Sonaecom SGPS SA v Autoridade Tributária e Aduaneira.
Date: 2020-11-12
29


As a preliminary point, it must be noted that the VAT Directive, which entered into force on 1 January 2007, repealed the Sixth Directive without making material changes to that directive. Since the relevant provisions of the VAT Directive have essentially the same scope as that of the relevant provisions of the Sixth Directive, the Court’s case-law on the VAT Directive is also applicable to the Sixth Directive (see, by analogy, judgment of 3 July 2019, The Chancellor, Masters and Scholars of the University of Cambridge, C‑316/18, EU:C:2019:559, paragraph 17).
30


In that context, it must be borne in mind, in the first place, that, according to settled case-law, a company whose sole object is to acquire shares in other companies without direct or indirect involvement in the management of those companies neither has the status of taxable person within the meaning of Article 4 of the Sixth Directive nor the right to deduct tax under Article 17 of that directive. The mere acquisition and holding of shares in a company do not, in themselves, amount to an economic activity within the meaning of the Sixth Directive, conferring on the holder the status of a taxable person, since the mere acquisition of financial holdings in other undertakings cannot be regarded as the exploitation of property for the purpose of obtaining income therefrom on a continuing basis. Any dividend yielded by that holding is merely the result of ownership of the property (judgments of 5 July 2018, Marle Participations, C‑320/17, EU:C:2018:537, paragraphs 27 and 28, and of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 16 and the case-law cited).
31


It 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, if that entails carrying out transactions which are subject to VAT, such as the supply of administrative, financial, commercial and technical services, without prejudice to the rights held by the holding company as shareholder (judgments of 5 July 2018, Marle Participations, C‑320/17, EU:C:2018:537, paragraph 29, and of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 17 and the case-law cited).
32


As the Advocate General observed in point 30 of her Opinion, a mixed holding company is a company that, in addition to its non-economic holding activity, which consists in the holding of shares in other companies and is not subject to VAT, also carries out an economic activity. According to the case-law, a mixed holding company which not only holds shares in companies, but also supplies remunerated, taxable services to some of those companies, is thus itself a taxable person, albeit entitled to only a pro rata deduction of input tax (see, to that effect, judgments of 27 September 2001, Cibo Participations, C‑16/00, EU:C:2001:495, paragraph 22, and of 13 March 2008, Securenta, C‑437/06, EU:C:2008:166, paragraph 31).
33


Furthermore, since economic activities within the meaning of the Sixth Directive may consist of several consecutive transactions, the preparatory acts must themselves be treated as constituting economic activity. Thus, any person with the intention, as confirmed by objective elements, of independently starting an economic activity, and who incurs the initial investment expenditure for those purposes must be regarded as a taxable person (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 18 and the case-law cited).
34


It follows that a company which carries out preparatory acts which are part of a proposed acquisition of shares in another company with the intention of pursuing an economic activity consisting in involvement in the management of that other company by providing management services subject to VAT must be considered a taxable person, within the meaning of the Sixth Directive (see, to that effect, judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 19).
36


As regards, in the second place, the right to deduct, it follows from Article 17 of the Sixth Directive that, in so far as the taxable person, acting as such at the time when he or she acquires goods or receives services, uses those goods or services for the purposes of his or her taxed transactions, he or she is entitled to deduct the VAT paid or payable in respect of those goods or services. In accordance with the first subparagraph of Article 10(2) and Article 17 of the Sixth Directive, that right to deduct arises at the time when the tax becomes chargeable, namely when the goods are delivered or the services are performed (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 21 and the case-law cited).
37


The right to deduct provided for in Article 17 et seq. of the Sixth Directive is an integral part of the VAT scheme and, in principle, may not be limited. It is exercisable immediately in respect of all the taxes charged on input transactions (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 22 and the case-law cited).
38


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 or her 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 (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 23).
39


The principle that VAT should be neutral as regards the tax burden on a business requires that the first investment expenditure incurred for the purposes of, and with the view to, commencing a business must be regarded as an economic activity; it would be contrary to that principle if such an activity commences only when taxable income arises. Any other interpretation would burden the trader with the cost of VAT in the course of his or her economic activity without allowing him to deduct it and would create an arbitrary distinction between investment expenditure incurred for the needs of a business before actual exploitation of the business or expenditure incurred during exploitation (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 24 and the case-law cited).
40


