Skatteverket v AB SKF.

• Jurisdiction: European Union
• Celex Number: 62008CC0029
• ECLI: ECLI:EU:C:2009:90
• Docket Number: C-29/08
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 12 February 2009

OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 12 February 2009 ¹(1)

Case C‑29/08

Skatteverket

v

AB SKF

(Reference for a preliminary ruling from the Regeringsrätten (Sweden))

(VAT – Interpretation of Articles 2, 4, 13B(d)(5) and 17 of the Sixth Directive, and of Articles 2, 9, 135(1)(f), 168 and 169 of Directive 2006/112/EC – Disposal by a parent company of shares in a subsidiary and of its remaining holding in another company, for the purposes of group restructuring – Deductibility of VAT paid on supplies of services acquired by the parent company as part of the share disposal transactions)

I – Introduction

1. This reference for a preliminary ruling relates to the interpretation of Articles 2, 4, 13B(d)(5) and 17 of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, (2) as last amended by Council Directive 2006/18/EC of 14 February 2006 (3) (‘the Sixth Directive’), and to the interpretation of Articles 2, 9, 135(1)(f) and 168 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. (4)

2. This reference was made in proceedings where the opposing parties are the Skatteverket (Swedish local tax board), the applicant in the main proceedings, and the company AB SKF (‘SKF’), the defendant in the main proceedings, relating to a tax preliminary decision (5) issued by the Skatterättsnämnden (Revenue Law Commission) on the right to deduct input value added tax (VAT) on supplies of services acquired by SKF as part of its disposal of its entire shareholding in a subsidiary (‘the subsidiary’) and of its remaining holding in another company (‘the controlled company’), in the course of tax years in which both the Sixth Directive and Directive 2006/112 were in force.

II – Legal background

A – Community legislation

3. Under Article 2(1) of the Sixth Directive the supply of goods and services effected for consideration within the territory of the country by a taxable person acting as such is subject to VAT.

4. Article 4 of the Sixth Directive is worded as follows:

‘1. “Taxable person” shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity.

…’

5. Under the first indent of the second subparagraph of Article 6(1) of the Sixth Directive, a supply of services may consist, inter alia, of an assignment of intangible property whether or not it is the subject of a document establishing title.

6. Article 13B(d)(5) of the Sixth Directive provides that Member States may exempt from VAT ‘transactions, including negotiation, excluding management and safekeeping, in shares, interests in companies or associations, debentures and other securities …’.

7. Article 17 relates to the origin and scope of the right to deduct. Paragraphs (1), (2), (3) and (5) are worded as follows:

‘1. The right to deduct shall arise at the time when the deductible tax becomes chargeable.

2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay:

(a) the [VAT] due or paid within the territory of the Member State in respect of goods or services supplied or to be supplied to him by another taxable person;

…

3. Member States shall also grant to every taxable person the right to a deduction or refund of [VAT] referred to in paragraph 2 in so far as the goods and services are used for the purposes of:

…

(c) any of the transactions exempted under Article 13B(a) and (d), paragraphs 1 to 5, when the customer is established outside the Community or when these transactions are directly linked with goods intended to be exported to a country outside the Community.

…

5. As regards goods and services to be used by a taxable person both for transactions covered by paragraphs 2 and 3, in respect of which [VAT] is deductible, and for transactions in respect of which [VAT] is not deductible, only such proportion of [VAT] shall be deductible as is attributable to the former transactions.

…’.

8. The Sixth Directive was repealed by Directive 2006/112. In accordance with its Article 413, Directive 2006/112 entered into force on 1 January 2007.

9. Articles 2(1), 9(1), 25(a), 135(1)(f), 168(a), 169(c), and 173(1) respectively of Directive 2006/112 are essentially identical to Articles 2(1), 4(1) and (2), 6(1), second paragraph, 13B(d)(5) and 17(2),(3)(c) and (5), first paragraph, of the Sixth Directive.

