Following the Tax Courts, also the Supreme Court confirmed the deductibility of input VAT paid on the so-called “transaction costs” incurred by a special purpose vehicle in a leveraged buy-out merger transaction. In detail, in the judgement no. 22608/2024, the Judges held that input VAT paid on such costs is deductible according to the principle of neutrality.
This is the first decision of the Supreme Court, in fact, some Tax Courts case law had already reached this conclusion (CTP Milan, no. 3361/2022 and CGT II Lombardia no. 3755/2023), stating that it was legitimate to deduct VAT on “transaction costs” incurred by a special purpose vehicle, in a MLBO transaction concluded with the merger of the target – active – company into the SPV and with the continuation of business by the resulting entity.
This is an important case law, that should be considered both for the future, and also for evaluating the chance to recover non-deducted input VAT in similar transactions.