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The Council of State has laid down the rules applicable to the deductibility of VAT paid on expenses related to the sale of equity securities.
When a holding company, which engages in an economic activity for which it is subject to VAT, plans to sell all or part of the securities of the holding it holds in a subsidiary and sets out, to this end, expenses with a view to preparing this transfer (in this case, it involved intermediation and consulting services), it is entitled, subject to producing supporting documents, to deduct the VAT charged on these expenses (CGI , Art. 271, I-1), which are deemed to be part of its general expenses and to be linked to the constituent elements of the price of transactions relating to this economic activity. This is the case when the securities transfer operation does not take place.
When this transfer has taken place, whether this operation is outside the scope of VAT or within the scope but exempted, the Administration is justified in calling into question the deductibility of the tax on such expenses when it establishes that this operation took on a financial nature , since the proceeds of this sale have been distributed, regardless of the terms of this distribution, or that, in the absence of contrary elements produced by the company, these expenses have been incorporated in the sale price of the securities.
The Administrative Court of Appeal of Versailles (1), in 2018, applied the case law of the Council of State.
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CAA of VERSAILLES, 1st chamber, 03/07/2018, 15VE02642: https://www.legifrance.gouv.fr/ceta/id/CETATEXT000037193645/
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