Tax deduction for holding companies

An entrepreneur is entitled to the pre-tax deduction for those tax amounts that are separately shown in an invoice from other entrepreneurs and relate to services provided for his company. An entrepreneur is anyone who independently carries out a sustainable activity to generate income.. The UFS had, in this context, been asked to consider the question of, under what conditions holding companies are entitled to a pre-tax deduction (GZ RV/0321-I/04 of 26.8.2008).

One „Participating holding“, the solely acquires and manages investments, does not qualify as an entrepreneur, as it does not appear in the economic sphere with any services. Consequently, such a participating holding no pre-tax deduction To.

Does a company, in addition to its investment management activities, engage in economic activity („mixed holding“), is the distinguishing the entrepreneurial sphere from the non-entrepreneurial sphere. In this case, a pre-tax deduction is only applicable to those tax amounts that are related to the company's entrepreneurial activity – and not to the management of the investment.

When a holding company intervenes economically in the management of its investments, a so-called „managing holding company“ Before. Such a holding company can have one Withholding tax in that respect claim, when they entered into debt-related contracts as an entrepreneur for their subsidiaries, e.g. by providing commercial or technical services, becomes active and receives remuneration for this. The input tax deduction only applies to those pre-payments that are related to the services provided to the subsidiaries. The business entity status – and thus the Right to pre-tax deduction – will be already at that time acquired, in which preparatory actions (e.g. investments) to generate future revenues set to.

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