One of our client, a Luxembourg SCSp Sicav-RAIF active in the Private Debt sector is receiving invoices from different service providers in Luxembourg and abroad.
The SCSp Sicav-RAIF is a VATable person that must self-assess but that should not be able to recover input VAT (ie VAT is a final cost).
SCSp Sicav-RAIF is the full owner of a Luxembourg company channelling lending to third parties.
We advised the client to apply for a VAT group between the SCSp Sicav-RAIF and its Luxembourg company.
Indeed, legally independent persons that are closely bound by financial, economic, and organizational links can set-up a VAT group.
The Luxembourg company was lending money to entities established in Europe and outside Europe. Therefore, it was a VATable person with the right to recover VAT on its costs, at least partially based on a prorata between loans granted to non-EU and EU debtors.
Through the VAT group, SCSp Sicav-RAIF can benefit partially from that VAT recovery.
In addition, the supply of services between members of the group is inexistent for VAT and therefore not subject to VAT.
