European investment companies could be forced to pay value added tax when they issue shares after the European Court of Justice ruled German property investment company Securenta should repay about â¬3.2m ($5bn) that it claimed from tax authorities on capital raised in 1994.
The ECJ decision is based on the principle that companies should only be able to reclaim VAT in relation to business activities, so holding companies that mainly carry out investment, rather than business activities, would not be eligible for rebates.
