Danish tax ruling from February 28, 2025, regarding a VAT-free business transfer involving an apport contribution and subsequent vertical merger.
- The inquirer (company) completed a restructuring to separate an activity from the main business and isolate it in a new company within the same corporate group
- As part of this restructuring, the inquirer established a subsidiary (H4) through an apport contribution (contribution in kind) of the business activity
- Subsequently, a vertical merger was implemented between H4 and another company in the group (H3)
- H4 was not VAT-registered and existed for only 20 days before being dissolved through the merger with H3
- The transfer of activities from the inquirer to H4, when viewed in isolation, did not meet the conditions to be considered a VAT-free business transfer
- However, the subsequent vertical merger meant that the activity H4 had taken over from the inquirer was immediately continued unchanged by H3 through a legal universal succession
- The Danish Tax Council found that under these special circumstances, when making the VAT qualification of the transfer, consideration could be given to the transactions H3 carried out after the merger, in accordance with principles from case C-137/02, Faxworld
- Therefore, the transfer from the inquirer to H4 could be considered a VAT-free business transfer, taking into account that the activity continued unchanged as a VAT-taxable activity by H3 after the vertical merger
Source: info.skat.dk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
