Tag: Loss carry forward

Skatteverket vs Holmen AB, June 2019, European Court of Justice, Case no C-608/17

Skatteverket vs Holmen AB, June 2019, European Court of Justice, Case no C-608/17

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 ... Continue to full case
Skatteverket vs Memira Holding AB, June 2019, European Court of Justice, Case no C-607/17

Skatteverket vs Memira Holding AB, June 2019, European Court of Justice, Case no C-607/17

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 ... Continue to full case
Denmark vs Bevola, June 2018, European Court of Justice, Case No C-650/16

Denmark vs Bevola, June 2018, European Court of Justice, Case No C-650/16

The Danish company Bevola had a PE in Finland. The PE incurred a loss when it was closed in 2009 that could not be utilized in Finland. Instead, Bevola claimed a tax deduction in its Danish tax return for 2009 for the loss suffered in Finland. A deduction of the loss was disallowed by the tax authorities because section 8(2) of the Danish Corporate Tax Act stipulates that the taxable income does not include profits and losses of foreign PEs (territoriality principle). Bevola would only be entitled to claim a tax deduction for the Finnish loss in the Danish tax return by making an election of international joint taxation under section 31 A. However, such an election means that all foreign entities must be included in the Danish tax return and the election is binding for a period of 10 years. The decision of the tax authorities was confirmed by the National Tax Tribunal on 20 January 2014. The taxpayer ... Continue to full case
Netherlands vs X BV, June 2016, Supreme Court, Case No 2016:1031 (14/05100)

Netherlands vs X BV, June 2016, Supreme Court, Case No 2016:1031 (14/05100)

In 1996, X BV acquired the right to commercially exploit an intangible asset (Z) for a period of 15 years for $ 63.5 million. X BV then entered a franchise agreements with group companies for the use of Z, including a Spanish PE of Y BV. According to the franchise agreement Y BV paid X BV a fee. According to X, in the calculation of the loss carry forward in Spain the franchise fee should not be fully attributed to the PE in Spain due to existing rules on internal roaylties. X states that the loss carry forward amounts to € 13.1 million. The tax authorities increases the loss carry forward with the fee paid to X, for the use of Z by the Spanish PE. According to the tax authorities, the loss carry forward is € 16.1 million. The District Court finds that no amount needs to be taken of the fees that Y BV paid to X BV ... Continue to full case