By a decision of 13 July 2012, the Conseil d' État laid down the rules applicable to the deductibility of VAT paid on expenses relating to the sale of equity securities.
Where a holding company, which engages in an economic activity for which it is subject to VAT, intends to sell all or part of the shares in a subsidiary and exposes it for this purpose, In the case in point, it is entitled to deduct the VAT charged on these expenses (CGI, art. 271, I-1), which are deemed to be part of its general expenses and relate to the price components of transactions relating to that economic activity. This is the case when the sale of securities does not take place.
Where such a transfer has taken place, whether this transaction is outside the scope of application of VAT or in the field but exempt, the Administration shall be entitled to question the deductibility of the tax charged on such expenditure where it establishes that the transaction was of a proprietary nature, provided that the proceeds of the transfer have been distributed, whatever the arrangements for such distribution, or that, in the absence of any evidence to the contrary, the proceeds of the transfer have been distributed.
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