In Ryanair v HMRC (Case C-249/17) (3 May 2018) the advocate general considered that input tax incurred in an aborted strategic takeover was deductible.
In 2006 the airline Ryanair made a bid to take over the Irish airline Aer Lingus. Although the takeover failed for reasons of competition law Ryanair had already incurred considerable costs for consultancy and other services in connection with the planned takeover. Ryanair therefore claimed deduction of the input tax paid which was refused by the Irish tax authorities on the basis that the mere acquisition and holding of shares does not constitute an economic activity. The issue was whether the case law on holding companies which provides that their costs are not deductible should apply in the case of the strategic takeover of a competitor.
The AG noted that direct involvement in management by supplying management services is not...
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