The Memira Holding case was about a crossborder merger between a loss-making German subsidiary and a Swedish parent company. The CJEU was asked to clarify whether the German losses would be deductible in Sweden after the merger had been finalized.
In the Court’s view, Memira Holding may deduct the foreign losses in Sweden, but only if the Swedish parent company can demonstrate that it is impossible to use the losses in Germany in future periods. The fact that Germany does not allow losses to be taken over through a merger is thus not decisive in itself. Further possibilities to take over the losses must be assessed.
The CJEU states that losses in 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. If, on the other hand, the parent company can adduce evidence to the contrary, then the losses of the German subsidiary would be deemed as final and it would then be disproportionate not to allow Memira Holding to take them into account in Sweden.