Keywords
Summary

Keywords

Freedom of movement for persons Freedom of establishment Tax legislation Corporation tax National legislation limiting the possibility of deducting losses incurred in the Member State concerned for companies which have a permanent establishment in another Member State Not permissible

(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC))

Summary

$$Article 52 of the Treaty (now, after amendment, Article 43 EC) precludes legislation of a Member State under which a company incorporated under national law, having its seat in that Member State, may, for the purposes of corporation tax, deduct a loss incurred the previous year from the taxable profit for the current year only on the condition that that loss was not capable of being set off against the profit made during that same previous year by one of its permanent establishments situated in another Member State, to the extent that a loss thus set off cannot be deducted from taxable income in either of the Member States concerned, whereas it would be deductible if the establishments of that company were situated exclusively in the Member State in which it has its seat. Such legislation establishes a differentiated tax treatment as between companies incorporated under national law having establishments only on national territory and those having establishments in another Member State.

( see paras 23, 33 and operative part )