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By Antonio MERINO, Counsel, VAT lead, Baker McKenzie Luxembourg
On 17 December 2025, the UK Supreme Court rejected an appeal filed by a holding company actively involved in managing its subsidiary. It determined that the input value-added tax (“VAT”) borne on the deal fees connected with an exempt share sale is not deductible, and hence represents a final cost due to the direct and immediate link with the share sale (and not the management activity).
Some might think that the key VAT decision in HMRC v. Hotel La Tour Ltd(1) (“Hotel La Tour Ltd”) is not relevant for holding companies established outside the UK — for instance, those carrying out their activities in an EU member state such as Luxembourg. However, even if the VAT Directive(2) no...
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