B – National legislation

10. The Mervärdesskattelagen (1994:200) (6) (Law No 200 of 30 March 1994 on VAT, ‘the ML’) provides in Chapter 1, Paragraph 1, that VAT is to be paid to the State on taxable supplies of goods or services which are made within Swedish territory as part of a professional activity.

11. Chapter 3, Paragraph 9, of the ML exempts, inter alia, transactions in transferable securities, such as the supply and trading, as an intermediary, of shares, other interests and debts, whether or not represented by securities, and the management of investment funds.

12. Under Chapter 8, Paragraph 3, of the ML, in so far as goods and services are used for the purposes of his business, the taxable person has the right to deduct input VAT on acquisitions or imports.

III – The facts of the main proceedings and the questions referred for a preliminary ruling

13. The share company SKF is the parent company of an industrial group which carries on activities in a number of countries. It takes an active part in the management of its subsidiaries and supplies to them, for a consideration, services, including management, administration and marketing policy. Those services are invoiced to the subsidiaries and SKF is liable for VAT on them.

14. SKF intends to restructure the group and, in that connection, to dispose of the business of its subsidiary by transferring all the shares in the latter. In addition, SKF will dispose of its 26.5% shareholding in the controlled company, which was in the past wholly owned and to which SKF also supplied, as the parent company, services subject to VAT. The reason for those disposals is to obtain funds to finance other activities of the group. In order to carry out those disposals, SKF envisages requiring supplies of services in the area of valuation of shares, assistance with negotiations and specialised legal advice for the drafting of the contracts. Those supplies of services will be subject to VAT.

15. In order to clarify the tax consequences of those disposals, SKF applied to the Skatterättsnämnden for a preliminary decision on the right to deduct input VAT on the supplies of services acquired as part of the disposal of shares in the subsidiary and the controlled company.

16. In its decision of 12 January 2007 the Skatterättsnämnden held that, in both cases, SKF was entitled to deduct the input VAT on those supplies of services. It considered that the supplies of services provided by SKF to the subsidiary and to the controlled company were part of an economic activity and that the VAT paid on costs incurred when those companies were acquired was deductible. In the same way, the VAT paid on its costs when that activity was brought to an end ought also to be deductible. The fact that the activity of the controlled company was to be brought to an end gradually did not affect that assessment.

17. The Skatteverket brought an appeal against that decision before the Regeringsrätten, claiming that the VAT paid on the supplies of the services acquired was not deductible. SKF, for its part, contended that the decision of the Skatterättsnämnden should be upheld.

18. It was in those circumstances that the Regeringsrätten decided to stay proceedings and to refer to the Court of Justice the following questions for a preliminary ruling:

‘(1) Are Articles 2 and 4 of the Sixth Directive … and Articles 2 and 9 of Directive 2006/112 to be interpreted as meaning that, where a taxable person liable for [VAT] on supplies of services to a subsidiary disposes of shares in that subsidiary that disposal is a transaction subject to VAT?

(2) If the answer to the first question is that the disposal constitutes a taxable transaction, is it then covered by the exemption provided for by Article 13B(d)(5) of the [Sixth] Directive … and Article 135(1)(f) of Council Directive 2006/12 in respect of transactions in shares?

(3) Irrespective of the answer to the above two questions, can there be a right to deduct for expenditure directly attributable to the disposal transaction, in the same way as there is for general overheads?

(4) Is it of significance for the answers to the above questions if the disposal of interests in a subsidiary takes place in stages?’

IV – Procedure before the Court

19. Pursuant to Article 23 of the Statute of the Court of Justice, the Skatteverket, SKF, the German Government, the United Kingdom Government and the Commission of the European Communities have submitted written observations. The oral arguments of those parties, with the exception of the Skatteverket and the United Kingdom Government which were not represented, and also of the Swedish Government, were presented at the hearing which took place on 4 December 2008.

V – Analysis

A – Preliminary remarks

20. As stated above, the issue in the main proceedings is whether SKF can deduct the VAT payable on the supplies of services...