Marle Participations SARL v Ministre de l'Économie et des Finances.
Date: 2018-07-05
19


As a preliminary point, it should be observed that, although the VAT Directive gives a very wide scope to VAT, only activities of an economic nature are covered by that tax (judgment of 29 October 2009, Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 34). It is apparent from Article 2 of that directive that, among the services supplied within the territory of a Member State, only services supplied for consideration by a taxable person acting as such are subject to VAT (order of 12 January 2017, MVM, C‑28/16, EU:C:2017:7, paragraph 24).
22


An analysis of those definitions shows that the scope of the term ‘economic activities’ is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. Accordingly, an activity is, as a general rule, categorised as ‘economic’ where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity (judgment of 29 October 2009, Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 37 and the case-law cited).
23


Moreover, it is clear from the Court’s case-law that, within the framework of the VAT system, taxable transactions presuppose the existence of a transaction between the parties in which a price or consideration is stipulated (judgment of 29 October 2009, Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 43) and that a supply of services is effected ‘for consideration’ within the meaning of Article 2 of the Sixth Directive only if there is a direct link between the service provided and the consideration received (judgment of 29 October 2009, Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 45).
25


The deduction system is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT consequently ensures neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject, in principle, to VAT (order of 12 January 2017, MVM, C‑28/16, EU:C:2017:7, paragraph 27 and the case-law cited).
26


However, under Article 168(a) of the VAT Directive, in order to have a right of deduction, it is necessary, first, that the person concerned be a taxable person, within the meaning of that directive, and, second, that the goods or services relied on to confer entitlement to that right be used by the taxable person for the purposes of his own taxed output transactions, and that, as inputs, those goods or services be supplied by another taxable person (judgment of 19 October 2017, Paper Consult, C‑101/16, EU:C:2017:775, paragraph 39).
27


More specifically, as regards a holding company’s right of deduction, the Court has previously held that a holding company does not have the status of taxable person within the meaning of Article 9 of the VAT Directive and, accordingly, does not have the right to deduct tax under Articles 167 and 168 of that directive when it has as its sole purpose the acquisition of shares in other undertakings and does not involve itself directly or indirectly in the management of those undertakings, without prejudice to its rights as a shareholder (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 18).
28


The mere acquisition and holding of shares in a company is not to be regarded as an economic activity, within the meaning of the VAT Directive, conferring on the holder the status of a taxable person. The mere acquisition of financial holdings in other undertakings does not amount to the exploitation of property for the purpose of obtaining income therefrom on a continuing basis because any dividend yielded by that holding is merely the result of ownership of the property (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 19).
29


However, the Court has ruled that the position is otherwise where the holding is accompanied by direct or indirect involvement in the management of the companies in which the holding has been acquired, without prejudice to the rights held by the holding company as shareholder (see, inter alia, judgments of 14 November 2000, Floridienne and Berginvest, C‑142/99, EU:C:2000:623, paragraph 18; of 27 September 2001, Cibo Participations, C‑16/00, EU:C:2001:495, paragraph 20; of 6 September 2012, Portugal Telecom, C‑496/11, EU:C:2012:557, paragraph 33; and of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 20).
30


It is apparent from settled case-law of the Court that 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 9(1) of the VAT Directive, in so far as it entails carrying out transactions which are subject to VAT by virtue of Article 2 of that directive, such as the supply by a holding company to its subsidiaries of administrative, accounting, financial, commercial, information technology and technical services (see, inter alia, judgments of 14 November 2000, Floridienne and Berginvest, C‑142/99, EU:C:2000:623, paragraph 19; of 27 September 2001, Cibo Participations, C‑16/00, EU:C:2001:495, paragraph 22; and of 6 September 2012, Portugal Telecom, C‑496/11, EU:C:2012:557, paragraph 34).
34


In that regard, it should also be noted that the taxation of leasing and letting transactions is a power, provided for in Article 137(1)(d) of the VAT Directive, which the EU legislature has conferred on the Member States in derogation from the general rule established in Article 135(1)(l) of that directive, under which leasing and letting transactions are exempt from VAT. The Member States may therefore, by virtue of this power, allow persons benefiting from that exemption to waive it (see, to that effect, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraphs 26 and 27).
36


As regards the conditions for exercising the right of deduction and, more specifically, its extent, it must be noted that the Court has previously ruled, in the judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 33), that expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in the management of those subsidiaries and which, on that basis, carries out an economic activity must be regarded as belonging to its general expenditure and the VAT paid on that expenditure must, in principle, be deducted in full.
37


However, expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in the management of only some of those subsidiaries and which, with regard to the others, does not, by contrast, carry out an economic activity must be regarded as only partially belonging to its general expenditure, so that the VAT paid on that expenditure may be deducted only in proportion to the expenditure which is inherent in the economic activity, in accordance with the apportionment criteria defined by the Member States, which, when exercising that power, must have regard to the aims and broad logic of the VAT Directive and, on that basis, provide for a method of calculation which objectively reflects the part of the input expenditure actually to be attributed, respectively, to economic and to non-economic activity, which it is for the national courts to ascertain (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 33).
41


It is true that it is settled case-law that the right of deduction may be refused when it is established, in the light of objective evidence, that that right is being invoked for fraudulent or abusive ends. The fight against tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive and EU law cannot be relied on for fraudulent or abusive ends (judgments of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraphs 42 and 43 and the case-law cited, and of 19 October 2017, Paper Consult, C‑101/16, EU:C:2017:775, paragraph 43).
42


However, the measures adopted by the Member States must not go beyond what is necessary to achieve such objectives. Therefore, they cannot be used in such a way that they would have the effect of systematically undermining the right to deduct VAT and, consequently, the neutrality of VAT (judgments of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 57, and of 19 October 2017, Paper Consult, C‑101/16, EU:C:2017:775, paragraph 50).
43


First, it is settled case-law that expenditure incurred by a holding company involved in the management of a subsidiary in respect of the various services it has purchased in connection with the acquisition of a shareholding in that subsidiary forms part of the taxable person’s general costs and is, as such, a cost component of its products, and therefore has, in principle, a direct and immediate link with the holding company’s economic activity as a whole (judgments of 27 September 2001, Cibo Participations, C‑16/00, EU:C:2001:495, paragraph 35, and of 29 October 2009, SKF, C‑29/08, EU:C:2009:665, paragraph 58).
44


Second, the right to deduct VAT must be guaranteed, without it being subjected to a criterion relating, inter alia, to the result of the economic activity of the taxable person, in accordance with Article 9(1) of the VAT Directive under which a taxable person ‘shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity’.