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Title: The VAT status of holding companies in Malta
Authors: Bezzina, Dario
Keywords: Value-added tax -- Malta
Auditing -- Malta
Holding companies -- Malta
Issue Date: 2012
Abstract: Purpose This study examines the circumstances in which a holding company acquires the status of a taxable person for VAT purposes in Malta and analyses the VAT consequences of that status in terms of registration and input VAT recovery. In particular, it reviews relevant case law of the Court of Justice of the European Union (CJEU), analyses how leading local advisors treat holding companies for VAT purposes and compares the local practice to the criteria established at CJEU level. Design The objectives of this study were achieved through a series of semi-structured interviews with selected tax advisors from local audit firms. The VAT Department’s standpoint was also obtained. Findings The results indicate that the jurisprudence concerning holding companies is not always consistent. Consequently, there is no uniform interpretation of CJEU case law among local practitioners. The study ascertains that although a pure holding company is not considered a taxable person for VAT purposes, the moment it performs additional activities for a consideration (such as the provision of management and advisory services to its subsidiaries and also the mere granting of one interest-bearing loan), would qualify it as a taxable person. In Malta, a holding company which is regarded as a taxable person is entitled to claim full refunds of VAT directly incurred in connection with the provision of services to its subsidiaries and on general expenses directly incurred in connection with the overall business activity. Conclusion CJEU case law seems to be adding unnecessary complexities to the EU VAT system which are bringing about contrasting interpretations among different practitioners in different member states. Given that it is very unlikely that the issue will be addressed at EU level, this dissertation identifies various ways in which the main VAT principles of fiscal neutrality and harmonisation could be safeguarded. Value In the absence of specific guidelines relating to the VAT treatment of holding companies, this research sought to fill this apparent gap. In the case law that will inevitably be developed in the coming years, it would be preferable if the CJEU returns to a simpler test to determine the extent to which a holding company can recover input VAT. This will ensure legal certainty for holding companies and the EU VAT system.
Description: B.ACCTY.(HONS)
Appears in Collections:Dissertations - FacEma - 2012
Dissertations - FacEMAAcc - 2012

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