the vendor and the customer are 
connected to each other and the taxable person is not able to demonstrate to the 
requisite legal standard that the consideration is in line with market conditions. 
8 The first subparagraph of Paragraph 9 of Chapter 1 provides that, with regards to 
services, open market value means the full amount that a customer of a service, at 
the same marketing stage at which the supply of services takes place, would have 
to pay, at the time of the supply and under conditions of fair competition, to a 
vendor at arm’s length for such a service situated within the national territory. 
According to the second subparagraph, where no comparable supply of services 
can be ascertained, the open market value is an amount which is not less than the 
full cost to the taxable person of providing the service. 
The facts of the case 
9 The case concerns Aktiebolaget Högkullen, the parent company of a real estate 
management group. The real estate management is carried out by its subsidiaries. 
In 2016, it had 19 direct and indirect subsidiaries. 
REQUEST FOR A PRELIMINARY RULING OF 21. 12. 2023 – CASE C-808/23 
 
4  
10 The activities of the subsidiaries are partially exempt from tax and, therefore, they 
are not entitled to deduct in full the input VAT paid. The parent company is 
actively involved in the management of all subsidiaries by providing them with 
various main office functions for consideration. That economic activity is fully 
subject to VAT. No other economic activity is undertaken by the parent company, 
and it does not declare any income other than that generated by the provision of 
intra-group services. 
11 In 2016, the parent company provided its subsidiaries with management, financial, 
real estate management, investment, information technology and personnel 
management services. The parent company received a total of approximately 
SEK 2.3 million as consideration for the services and declared output VAT on the 
whole of the consideration. 
12 According to the parent company, the amount of consideration was determined by 
the application of a cost-plus method. The company states that the method 
consists of remunerating an amount corresponding to the costs incurred by the 
parent company for purchasing and providing the services and a mark-up for 
profit. According to the company, it applied an allocation key whereby a specific 
percentage of its management costs and costs such as those for premises, 
telephone, information technology, corporate hospitality and travel are considered 
as attributable to the services provided to the subsidiaries. The company has 
further indicated that it considered that shareholder costs, such as the costs of 
closing the accounts, audit and general meeting costs, and the costs of raising 
capital, were not linked to the services provided and that, consequently, those 
costs were entirely excluded from the calculation of the consideration. Those costs 
included the costs associated with a planned new issuance of shares and stock 
exchange listing. 
13 The parent company’s own costs during the same year amounted to approximately 
SEK 28 million. Approximately half of that amount related to acquisition 
expenses subject to VAT, while the remainder related to VAT-exempt acquisition 
costs and other VAT-exempt costs, such as wage costs. The company deducted all 
the input VAT on acquisitions in respect of which VAT had been charged, that is 
to say, including the tax on the costs of raising capital and shareholder costs. 
14 Taking the view that the services had been supplied to the subsidiaries at a price 
that was less than the open market value, the Tax Agency decided to revalue and 
increase the taxable amount. According to the Tax Agency, there were no 
comparable supplies of services on the open market and the taxable amount was 
therefore set at an amount corresponding to the costs incurred by the company in 
providing those services. The Agency took the view that all the costs incurred by 
the company for the year in question, that is to say, approximately SEK 28 
million, had to be regarded as attributable to the services supplied and the basis 
for the parent company’s output VAT was therefore set at that amount. That 
increase was subject to a tax surcharge. 
HÖGKULLEN 
 
5 
15 The parent company brought an action before the Förvaltningsrätten i Göteborg 
(Administrative Court, Gothenburg, Sweden), which upheld the appeal and 
annulled the Tax Agency’s decision. By way of justification, the Administrative 
Court stated the following. The Tax Agency has not demonstrated to the requisite 
legal standard that the company sold intra-group services below the open market 
value. It is not self-evident that shareholder costs are to be regarded as costs 
related to the provision of administrative services. The fact that the company did 
not declare any income other than that from the intra-group services and that it 
deducted input VAT on all its purchases has, as such, no bearing on the estimate 
of the expenditure incurred for the provision of those services. Given that the 
company is the parent company of a group of companies and that a large 
proportion of its costs in the year in question were made up of the costs related to 
a possible stock exchange listing, it is unlikely that the costs incurred by the 
company for the provision of intra-group services comprised all of the costs which 
it incurred in that year. 
16 The Tax Agency brought an appeal before the Kammarrätten i Göteborg 
(Administrative Court of Appeal, Gothenburg), which upheld its appeal and 
upheld the Agency’s decision on the following grounds. 
17 The Tax Agency has the burden of proving that the consideration charged to 
subsidiaries is lower than the open market value. Since these are intra-group 
services, it should be sufficient that the Tax Agency is able to demonstrate that the 
consideration for those services was lower than the costs of providing them. The 
provision on the revaluation of the taxable amount is a tax avoidance rule with the 
aim of uncovering the price manipulation itself. It is therefore reasonable that the 
valuation of the taxable amount is based on what the taxable person itself has 
regarded as forming part of the taxable economic activity. The planned new 
issuance of shares and stock exchange listing were intended to raise finance for 
further acquisitions of companies and real estate. The raising of capital has 
therefore benefited the entire group. By requesting the deduction of input tax on 
all purchases, the company expressed the view that that expenditure was part of its 
economic activity. In the case of a parent company whose sole activity consists of 
supplying taxable services to its subsidiaries, input tax cannot be fully deductible 
on the ground that the expenditure in question forms part of the overheads of the 
economic activity, while at the same time such a transaction is considered to have 
no connection with the taxable output transactions of that activity. Thus, all the 
costs incurred by the parent company are an integral part of the price of the 
management of the subsidiaries and should be included when determining the 
open market value of the intra-group services. 
REQUEST FOR A PRELIMINARY RULING OF 21. 12. 2023 – CASE C-808/23 
 
