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C&D Foods: the Good, the Bad and the Ugly

C&D Foods: the Good, the Bad and the Ugly

Analysis of the C&D Foods Acquisition ApS decision.

Peter Dylewski - Director, EMA Region Leader, Indirect Tax

Associate Partner, Global Leader, FS Indirect Tax

KPMG in the UK


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In C&D Foods Acquisition ApS, the Court of Justice of the European Union (CJEU) has ruled that there should be no deduction of input tax following an aborted sale of shares in a group subsidiary given the intention to use the proceeds to pay down debt. It found the aborted sale was outside the scope of VAT, as the purpose meant there was an insufficient link to the overall economic activity of the taxpayer. As paying down debt is a common business activity, the decision raises concerns that VAT recovery could be blocked in more instances than seems appropriate. To improve chances of recovery, any VAT incurred should be charged to the right entity and appropriate documentation should be kept to evidence the intended links to economic activity and taxable supplies. Consideration should be given to the stated intentions of the parties and to links between costs and planned onward supplies.

In an article for Tax Journal*, Peter Dylewski and Sarah Daley discuss the recent CJEU case of C&D Foods Acquisition ApS, and how this could affect the chances of VAT recovery in similar instances. You may access the full article by clicking here.

*First published in Tax Journal on 11 January 2019. Reproduced with permission.

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