Hungary: VAT deductions, holding company | KPMG | GLOBAL
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Hungary: VAT deductions, holding company actively involved in its participations

Hungary: VAT deductions, holding company

The Court of Justice of the European Union (CJEU) in January 2017 issued a judgment in a case concerning the value added tax (VAT) deduction of a holding company that is actively involved in the management of its participations and that also conducts business “with substance.”


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The CJEU held that a VAT deduction limitation can apply to a “top” holding company that, in addition to actively carrying on a business, is also involved in the management of its participations, without charging a fee for this. The judgment appears essentially to rule out a VAT deduction because the CJEU considered that the costs incurred only related to the non-economic activity of the holding company (that is actively involved in the management of its participations). Because this involves a finding of fact, the referring Hungarian court will need to resolve this fact-finding.

The case is: MVM Magyar Villamos Művek Zrt (C-28/16, 12 January 2017)

KPMG observation

This case once again shows how important it is to properly analyze the VAT position of holding companies that are actively involved in the management of their participations, but also of businesses with substance.


Read a January 2017 report prepared by the KPMG member firm in the Netherlands

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