6  
Positions of the parties 
Aktiebolaget Högkullen 
18 Aktiebolaget Högkullen brought an appeal against the judgment of the 
Administrative Court of Appeal, seeking to have that judgment set aside and the 
decision of the Administrative Court upheld. It maintains that the consideration 
received is not lower than the open market value of the services in question and 
the Tax Agency’s decision to revalue the taxable amount is therefore unfounded. 
The company submits the following. 
19 The Tax Agency’s contention that the services provided constitute a single joined-
up service that is unique to the group and that there is therefore no comparable 
service on the open market has no basis in the case-law of the Court of Justice. 
The VAT Directive is based on the principle that each transaction must be 
regarded as distinct and independent, and the Court of Justice has also recognised 
that the active management of subsidiaries may consist of various types of 
services which constitute an economic activity (see, for example, Marle 
Participations, C-320/17, EU:C:2018:537). 
20 The services which the company provided to its subsidiaries are not unique to the 
group and its activities. Outsourcing various functions is common, and all of the 
services at issue in the present case are of such a nature that they can be procured 
on the open market from different suppliers. There are therefore comparable 
services on the open market, and it is possible to set a market price for each 
separate service. To regard the management of subsidiaries as a joined-up unique 
service that can only be provided within a group of companies is contrary to the 
principle of neutrality and implies that the general rule for determining the open 
market value never applies to the provision of such services. 
21 The company applies the cost-plus method to determine the price of the services it 
provides to its subsidiaries. The methodology is a generally accepted cost-based 
pricing model with an arm’s length mark-up. The arm’s length principle is 
internationally recognised and means that prices and other conditions agreed 
between closely connected companies in cross-border transactions must 
correspond to what independent companies would have agreed in the same 
situation. 
22 The company’s raising of capital is of no benefit to the subsidiaries and has no 
connection to the performance of the various main office functions. According to 
the OECD’s guidelines on intra-group services, it is not in line with the arm’s 
length principle to charge shareholder costs to subsidiaries. The Tax Agency 
constructs a fictitious open market value which will vary considerably from year 
to year where, as in the present case, a one-off cost occurs that has no connection 
to the actual cost of producing or providing the services. Because the company 
adds a mark-up to the cost price of the services, the company’s overheads are 
HÖGKULLEN 
 
7 
taken into account in pricing over time by including them in the ‘plus’ in the cost-
plus method. 
23 An open market value that is determined according to the cost-plus method does 
not conflict with what constitutes an open market value within the meaning of the 
VAT Directive. There is no legal basis for concluding that the amount of input 
VAT deduction must be linked to the pricing of a service. In its application of the 
rules on revaluation, the Tax Agency relies on the case-law of the Court of Justice 
regarding the right to deduct. That is incorrect, because the rules on revaluation 
are entirely independent of the rules on the right to deduct. Furthermore, the effect 
of the Tax Agency’s decision is that expenditure which is not subject to input 
VAT, such as wage costs, is also included in the taxable amount and subject to 
output VAT. The way the Tax Agency applies the rules on revaluation leads to a 
result which is disproportionate to the objective pursued by those rules. 
The Tax Agency 
24 The Tax Agency asserts that the appeal should be dismissed and submits the 
following. 
25 The active management of its subsidiaries by the parent company must be 
regarded as a single joined-up service, the equivalent of which does not exist 
between independent parties on the open market. Even if it were to be considered 
that several separate services are provided, they must be considered to be so 
specific to the group in question that there are no comparable services on the open 
market. In intra-group relationships, pricing may in fact be influenced by factors 
that are irrelevant in the context of a corresponding external transaction. Pricing 
within a group of companies may therefore deviate from what would have been 
agreed between independent parties. The content of intra-group services may also 
be influenced by factors that are irrelevant to external transactions. This leads to 
the conclusion that if a parent company incurs high costs for producing a service 
provided to its subsidiaries, then it is not the same type of service as an external 
supplier could provide; rather the parent company’s service is of a different 
character and contains much more. 
26 Where the open market value is calculated on the basis of the costs incurred by the 
parent company, this should be done in the same way as the taxable amount is 
determined when services are used for purposes other than those of the business. 
This means that the cost of providing the service is considered to be the proportion 
of the fixed and running business costs that relate to the service. If it can be 
established that the input tax relating to expenditure is deductible on the ground 
that those costs form part of the overheads of the economic activity, then there is a 
link between the cost and the output transactions. If such a link exists in the 
context of the assessment of the right to deduct, then there is a corresponding link 
in the context of a revaluation. Consequently, input tax cannot be regarded as 
wholly deductible on the ground that the cost forms part of the overheads of the 
REQUEST FOR A PRELIMINARY RULING OF 21. 12. 2023 – CASE C-808/23 
 
