Opinion of the Advocate General — ECLI:EU:C:2001:131
Date: 2001-03-06
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: France

Summary of the Judgment 
1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Economic activity within the meaning of Article 4 of the Sixth 
Directive — Involvement of a holding company in the management of its suhsidi-
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SUMMARY — CASE C-16/00 
aries — Included, provided transactions are carried out which are subject to VAT by 
virtue of Article 2 of the directive 
(Council Directive 77/388, Arts 2 and 4(2)) 
2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Holding company carrying out both 
taxable and exempt transactions — Expenditure arising from the purchase of services 
in the context of the acquisition of a shareholding in a subsidiary — Right to 
deduct — Conditions 
(Council Directive 77/388, Art. 17(2), (3) and (5)) 
3. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Sixth Directive •— Scope — Receipt of dividends — Excluded 
(Council Directive 77/388, Art. 2) 
1. The involvement of a holding company 
in the management of companies in 
which it has acquired a shareholding 
constitutes an economic activity within 
the meaning of Article 4(2) of the Sixth 
Directive 77/388 on the harmonisation 
of the laws of the Member States 
relating to turnover taxes where it 
entails carrying out transactions which 
are subject to value added tax by virtue 
of Article 2 of that directive, such as 
the supply by a holding company to its 
subsidiaries of administrative, finan­
cial, commercial and technical services. 
(see para. 22, and operative part 1) 
2. Expenditure incurred by a holding 
company in respect of the various 
services which it purchases in connec­
tion with the acquisition of a share­
holding in a subsidiary forms part of its 
general costs and therefore has, in 
principle, a direct and immediate link 
with its business as a whole. Thus, if 
the holding company carries out both 
transactions in respect of which value 
added tax is deductible and transac­
tions in respect of which it is not, it 
follows from the first subparagraph of 
Article 17(5) of the Sixth Directive 
77/388 on the harmonisation of the 
laws of the Member States relating to 
turnover taxes that it may deduct only 
that proportion of the value added tax 
which is attributable to the former. 
(see para. 35, and operative part 2) 
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CIBO PARTICIPATIONS 
3. Since the receipt of dividends is not the 
consideration for any economic activ­
ity, within the meaning of the Sixth 
Directive 77/388 on the harmonisation 
of the laws of the Member States 
relating to turnover taxes, it does not 
fall within the scope of VAT. 
(see para. 41, 45, and operative part 3) 
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