In Ryanair Ltd v The Revenue Commissioners [2018] C-249/17, the CJEU ruled that VAT on consultancy fees relating to a failed takeover bid was recoverable as Ryanair intended to make taxable management services to the target.

  • Ryanair’s takeover bid for the shares in Aer Lingus was blocked by the European Commission on competition law grounds.
  • Ryanair tried to recover VAT on costs associated with the takeover bid as the plan after completion was to charge management services to Aer Lingus which would have been subject to VAT.
  • The Irish Revenue Commissioners refused the claim.
  • The case proceeded through the Irish courts and the Supreme Court referred to the CJEU for a ruling.

The CJEU ruled as follows:

  • Ryanair, intended to carry on an economic activity relating to the shares, and incurred costs for those purposes. In respect of those costs, Ryanair, must be regarded as a taxable person.
  • It would be contrary to the principle that VAT should be neutral for businesses, if an economic activity does not commence until taxable supplies are made.
  • Once the right to deduct has arisen in relation to the intention to carry on an economic activity, it is retained even if the intended economic activity was not ultimately carried out.
  • VAT can be recovered on general costs. There does not have to be a direct and immediate link to a particular supply. These costs still have a direct and immediate link to the economic activity as a whole. Here they had a direct and immediate link to the intended economic activity of providing management services.
  • The VAT is recoverable.


Transfer of a going concern (TOGC)

External link Ryanair Ltd v The Revenue Commissioners [2018] C-249/17