Holding companies’ sale of shares: the underlying purpose test in the context of a direct and immediate link
(2021) HARN60 20211Department of Business Law
- Abstract
- In the ever evolving and ambiguous environment of VAT treatment of sales of shares, the underlying purpose test has arisen as a new form of controversy. While it seems to be a viable method for establishing in specific circumstances a strong enough direct and immediate link to guarantee deduction also for costs incurred in relation to an exempt or out-of-scope share disposal, the test’s nature and even its very meaning alone are far from self-explanatory.
Using relevant EU legislation, the case law of the CJEU and building upon the academic works of especially Ad van Doesum, Dennis Ramsdahl Jensen and Henrik Stensgaard, this thesis establishes the environment of the underlying purpose test. Against the background it is able to establish... (More) - In the ever evolving and ambiguous environment of VAT treatment of sales of shares, the underlying purpose test has arisen as a new form of controversy. While it seems to be a viable method for establishing in specific circumstances a strong enough direct and immediate link to guarantee deduction also for costs incurred in relation to an exempt or out-of-scope share disposal, the test’s nature and even its very meaning alone are far from self-explanatory.
Using relevant EU legislation, the case law of the CJEU and building upon the academic works of especially Ad van Doesum, Dennis Ramsdahl Jensen and Henrik Stensgaard, this thesis establishes the environment of the underlying purpose test. Against the background it is able to establish what the author of this thesis argues are the current meaning and significance of the underlying purpose test.
The test is essentially an objective determination of the direct and exclusive reason for the sale of shares based on the allocation of its proceeds. Its significance however is even more unclear. The author of this thesis argues that by its nature and operation the test is an unpractical, even impossible solution to the problem it was meant to solve and as such it has merely limited, if any, effect. Furthermore, taking into account the test’s questionable relationship with the concept of the common system of VAT, should the current review process of the Commission result in amendments to the VAT treatment of financial services in the EU, the underlying purpose test as it stands at the moment is unlikely to survive much longer. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9047076
- author
- Iskanius, Silvia Maria LU
- supervisor
- organization
- course
- HARN60 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- VAT, EU law, M&A, sales of shares, right to deduct, direct and immediate link
- language
- English
- id
- 9047076
- date added to LUP
- 2021-06-08 11:17:37
- date last changed
- 2021-06-08 11:17:37
@misc{9047076,
abstract = {{In the ever evolving and ambiguous environment of VAT treatment of sales of shares, the underlying purpose test has arisen as a new form of controversy. While it seems to be a viable method for establishing in specific circumstances a strong enough direct and immediate link to guarantee deduction also for costs incurred in relation to an exempt or out-of-scope share disposal, the test’s nature and even its very meaning alone are far from self-explanatory.
Using relevant EU legislation, the case law of the CJEU and building upon the academic works of especially Ad van Doesum, Dennis Ramsdahl Jensen and Henrik Stensgaard, this thesis establishes the environment of the underlying purpose test. Against the background it is able to establish what the author of this thesis argues are the current meaning and significance of the underlying purpose test.
The test is essentially an objective determination of the direct and exclusive reason for the sale of shares based on the allocation of its proceeds. Its significance however is even more unclear. The author of this thesis argues that by its nature and operation the test is an unpractical, even impossible solution to the problem it was meant to solve and as such it has merely limited, if any, effect. Furthermore, taking into account the test’s questionable relationship with the concept of the common system of VAT, should the current review process of the Commission result in amendments to the VAT treatment of financial services in the EU, the underlying purpose test as it stands at the moment is unlikely to survive much longer.}},
author = {{Iskanius, Silvia Maria}},
language = {{eng}},
note = {{Student Paper}},
title = {{Holding companies’ sale of shares: the underlying purpose test in the context of a direct and immediate link}},
year = {{2021}},
}