Moreover, the right to deduct, once it has arisen, is retained even if the intended economic activity was not carried out and, therefore, did not give rise to taxed transactions or the taxable person was unable to use the goods or services which gave rise to a deduction in the context of taxable transactions by reason of circumstances beyond his or her control. Any other interpretation would be contrary to the principle that VAT should be neutral as regards the tax burden on a business. It would be liable to create, as regards the tax treatment of the same investment activities, unjustified differences between businesses already carrying out taxable transactions and other businesses seeking by investment to commence activities which will in future be a source of taxable transactions. Likewise, arbitrary differences would be established between the latter businesses, in that final acceptance of the deductions would depend on whether or not the investment resulted in taxed transactions (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 25 and the case-law cited).
41


Furthermore, in accordance with settled case-law, the existence of a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to the right to deduct is, in principle, necessary before the taxable person is entitled to deduct input VAT and in order to determine the extent of such entitlement. The right to deduct VAT charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them is a component of the cost of the output transactions giving rise to the right to deduct (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 26 and the case-law cited).
42


However, a taxable person also has a right to deduct even where there is no direct and immediate link between a particular input transaction and an output transaction or transactions giving rise to the right to deduct where the costs of the services in question are part of his or her general costs and are, as such, components of the price of the goods or services which he or she supplies. Such costs do have a direct and immediate link with the taxable person’s economic activity as a whole (judgment of 17 October 2018, Ryanair, C‑249/17, EU:C:2018:834, paragraph 27 and the case-law cited).
43


The Court has held that the expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in their management and which, on that basis, carries out an economic activity must be regarded as belonging to its general costs and the VAT paid on that expenditure must, in principle, be deducted in full, unless certain output economic transactions are exempt from VAT under the Sixth Directive, in which case the right to deduct should have effect only in accordance with the procedures laid down in Article 17(5) of that directive (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 33).
47


It should nevertheless be specified that if it should transpire that the applicant in the main proceedings supplied services subject to VAT, which are characteristic of its economic activity, only to some of its subsidiaries, which it is for the referring court to verify, the VAT paid on the general costs can be deducted only in proportion to those inherent to the economic activity of the applicant in the main proceedings in its capacity as a taxable person, in accordance with a method which it is for the Member States to determine (see, to that effect, judgment of 5 July 2018, Marle Participations, C‑320/17, EU:C:2018:537, paragraph 37).
48


In that regard, it must be borne in mind that, when exercising that power, Member States must have regard to the aims and broad logic of the Sixth 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 each of the economic and non-economic activities (see, to that effect, judgment of 5 July 2018, Marle Participations, C‑320/17, EU:C:2018:537, paragraph 37 and the case-law cited).
56


In that context, as the Advocate General observed in point 55 of her Opinion, Member States may provide for calculation methods different from the turnover-based allocation key provided for in the Sixth Directive if the method chosen guarantees a more precise result (see, to that effect, judgment of 8 November 2012, BLC Baumarkt, C‑511/10, EU:C:2012:689, paragraphs 23 to 26, and of 9 June 2016, Wolfgang und Dr. Wilfried Rey Grundstücksgemeinschaft, C‑332/14, EU:C:2016:417, paragraph 33).
61


As pointed out, in paragraph 38 above, the deduction arrangement is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his or her economic activities. The common system of VAT therefore ensures complete neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject to VAT (judgments of 14 February 1985, Rompelman, 268/83, EU:C:1985:74, paragraph 19, and of 28 February 2018, Imofloresmira – Investimentos Imobiliários, C‑672/16, EU:C:2018:134, paragraph 38 and the case-law cited).
62


The principle of fiscal neutrality, inherent in the common system of VAT, precludes, in particular, economic operators who carry out transactions which are, in fact, similar from being treated differently as far as the levying of VAT is concerned, in order to avoid distortions of competition (see, to that effect, judgment of 10 September 2002, Kügler, C‑141/00, EU:C:2002:473, paragraph 30 and the case-law cited).
64


In that context, Article 17(2) and (3) of the Sixth Directive provides that a taxable person is entitled to deduct input tax paid only in respect of the goods and services which have a link with taxable output transactions. On the other hand, where goods or services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (see, to that effect, judgment of 14 September 2017, Iberdrola Inmobiliaria Real Estate Investments, C‑132/16, EU:C:2017:683, paragraph 30 and the case-law cited).