Keywords
Summary

Keywords

Freedom of movement for persons – Freedom of establishment – Tax provisions – Corporation tax – Tax relief – National provisions preventing the deduction by a parent company of the losses incurred in another Member State by a subsidiary established in that State – Lawfulness – Limits

(Arts 43 EC and 48 EC)

Summary

As Community law now stands, Articles 43 EC and 48 EC do not preclude provisions of a Member State which generally prevent a resident parent company from deducting from its taxable profits losses incurred in another Member State by a subsidiary established in that Member State although they allow it to deduct losses incurred by a resident subsidiary.

However, it is contrary to Articles 43 EC and 48 EC to prevent the resident parent company from doing so where the non-resident subsidiary has exhausted the possibilities available in its State of residence of having the losses taken into account for the accounting period concerned by the claim for relief and also for previous accounting periods and where there are no possibilities for those losses to be taken into account in its State of residence for future periods either by the subsidiary itself or by a third party, in particular where the subsidiary has been sold to that third party.

(see para. 59, operative part)