8  
economic activity while not being linked to the output transactions in the context 
of a revaluation. 
27 It is clear from the case-law of the Court of Justice that the costs of raising capital 
may constitute general overheads of the economic activity (Kretztechnik, 
C-465/03, EU:C:2005:320). In the present case, the parent company deducted all 
input tax relating to its acquisitions, including tax relating to the costs of raising 
capital and shareholder costs. As the parent company’s economic activity consists 
exclusively of providing services to its subsidiaries, those costs must be 
considered to have indirectly benefited the subsidiaries. 
28 The provisions on the revaluation of the taxable amount were introduced to 
counter tax evasion and the loss of VAT revenue as a result of price manipulation. 
In the present case, the parent company deducted the input tax paid in respect of 
general overheads, but did not take those costs into account in the pricing of the 
output transactions. The subsidiaries do not have a full right of deduction and 
would therefore not have been able to deduct all the input tax if they had 
purchased the services externally or raised the capital themselves. Accepting that 
way of pricing the services would therefore lead to a loss of tax revenue. 
29 The principles that govern income taxation are not applicable in the field of VAT, 
since they are two separate systems with different objectives and different 
approaches. The Court of Justice has held that the OECD Model Tax Convention 
is not relevant for the purposes of interpreting the VAT Directive, since it relates 
to direct taxation (FCE Bank, C-210/04, EU:C:2006:196, paragraph 39). 
Consequently, even if that way of pricing may be accepted for income tax 
purposes, it may be necessary to revalue the taxable amount in the context of a 
VAT assessment. 
The need for a preliminary ruling 
30 In the present case, it is undisputed that the parent company and its subsidiaries 
are connected to each other in such a way that it can be assumed that the rules 
relating to the revaluation of the taxable amount are applicable and that the 
subsidiaries do not have a full right of deduction of input VAT. Furthermore, 
Article 80 of the VAT Directive makes revaluation subject to the condition that 
the consideration provided be lower than the open market value. By this request 
for a preliminary ruling, the Supreme Administrative Court seeks guidance on 
how to assess whether that is the case. 
31 Under the first paragraph of Article 72 of the VAT Directive, the open market 
value of a service means the amount the customer of the service would have had 
to pay a supplier at arm’s length in order to obtain the service in question. Under 
the second subparagraph, if no comparable supply of services can be ascertained, 
the open market value is to mean an amount which is not less than the full cost of 
providing the service. 
HÖGKULLEN 
 
