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VAT remains a thorny issue, especially for holding companies. How do you find your way between pure holding and managing holding, especially when it comes to optimizing the VAT deduction? Let's look at the current liability rules: this article clarifies their concrete application to holding companies, details the transactions concerned and shows how to secure your right to deduct. Here, we will rely on recent case law and the latest regulatory updates. So, ready to transform these fiscal subtleties into a strategic advantage for your structure?
The distinction between Holding Pure and active management company directly conditions the rules of VAT. The first is content to hold participations, while the second intervenes concretely in the affairs of its subsidiaries. This structural difference determines their accounting obligations and their tax regime.
Active parent companies generate revenue that can be deducted via services billed to their subsidiaries : strategic advice, accounting management or operational support. The VAT applicable to these transactions allows a partial or total recovery according to the liability or taxation coefficient of the company.
To fully recover VAT, the company must demonstrate that it provides services to all subsidiaries that pay dividends to the Holding. In addition, the company should not receive other exempt financial products that would be considered by the administration to be non-ancillary.
In practice, the choice of structure has a direct impact on the group's cash flow and on the profitability of the business.
THEsubjugation To the VAT is based on several legal conditions that a company must meet. Here are the key factors for tax management:
A holding company not subject to VAT suffers direct consequences: Take the case of a Holding Pure : she cannot recover VAT on her purchases or operating expenses. This status certainly simplifies accounting, but it ends up bearing VAT as a burden.
Some holding activities are exempt from VAT.
In practice, the simple holding of participations and the receipt of dividends do not generally constitute a taxable economic activity.
Likewise, the financial transactions carried out by the holding company, such as loans to its subsidiaries can also benefit from tax exemptions under certain conditions (article 261 C of the CGI).
Thus, it is necessary to determine whether the dividends received or whether the interest received constitute products that allow VAT to be deducted or not.
The evaluation of VAT deduction rights is based on a very specific method.
The deduction coefficient is decisive in calculating the amount recoverable on purchases and services.
To determine this coefficient, it is necessary to identify whether each of the coefficients that compose it are equal to unity.
As a matter of principle, the Deductibility depends directly on VAT liability of society. When a subsidiary pays dividends, this affects the overall calculation. Expenses related to group management - salaries, accounting expenses or investments - must therefore be rigorously traced to optimize the deduction of VAT.
This coefficient reflects the proportion of use of the good or service to carry out transactions falling within the scope of VAT. It is this coefficient that the administration uses, for example, to prevent the deduction of VAT in the event of personal use of an expenditure.
Thus, under a holding company, if the latter receives dividends, it thus receives products outside the scope of VAT.
However, case law considers that these are not to be taken into account if the Holding provides services for the benefit of the subsidiaries concerned. Thus, an active Holding that provides services to each of these subsidiaries has a coefficient equal to unity (1).
This coefficient reflects the proportion of use of the good or service for carrying out transactions eligible for deduction. It is 1 for expenses directly allocated to taxable activities and 0 for non-taxable activities such as certain financial and banking activities.
The calculation is based on the turnover of the current year.
In a simplified manner, it is possible to determine an overall coefficient for the whole activity.
Here's how it works: you multiply the taxes incurred by the ratio between taxable revenue and total turnover in connection with transactions falling within the scope of VAT (excluding dividends for example). This mechanism applies in particular to parent companies active in the management of their subsidiaries.
Thus, a holding company that provides services to each of these subsidiaries without receiving interest will have a tax coefficient equal to 1 and will thus be able to deduct the VAT incurred (with the exception of legal exclusions such as on expenses related to transport).
A holding company that receives exempt financial products should in principle only partially deduct VAT: it can however try to demonstrate that the exempt financial products are ancillary and thus fully deduct VAT.
The establishment of a holding company requires the filing and monitoring of various tax obligations.
Holdings are required to file VAT returns: the declaration of CA3 VAT is used by companies under the real regime to report the transactions carried out each month.
For cross-border services, VAT is generally autoliquidated by the buyer.
The French holding company must indicate the amount due on the line “Purchases of services made from a taxable person not established in France (article 283-2 of the General Tax Code)” of the CA3.
In the absence of the right to deduct, a holding company that acquires services from a taxable person not established in France will have to auto-liquidate the VAT without the right to deduct: this thus incurs a cost for the company.
Holdings must declare through the European Service Declaration the services provided to companies established in another Member State of the European Union and which are subject to VAT in this State through the reverse charge mechanism (excluding VAT invoicing).
