VAT and share issues: at last some sense

Article by Peter Landon, consultant with CW Energy Tax Consultants Ltd. This article appeared in the July 2005 issue of Tax Adviser.
On 26 May 2005, in its ruling in Kretztechnik AG v Finanzamt Linz, the ECJ finally resolved what has been one of the longest running sores I can remember in relation to VAT. Following the line taken by Advocate General Jacobs in February, the court decided that the issue of a new share is not a supply for consideration within art 2(1) of Directive 77/388, the sixth VAT directive (17 May 1977), and that the input tax on related costs was, in principle, deductible under art 17(1) and (2) – like any other input tax.

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