9 
32 The parties to the case disagree as to whether the first paragraph of Article 72 may 
be applied in order to determine the open market value of services provided by a 
parent company to its subsidiaries. Aktiebolaget Högkullen asserts that the 
services provided must each be assessed separately and that corresponding 
services can be acquired on the open market. By contrast, the Tax Agency 
maintains that the active management of the subsidiaries by the parent company is 
a single joined-up service, the equivalent of which does not exist between 
independent parties on the open market. The Tax Agency also asserts that both the 
pricing and content of intra-group services are influenced by factors that are 
irrelevant to external transactions. According to the Tax Agency, a comparable 
supply therefore cannot be ascertained, irrespective of whether one or more 
services are considered to have been provided to the subsidiaries. 
33 The question whether in this specific case comparable supplies of services 
actually exist on the open market is fundamentally a question of fact on which the 
Court of Justice does not rule. The Tax Agency, however, holds the view, in 
principle, that services provided by a parent company, as an active holding 
company, to its subsidiaries are, by their very nature, such that no comparable 
supply of services may be ascertained on the open market. According to the Tax 
Agency, those cases therefore entail unique services whose open market value 
cannot be determined in accordance with the first paragraph of Article 72. 
34 The Tax Agency’s position is based on the previous case-law of the Supreme 
Administrative Court. In the case HFD 2014 ref. 40, the court held that a 
prerequisite for revaluation of the taxable amount is that the Tax Agency show 
that the consideration is lower than the open market value. Furthermore, the court 
held that, in the case of intra-group transactions, the Tax Agency may discharge 
its burden of proof by demonstrating that the consideration is lower than the cost 
of providing the services, without first having to show that there are no 
comparable services provided by external service providers. The court justified 
this by the fact that pricing in intra-group transactions may be influenced by 
factors that are irrelevant in the context of a corresponding external transaction 
and thus may deviate from what would have been agreed between independent 
parties. 
35 The Supreme Administrative Court considers it necessary for the Court of Justice 
to clarify whether it is compatible with Articles 72 and 80 of the VAT Directive to 
assume, as the Tax Agency did, that there are no comparable supplies of services 
on the open market as regards the type of services at issue in the present case. The 
question which arises is therefore whether it is compatible with the VAT 
Directive, with reference to the uniqueness of those services, always to determine 
the open market value on the basis of the alternative rule in the second paragraph 
of Article 72. 
36 Under the second paragraph of Article 72, the open market value is an amount that 
is not less than the full cost to the taxable person of providing the service. The 
parties to the case also disagree as to how that provision is to be understood. 
REQUEST FOR A PRELIMINARY RULING OF 21. 12. 2023 – CASE C-808/23 
 
10  
According to Aktiebolaget Högkullen, the cost-plus method it used to calculate 
the consideration results in the latter being at least equal to the company’s costs of 
providing the services. The Tax Agency maintains that all the fixed and variable 
costs of the parent company constitute costs for the provision of the services. 
37 In support of its argument, the Tax Agency refers to the fact that, in the present 
case, the parent company’s sole economic activity consisted of the active 
management of its subsidiaries and that it deducted all input tax charged on its 
own expenditure, including tax relating to the costs of raising capital and 
shareholder costs. According to the Tax Agency, that means that the total 
expenditure of the parent company must be regarded as constituting the cost 
incurred by it in providing the services. 
38 In order for the taxable amount to be set at an amount higher than the 
consideration, the Tax Agency must show that the consideration is lower than the 
open market value. In the view of the Supreme Administrative Court, it is not 
clear whether, in a situation such as that at issue in the present case, when 
determining the open market value such a link must be made to the deduction of 
input tax, as the Tax Agency did. Consequently, the Supreme Administrative 
Court seeks a ruling from the Court of Justice on whether it is compatible with 
Articles 72 and 80 of the VAT Directive to consider that, where a parent 
company’s sole activity consists of the active management of its subsidiaries and 
the parent company has deducted all of the input VAT paid on its expenditure, the 
total expenditure of the parent company, including the costs of raising capital and 
shareholder costs, constitutes the cost incurred by the company in providing the 
services to the subsidiaries. 
39 According to the case-law of the Court of Justice, Article 80 must be interpreted 
restrictively and Member States may not, on the basis of that article, provide that 
the taxable amount is to be the open market value in situations other than those set 
out therein (see, for example, Balkan and Sea Properties and Provadinvest, Joined 
Cases C-621/10 and C-129/11, EU:C:2012:248, paragraphs 45 and 51). The Court 
of Justice has not, however, examined the questions at issue in the present case 
concerning the revaluation of the taxable amount in respect of intra-group services 
and the earlier case-law does not, in the Supreme Administrative Court’s view, 
provide sufficient guidance to determine how the questions should be answered. It 
is therefore necessary to obtain a preliminary ruling from the Court of Justice. 
Questions 
40 In the light of the foregoing, the Supreme Administrative Court requests an 
answer to the following questions. 
Question 1: When applying national provisions on the revaluation of the taxable 
amount, is it compatible with Articles 72 and 80 of the VAT Directive, where a 
parent company provides its subsidiaries with services of the kind at issue in the 
present case, always to regard those services as unique services whose open 
HÖGKULLEN 
 
11 
market value cannot be determined by means of a comparison such as that 
provided for in the first paragraph of Article 72? 
Question 2: When applying national provisions on the revaluation of the taxable 
amount, is it compatible with Articles 72 and 80 of the VAT Directive to consider 
that the total expenditure of a parent company, including the costs of raising 
capital and shareholder costs, constitutes the cost incurred by the company in 
providing services to its subsidiaries, where the parent company’s sole activity 
consists of the active management of its subsidiaries and the parent company has 
deducted all the input VAT paid on its acquisitions?