Extract
[...] In contrast, expenses related to purely patrimonial activities, such as managing dividends, do not allow for a deduction9. Initially, the hesitation dissipated thanks to the Marle Participations ruling 10, which imposes a precise allocation between economic and non-economic activities to avoid excessive VAT deduction. However, the practical implementation of this allocation is complex, requiring holdings to thoroughly justify each expense, under penalty of tax disputes. II. A deductibility marked by limits and uncertainties In this context, we will analyze the rigorous, but controversial, conditions of deductibility followed by the demanding accounting management imposed by mixed activities A. [...]
[...] This complex calculation aims to avoid excessive VAT deduction. The Marle Participations ruling 16 This is illustrated by the requirement that only expenses related to economic activities can be deducted. For example, management fees for rented properties to subsidiaries were considered eligible, as they reflect an involvement in the management of subsidiaries 17. On the other hand, the right to deduct a holding is only partial if there is only an involvement in the management of some of its subsidiaries. [...]
[...] A pure holding company, limited to the holding of participations, is generally considered not liable to VAT, lacking economic activity. The Polysar judgment1 clearly established that the mere holding of shares does not fall within the scope of VAT. This judgment has been confirmed by several national decisions, including that of France Télécom company which excludes the deductibility of expenses related to purely financial management. On the other hand, active holding companies, involved in the active management of their subsidiaries through legal, administrative, or financial services, are liable to VAT. [...]
[...] To grasp this subject, it is essential to define precisely the terms 'holding company' and 'VAT'. The concept of holding company, although not defined by law, plays a central role in the taxation of groups due to its importance for governance and the centralization of decisions within the group. If jurisprudence and practice tend to give it a variable interpretation according to use, it is mainly the typology of the financial holding that is imposed in the matter of VAT. [...]
[...] This accounting rigor, although indispensable, constitutes a brake for many entities. The accounting and tax management of mixed holdings becomes even more complex, particularly due to the calculation of deduction coefficients. The expenses incurred by a VAT-liable company for its capital operations entitle it to deduction under specific conditions. When all the taxable operations of the company allow for deduction, the VAT is fully deductible with a tax coefficient equal to one. On the other hand, if no taxable operation entitles to deduction, the VAT on these expenses is not deductible, which corresponds to a tax coefficient equal to zero. [...]
