--- title: New testing of right of deduction of VAT in conjunction with the sale of a subsidiary description: The Supreme Administrative Court will now, once again, test whether it is correct that the Tax Agency denies deduction of VAT on consulting expenses, etc. incurred in conjunction with the sale of shares in a subsidiary. image: https://blogg.pwc.se/hs-fs/file-374894050-png/Tax_matters/Illustrationer_PwC/ikoner/PwC-skatteradgivning-Pen-1-solid_0001_maroon.png --- [![pwc-logo-1](https://blogg.pwc.se/hs-fs/hubfs/Imported%20sitepage%20images/pwc-logo-1.png?width=200&name=pwc-logo-1.png)](https://blogg.pwc.se/) ## Tax matters - Sweden's tax blog [‹ Back to the articles](https://blogg.pwc.se/taxmatters-en) 20 May 2016 | [Value Added Taxes, customs and excise duties](https://blogg.pwc.se/taxmatters-en/topic/value-added-taxes-customs-and-excise-duties) # New testing of right of deduction of VAT in conjunction with the sale of a subsidiary Contact PwC Reading time: 3 min ![PwC-skatteradgivning-Pen-1-solid_0001_maroon.png](https://blogg.pwc.se/hs-fs/file-374894050-png/Tax_matters/Illustrationer_PwC/ikoner/PwC-skatteradgivning-Pen-1-solid_0001_maroon.png?width=900&name=PwC-skatteradgivning-Pen-1-solid_0001_maroon.png) ![PwC-skatteradgivning-Pen-1-solid_0001_maroon.png](https://blogg.pwc.se/hs-fs/file-374894050-png/Tax_matters/Illustrationer_PwC/ikoner/PwC-skatteradgivning-Pen-1-solid_0001_maroon.png?width=150&name=PwC-skatteradgivning-Pen-1-solid_0001_maroon.png "PwC-skatteradgivning-Pen-1-solid_0001_maroon.png")The Supreme Administrative Court will now, once again, test whether it is correct that the Tax Agency denies deduction of VAT on consulting expenses, etc. incurred in conjunction with the sale of shares in a subsidiary. The Supreme Administrative Court has previously tested the question of whether the sale of shares in a subsidiary can be seen, in VAT terms, to comprise a business transfer, implying, in the turn, the right to deduction of VAT on overheads incurred in such a sale. In order that such a view can be seen to apply, there is a requirement, according to the Court, that the sale of the shares in the subsidiary takes place together with other assets, that is, a sale comprised only of shares is not seen to be included in the term business transfer. Consequently, a parent company does not incur the right of deduction of input VAT on consulting expenses, etc. in conjunction with the sale of shares in a subsidiary. However, a question which has not been solved is under which specific circumstances deduction of VAT on consulting expenses, etc. with the sale of a subsidiary can be seen to comprise general overhead costs in VAT-liable operations and, for this reason, should be deductible. In the decision from the Administrative Court of Appeal which is now to be tested in the Supreme Administrative Court, Sveaskog Förvaltnings AB claimed deduction of input VAT for consulting expenses, etc. with the sale of a foreign subsidiary and with the sale of a subsidiary within a business area. ### Comments The Tax Agency regularly denies deduction of input VAT on the sale of shares in a subsidiary with reference to their interpretation that this matter has already been clarified in legal practice. According to our understanding, the leave to appeal now granted by the Supreme Administrative Court evidences that this is, in fact, not the case. Based on EU Court practice in this area, we are of the opinion that deduction of these costs should be seen to be possible. Ulf Hedström and Lena Josefsson [![Do you have any questions on Value Added Taxes, customs and excise duties?](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/315629/d57a76c7-ed7c-475a-9a26-713fb725b19e.png)](https://hubspot-cta-redirect-eu1-prod.s3.amazonaws.com/cta/redirect/315629/d57a76c7-ed7c-475a-9a26-713fb725b19e) ![PwC](https://blogg.pwc.se/hs-fs/hub/315629/file-2337440090.png) ### PwC PwC Sverige är marknadsledande inom revision och rådgivning med 2 700 medarbetare runt om i landet – vi finns där du finns! Vårt syfte är att skapa förtroende i samhället och lösa viktiga problem och våra värderingar genomsyrar allt vi gör. ## Subscribe to Tax Matters Get the latest news, directly to your inbox [Yes, I'd like to subscribe to Tax matters](https://cloud.email.pwc.se/tm-en-hubspot) ## Contact a tax advisor Do you need more information or do you have a question? 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