A holding company that receives dividends for more than 10% of its turnover or other financial products may be subject to payroll tax.
In this context, the company must file at least one payroll tax return annually.
As a reminder, this tax applies to salaries paid by companies that have a turnover not subject to VAT for more than 10% of the total turnover received by the company.
Faced with tax audits, holding companies must meticulously archive the evidence of their taxable activities. This rigor particularly concerns subsidiaries of a group, where financial flows are multiple.
One Impeccable accounting and compliance with reporting obligations play a key role in avoiding tax adjustments. This is particularly true when a holding company seeks to deduct its VAT. The expenses incurred must always correspond to the group's actual activities.
The choice of legal form directly influences the tax system of a society. La SAS offers increased flexibility to organize its internal management, in particular for holdings wishing to adapt their operations to specific activities. Conversely, the SARL imposes a more rigid framework which may however be suitable for certain family businesses. However, an SARL can in some cases make it possible to optimize the remuneration of the manager under payroll tax: this may therefore be interesting depending on the structure of the group's activity.
This comparative analysis between SAS and SARL is therefore necessary when creating a holding company.
The optimization of intragroup financial flows requires particular attention to VAT recovery.
When a holding company provides management services to its subsidiaries, VAT is applicable on these transactions.
In this context, the establishment of a VAT Group often makes it possible to streamline tax management for the entire group when subsidiaries do not have the right to deduct.
The study of recent decisions of the Council ofState is essential in order to understand the challenges of the interference of the holding company in the activities of its subsidiaries. Let's take a concrete case: the possibility of deduct VAT for a holding company depends directly on his active involvement in the operational management of its subsidiaries. The Council of State requested the opinion of the CJEU concerning the degree of intervention required in group companies: thus, services such as management fees or a real estate lease can demonstrate interference. The holding company is therefore considered to be active in VAT matters.
However, the Council of State specified that in order to fully deduct VAT in a holding company that receives dividends, the holding company must demonstrate that it provides services to each of the subsidiaries that pay dividends.
Note that a passive holding company, with no real influence on the activities of its subsidiaries, loses its VAT status.
The passage of a Holding Pure to Female Animator during the fiscal year involves a VAT liability. The holding company must collect VAT on the services invoiced to its subsidiaries and acquires the right to deduct VAT on its own purchases related to these taxable activities.
This change requires regular VAT returns and potentially a regularization of deductions. It is crucial to report this change to the tax authorities and to be accompanied by a chartered accountant to optimize the tax situation.
La VAT deductibility for a leading holding company is directly linked to the nature of the expenses and their allocation to activities subject to VAT. Unlike a pure holding company, a Holding animator interferes in the management of its subsidiaries, making its services generally subject to VAT.
La billing for services is an essential condition for the deduction of VAT. The Tax coefficient, calculated according to the turnover subject to VAT in relation to the total turnover, limits the right to deduct on certain expenses. A case-by-case analysis should be carried out.
The specificities of VAT for holding companies carrying out real estate transactions depend on the type of holding company (pure or animator) and the nature of the transactions. One Holding Pure is generally not subject to VAT, but may become so if it carries out real estate transactions subject to VAT (equipped or naked rental on option for example)
One Holding animator, already subject to VAT for its services to subsidiaries, will also be subject to VAT for its real estate transactions. These operations include sale of new buildings And the rental of furnished buildings.
No, theVAT liability for a holding company does not depend on turnover thresholds, but on the nature of its activity. One Holding Pure, whose activity is limited to managing participations, is generally not subject to VAT.
On the other hand, a Holding animator, which actively participates in the management of its subsidiaries by providing services to them, is considered to be exercising a economic activity and is therefore subject to VAT on the services invoiced.
VAT management for a holding company financing its subsidiaries by current account advances depends on its nature (pure or animatory). One Holding Pure is generally not subject to VAT.
One Holding animator, which actively participates in the management of its subsidiaries, is generally subject to VAT. If it charges interests on these advances, they can be considered as a supply of services but since the collection of interest is exempt without the right to deduct (if the subsidiary is established in the EU), the holding company will not be able to deduct VAT.
To secure the VAT deduction by a leading holding company, it is crucial to document and justify its interference by the holding company with these subsidiaries. The holding company must imperatively bill for management services to subsidiaries.
Best practices include setting up a animation and assistance agreement, the proof of the effectiveness of the animation, and the justification for the nature of the services invoiced. A set of indications must demonstrate the interference of the holding company in the management of subsidiaries.
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