The Holmen case dealt with tax deduction of losses arising in indirectly held Spanish subsidiaries would be deductible upon liquidations of the Spanish companies.
The Court clarified that final losses arising in an indirectly held subsidiary, should not be deductible for the parent company, unless all the intermediate companies between the parent company and the loss-making subsidiary are resident in the same member state as the loss-making subsidiary. In the Holmen case the facts suggest that a loss could be deductible in Sweden, as all intermediate companies were from Spain.
The mere fact that the legislation of the subsidiary’s state of establishment does not allow the transfer of losses in the year of liquidation can’t, in itself, be sufficient to deem the losses as “final”.
The Court also stated, that losses in foreign subsidiaries can’t be characterized as “final” if there is a possibility of deducting those losses economically in the subsidiary’s state of residence, for example by transferring them to a third party.