VAT on abort costs in case of an unsuccessful takeover bid is deductible, provided the buyer intended to supply management services for consideration to the target company. This was ruled by the Court of Justice of the European Union (“CJEU”) in the Ryanair case (C-249/17) issued on 17 October 2018.
Facts of the case
Ryanair attempted to acquire a 100% shareholding of Aer Lingus. Although the takeover was unsuccessful, Ryanair sought to recover the entire input VAT on professional advisory fees incurred. Ryanair argued that it intended to provide management services to Aer Lingus, had the takeover been successful. The question arose whether the input VAT on the abort costs could be fully deducted.
