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This guidance note examines how to determine the VAT status of a holding company’s activities. In particular, it looks at:

1. •

   when a holding company is or is not in business

2. •

   if a holding company is in business, whether its activities are exempt or taxable

The VAT status of activities is particularly important when deciding whether a holding company can recover VAT on costs. VAT recovery is only possible where the holding company has taxable business activities (amongst other factors).

For an overview of VAT and holding companies generally, see the Holding companies ― overview guidance note.

This is a complex and much litigated area of VAT law. For detailed discussion of the case law history surrounding the link between supplies and consideration, see De Voil Indirect Tax Service V3.103, and for business activities generally, see De Voil Indirect Tax Service V2.201B.