24 June 2019

Free movement of persons and services: Rule of reason
The restrictions on transfers of losses imposed by the legislation of the Member State of establishment of the subsidiary are not decisive so long as the parent company has not adduced evidence that it is impossible for those losses to be used by a third party, in particular after a sale for a price including the tax value of the losses, but if such evidence is adduced, the fiscal authorities are required to find that the losses of a non-resident subsidiary are final and that it is therefore disproportionate to not allow the parent company to take them into account at its level for tax purposes.
CJEU, Case C-607/17 Skatteverket v Memira Holding AB, Judgment of 19 June 2019, LawLex20190000831JBJ

Free movement of persons and services: Rule of reason
In the assessment of the finality of the losses of a non-resident subsidiary on which the parent company’s deductibility is dependent, the fact that there are no other entities in the State of establishment of the subsidiary which could have had the losses of that subsidiary transferred to them via a merger if such a possibility had been afforded is irrelevant.
CJEU, Case C-607/17 Skatteverket v Memira Holding AB, Judgment of 19 June 2019, LawLex20190000831JBJ

Free movement of persons and services: Rule of reason
Where the intermediate subsidiary or, subsidiaries between the parent company applying for group relief and the sub-subsidiary sustaining losses that could be regarded as final are not established in the same Member State, it is not disproportionate for a Member State to make cross-border tax relief conditional on a direct link.
CJEU, Case C-608/17 Skatteverket v Holmen AB, Judgment of 19 June 2019, LawLex20190000825JBJ

Free movement of persons and services: Rule of reason
National legislation which precludes group relief in the event of losses of a non-resident subsidiary if there is no direct link between the parent company making the application and the non-resident subsidiary sustaining the losses may be justified by the need to preserve the balanced allocation of the power to impose taxes between the Member States and to prevent the risk of losses being used twice and of tax avoidance.
CJEU, Case C-608/17 Skatteverket v Holmen AB, Judgment of 19 June 2019, LawLex20190000825JBJ