Case C‑28/17

NN A/S

v

Skatteministeriet

(Request for a preliminary ruling from the Østre Landsret)

(Reference for a preliminary ruling — Article 49 TFEU — Corporation tax — National tax legislation making the transfer of the losses sustained by a permanent establishment, situated on national territory, of a company established in another Member State, to a resident company belonging to the same group, subject to a condition as to the impossibility of using such losses for the purpose of a foreign tax)

Summary — Judgment of the Court (First Chamber), 4 July 2018

Freedom of movement for persons — Freedom of establishment — Tax legislation — Corporation tax — Deduction of losses — National legislation allowing group taxation of resident companies in a group, including permanent establishments located in the same country — Losses sustained by the permanent establishment, owned by a non-resident subsidiary of a resident parent group — National legislation allowing resident companies in a group to deduct those losses from their overall profits only where such deductions are not permitted in the subsidiary’s state of residence — Lawfulness — Conditions

(Art. 49 TFEU)

Article 49 TFEU must be interpreted as not precluding, in principle, national legislation, such as that at issue in the main proceedings, pursuant to which the resident companies in a group are permitted to deduct, from their group profits, the losses sustained by a resident permanent establishment of a non-resident subsidiary of that group only in the case where the rules applicable in the Member State in which that subsidiary has its registered office do not permit those losses to be deducted from the latter’s profits, when the application of that legislation is combined with that of a convention preventing double taxation allowing, in the latter Member State, the deduction from the income tax payable by the subsidiary of a sum corresponding to the income tax paid, in the Member State on the territory of which that permanent establishment is situated, in respect of the latter’s activity. However, Article 49 TFEU must be interpreted as precluding such legislation in the case where the effect of its application is to deprive that group of any effective possibility of deducting those losses from the group’s overall profits, where it is not possible to set off those losses against that subsidiary’s profits in the Member State on the territory of which that subsidiary is established, these being matters for the referring court to verify.

(see para. 57, operative part)