It was because the purchase and sale of shares by a charitable trust was not an economic activity that the VAT paid on the fees for professional services relating to those transactions were not recoverable; there was no downstream economic activity to which the costs could be linked.
The concept of economic activities, within the meaning of Article 4(2) of the Sixth Directive 77/388 on the harmonization of the laws of the Member States relating to turnover taxes, is to be interpreted as not including an activity that consists in the purchase and sale of shares and other securities by a trustee in the course of the management of the assets of a charitable trust.
Although the fact that such a trust does not have the status of a professional dealer in securities does not necessarily mean that an activity of the kind at issue cannot, in some cases, be treated as an economic activity, in view of the fact that Article 4 confers a very wide scope on value added tax, such an activity is not constituted by the mere exercise of the right of ownership consisting in the acquisition and sale of financial holdings in other undertakings by a trust which manages the assets that it holds, in the same way as a private investor, and whose investment activities consist essentially in those transactions with a view to maximizing the dividends or capital yields intended to provide the means for achieving its non-commercial objectives.
Citations:
Times 10-Jul-1996, C-155/94, [1996] EUECJ C-155/94, [1996] 2 CMLR 909, [1996] STC 945, [1996] ECR I-3013, [1996] All ER (EC) 589
Links:
Jurisdiction:
European
Cited by:
Cited – Revenue and Customs v Frank A Smart and Son Ltd SC 29-Jul-2019
The question was whether a taxpayer can deduct as input tax the VAT which it has incurred in purchasing entitlements to an EU farm subsidy, the Single Farm Payment. The taxpayer had used those entitlements to annual subsidies over several years and . .
Lists of cited by and citing cases may be incomplete.
VAT, Charity
Updated: 18 April 2022; Ref: scu.90368
