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World Journal of VAT/GST Law Volume 2, 2013 - Issue 1
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Original Articles

Portugal Telecom: a new door open for holding companies to deduct input VAT

Case C-496/11 Portugal Telecom SGPS SA v Fazenda Pública [2012] CJEU

Nina Aguiar Senior research fellow at CIJE—Center for Legal and Economic Research, Faculty of Law, University of Porto, Portugal; Associate Professor of tax law at the Polytechnic Institute of Bragança, Portugal. This article expresses the views of the author and not necessarily those of the institutions to which she is affiliated.
Pages 73-80 | Published online: 07 May 2015

  • Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes—Common system of value added tax: uniform basis of assessment, OJ L145, 13 June 1977.
  • Council Directive 2006/112/EC of 28 November 2006 on the Common System of Value Added Tax, OJ L347, 11 December 2006.
  • Case C-60/90 Polysar Investments Netherlands v Inspecteur der Invoerrechten en Accijnzen [1991] ECR I-3111.
  • Case C-496/11 Portugal Telecom SGPS SA v Fazenda Pública [2012] CJEU.
  • Ben JM Terra and Peter J Wattel, European Tax Law (Kluwer, 5th edn 2008) 138; Rolf Eicke, Tax Planning with Holding Companies: Repatriation of US Profits from Europe. Concepts, Strategies, Structures (Kluwer, 2008) 61; Advocate General van Gerven, Opinion in Case C-333/91 Sofitam v Ministre chargé du Budget [1993] ECR 1–3513, para 11.
  • Rita de la Feria, ‘When do Dealings with Shares Fall Within the Scope of VAT?’ (2008) 1 EC Tax Review 26.
  • Sixth Directive, Art 4(1).
  • ibid, Art 4(2).
  • Now VAT Directive, Art 9(1)(2).
  • Sixth Directive, Art 4(2). See Ben JM Terra and Julie Kajus, European Tax Law (IBFD, 2011) 365–6; Alan Schenk and Oliver Oldman, Value Added Tax: A Comparative Approach (Cambridge University Press, 2007) 99.
  • Case C-60/90 Polysar (n 3) para 13; Case C-333/91 Sofitam (n 5), Opinion of Advocate General van Gerven, para 11.
  • Case C-60/90 Polysar (n 3) para 13.
  • Terra and Wattel (n 5) 337.
  • Case C-60/90 Polysar (n 3) para 14.
  • Case C-333/91 Sofitam (n 5).
  • ibid, Opinion of Advocate General van Gerven, para 12.
  • Now Art 173 of the VAT Directive.
  • Case C-29/08 Skatteverket v AB SKF [2009] ECR I-10413, Opinion of Advocate General Mengozzi, para 81.
  • Case C-333/91 Sofitam (n 5), Opinion of Advocate General van Gerven, para 10.
  • 20 Now Art 17 of the VAT Directive.
  • Case C-333/91 Sofitam (n 5), Opinion of Advocate General van Gerven, para 15.
  • ibid.
  • As recognised by the Conseil d'Etat and not contested by the taxpayer (ibid, para 7).
  • ibid, para 13.
  • Terra and Wattel (n 5) 337.
  • 26 Now Art 174(1) of the VAT Directive.
  • Case C-142/99 Floridienne SA and Berginvest SA v Belgian State [2000] ECR I-9567.
  • ibid, para 19.
  • Case C-16/00 Cibo Participations SA v Directeur regional des impôts du Nord-Pas-de-Calais [2001] ECR I-6663, Opinion of Advocate General Stix-Hackl, para 12.
  • The Court confirmed this doctrine on many occasions, including in Case C-102/00 Welthgrove BV v Staatssecretaris van Financiën [2001] ECR I-5679.
  • Ian Roxan, ‘VAT Supplies of Services: A Definition in Search of a Meaning’ in Andy Lymer (ed), Contemporary Issues in Taxation Research (Ashgate, 2003) 194.
  • In Case C-16/00 Cibo Participations (n 29), the French Government held that the notion of involvement should be more rigorous, meaning the exercise of a decisive influence on the management of the subsidiary (para 16).
  • In his Opinion Advocate General Fennelly pointed out that ‘the central crux of the case is the meaning of the term “economic activity“' (Case C-142/99 Floridienne SA and Berginvest (n 27) para 8).
  • ibid, para 15.
  • ibid, para 20; Roxan (n 31) 194.
  • Roxan (n 31) 194.
  • Case C-142/99 Floridienne SA and Berginvest (n 27) para 22.
  • de la Feria (n 6) 27.
  • Case C-437/06 Securenta Göttinger Immobilienanlagen und Vermögensmanagement AG v Finanzamt Göttingen [2008] ECR I-1597.
  • ibid, para 28.
  • ibid, para 34.
  • [2001] ECR I-6663.
  • Referring to Cases C-98/98 Customs and Excise v Midland Bank plc [2000] ECR I-4177, para 30, and C-169/04 Abbey National plc and Inscape Investment Fund v Commissioners of Customs and Excise [2006] ECR I-4027, para 28.
  • On the ‘immediate and direct link’ concept, see Cases C-4/94 BLP Group plc v Commissioners of Customs and Excise [1995] ECR I-983; C-435/05 Investrand BV v Staatssecretaris van Financiën [2007] ECR I-1315; C-465/03 Kretztechnik v Finanzamt Linz [2005] ECR I-4357. See also de la Feria (n 6) 28.
  • Case C-16/00 Cibo Participations (n 29) para 33.
  • ibid, para 33. On this point, see Case C-333/91 Sofitam (n 5), Opinion of Advocate General van Gerven, para 8, quoting Case 42/83 Dansk Denkavit [1984] ECR 2649, para 13; Case C-435/05 Investrand BV v Staatssecretaris van Financiën [2007] ECR I-9567, para 23.
  • Case C-142/99 Floridienne SA and Berginvest (n 27) para 32.
  • Case C-16/00 Cibo Participations (n 29) para 44.
  • Case C-29/08 Skatteverket v AB SKF [2009] ECR I-10413.
  • The Court referred to Case C-465/03 Kretztechnik (n 44) para 20, and the case law cited therein.
  • A line of reasoning that is particularly difficult to follow. Cf Ben JM Terra and Julie Kajus, A Guide to the European VAT Directives (IBFD, 2011) 1124.
  • Case C-29/08 Skatteverket (n 49) para 52.
  • Ibid, para 31.
  • Case C-496/11 Portugal Telecom (n 4).
  • Decreto-Lei n. 495/88, December 30, defines the legal statute of holding companies: see www.igf.min-financas.pt/inflegal/bd_igf/bd_legis_geral/leg_geral_docs/DL_495_88.htm.
  • 56 Case C-496/11 Portugal Telecom (n 4) para 49.
  • ibid, para 38.

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