Tax & Legal

The proceeds from the sale of a self-contained business are not subject to VAT provided the sale includes all assets necessary for the purchaser to continue the operation. In a most recent decision, the Supreme Tax Court held that this only applies to services provided between the transferor and the transferee and does not include transactions that are supplied to third parties.

The Supreme Tax Court has held that a lump sum compensation payment for an agreement not to compete with the purchaser of a business can be free of VAT as part of the price paid for the sale of an entire business.

The finance ministry has amended its VAT Implementation decree to the effect that a transfer of business premises by way of lease with only a short notice period does not detract from the VAT exemption for transfers of entire businesses.

The finance ministry has issued a decree to the effect that the sale of shares in a company can be non-VAT-able as the sale of a business, if the subsidiary meets the economic integration qualification for joining a VAT group with the acquirer.

The ECJ has held that a sale of a shop’s stock and fittings accompanied by an indefinite lease on the premises cancellable at three month’s notice can be VAT-free as the sale of an entire business, if, in the circumstances, the items transferred are sufficient to enable the purchaser to operate on a lasting basis.

The Supreme Tax Court has held that the sale of less than 100% of the share capital of a subsidiary cannot rank as the sale of a business. The transaction is a VAT-free sale of shares and the input tax on the associated costs is not deductible.