With ruling No. 3755, filed on 20 December 2023, the Superior Tax Court of Lombardy confirmed the decision ruled on by the trial court (ruling No. 3361 filed on 5 December 2022) on the VAT deductibility paid by a Special Purpose Vehicle (SPV) on transaction costs (notary fees, consultancy, due diligence, etc.) incurred in connection with a Merger Leveraged Buy-Out (MLBO) transaction.
At the basis of this decision is, in both instances, the reference to the existence of an evident finalistic-functional connection of the transaction costs (as preparatory expenses) to the business activity continued downstream by the extraordinary transaction, on the assumption that “preparatory acts must already be considered an integral part of economic activities”, as confirmed by the European Court of Justice in support of the principle of VAT neutrality. Therefore, in the case of holding companies established as SPVs, the system of deduction regarding VAT paid on purchases of goods and services relating to preparatory activities, based, as mentioned, on a prospective assessment of the activity to be carried out by the company after the merger, allows the SPV to deduct the VAT relating to such transaction costs, given that the intention to continue an activity relevant for VAT purposes is usually confirmed by objective elements such as, for example, the obligations arising from the loan agreements with the financial institutions which funded the transaction or from the deeds drawn up for the extraordinary transaction.
The position taken by the judges by means of the sentences in question is of absolute relevance as it is diametrically opposed to the consolidated orientation of the administrative practice (Revenue Agency Circular No. 6/2016 as well as answers to advance tax ruling No. 17/2019, 758/2021 and 529/2022), therefore one hopes for is the possibility of recovering the VAT incurred and not deducted in the past on such costs, in relation to years that are not prescribed, through a claim for reimbursement.
